A lot of mainstream Republicans have to be uneasy with the direction their party has taken in recent months. Sure, they’re willing to ride the Tea Party tsunami into the midterms, even with all the wacky candidates it has drawn into its wake, because it gives them a means to seize power from the hated Nancy Pelosi and maybe even Harry Reid. But looking beyond November, they also recognize the danger of letting that same passion and emotion dictate, say, a Sarah Palin, Newt Gingrich or Mike Huckabee as their presidential nominee come 2012.
A nominee such as Mitt Romney would be more to their liking, but the man has way too much baggage to stuff in the overhead compartment. He authored the Massachusetts health-care plan that served as the model for ObamaCare; he can’t talk the conservative talk without coming off like an actor who lacks the chops to sound sincere; and his Mormon faith, unfortunately, remains a serious drawback in the South, where the GOP nomination is likely to be decided.
Another name you hear a lot is Mitch Daniels. He is an accomplished governor of Indiana; he was re-elected by an 18-point margin in 2008, the same year Obama took Indiana in the presidential race; and he has served as a director of the Office of Management and Budget, as head of the conservative Hudson Institute and as a senior adviser to Ronald Reagan. He is a government geek, which is not a bad thing.
However, with that much high-level executive experience, a person can’t help but become more pragmatic than ideological. Daniels has already angered social conservatives by suggesting that Americans need to call a national truce in the culture wars to allow us to focus on more important things. As governor, Daniels has also found it necessary to propose major tax hikes — in addition to major spending cuts — as a way to balance Indiana’s books.
As if that weren’t bad enough, Daniels further concedes that “at some stage there could well be a tax increase” at the federal level as well. Just last week, in a speech to the Hudson Institute, he spoke supportively of both a value-added tax, or VAT, as well as a tax on imported oil.
The repercussions were swift, as Politico’s James Hohmann documents:
“This is outside the bounds of acceptable modern Republican thought, and it is only the zone of extremely left-wing Democrats who publicly talk about those things because all Democrats pretending to be moderates wouldn’t touch it with a 10-foot pole,” Americans for Tax Reform President Grover Norquist told POLITICO. “Absent some explanation, such as large quantities of crystal meth, this is disqualifying. This is beyond the pale.”
Now, Norquist is a man prone to throwing hissy fits, but he is also the conservatives’ most important ideological enforcer on tax matters. When he declares Daniels’ statements “outside the bounds of acceptable modern Republican thought,” it means something.
While we’re on the subject, let’s talk a little more about the VAT, which is a centerpiece of many European economies. For those unfamiliar with the concept, a VAT is kind of like a sales tax, but it’s assessed in stages and paid by businesses rather than consumers. For example, if a business buys $100 in raw materials, processes that material and then sells it for $175, it pays a VAT on that $75, or the amount of value it added.
President Obama has occasionally mentioned a VAT as a possible option in a much larger tax reform, which of course touched off instant anger among many on the right. That’s why Norquist responded as he did to Daniels’ statement. It’s “not quite up there with being a World War II re-enacter, but it’s close,” he said, referring to Rich Iott, a Republican congressional candidate from Ohio whose hopes were dashed once it was discovered that he liked to dress up in SS uniforms.
Interestingly, though, Norquist and his group also happen to be strong backers of U.S. Rep. Paul Ryan’s so-called “roadmap” to fiscal responsibility. If Republicans regain control of the House, Ryan would be in line to head the House Budget Committee and thus able to try to implement that plan.
But here’s the thing: The Ryan roadmap clearly includes a VAT. He may relabel it a “business consumption tax,” but it functions exactly as a VAT would function, as at least some conservatives admit.
In other words, Mitch Daniels’ almost casual mention of a VAT gets him read out of the conservative movement, while Paul Ryan proposes the same thing but remains a conservative hero. Strange stuff. (For a good explanation of how such a thing is possible, read this.)