Norquist pledge can send us over the cliff

If those who signed it believe compromise is heresy, we will end up with no budget deal.

By Jim Cramer Dec 3, 2012 9:59AM

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CorbisThe Republicans who signed the no-tax increase pledge -- the one put together by anti-tax strategist Grover Norquist -- have no room to maneuver when it comes to compromising to avoid the fiscal cliff.

 

Norquist is the real force behind the Republican Party's strategy when it comes to the talks to avoid the cliff. He has made it clear to anyone who signed the pledge, and that's pretty much every Republican, that they will be embarrassed and shamed out of their "impure" thoughts. They will be forced to get back in line, or risk being outed as closet Democrats who favor bigger government and higher taxes.

 

In other words, those who signed an allegiance to Norquist have no choice but to send us over the cliff. They are duty-bound to do so, frankly, regardless of whether they like it. They took the pledge; they have to swallow the cliff medicine.

 

Unless the pledge is broken by those who signed it, there won't be enough votes to put through a package to avoid the cliff.

 

Put aside for a moment the issue of whether you hate President Obama or like him. I know, I know -- that's virtually an impossibility these days. But accept the view that the president will not accept any deal that does not have tax increases.

 

Then accept that Norquist, who is by far the most powerful ideological force behind the Republican Party, will not allow those who signed the pledge to get out of it without a promise that they'll be fired by their constituents.

Assuming these two factors, there will be no choice. We will have to get the onerous austerity package -- the one that was created to give us Spain-like budget cuts and tax increases -- even though we are nowhere as profligate and anti-tax as the Spanish had been before their forced cliff jump.

 

Now, I am sure many of you say, "Wait, why doesn't the president have to give? Why doesn't he have to surrender to Grover Norquist, too, in order to get a deal done? Why doesn't he have to bend his will?"

 

Don't laugh, but when I pulled up with Norquist, an old acquaintance from college, he marveled at how obtuse the president was not to see that we need to prevent tax increases. He appears to believe that, if the president were to sign the no-tax-increase pledge and then go with the program cuts wanted by the Republicans, there will be no deficit and the U.S. will grow to the sky.

 

That's my summary of Norquist's view, whether Norquist thinks that's accurate or not. You can't help but draw that conclusion.

 

Here's the issue with our obstinate president. He campaigned and won on a pledge to raise taxes and cut spending. Norquist didn't campaign. He didn't win. The president is all hung up on his pledge -- the one that the voters agreed with.

 

The fact is, again, regardless of whether you like him, the president has said he will be willing to cut spending. He awaits the Republican anti-spending plan. If they propose one, I think he will agree with some of it, provided that the Republicans agree to some tax increases. It is called "compromise" where the president comes from.

 

Where Norquist comes from, it is called "heresy." No compromise is allowed. That, to me, is why the only hope for a deal is to have the pledge broken in favor of avoiding the fiscal cliff. Norquist doesn't care about the consequences of the cliff; he cares about exacting the consequences of violating the pledge.

 

I think we have to stop obfuscating. If you think the no tax-increase-pledge must be upheld, then you can't believe in compromise. If you can't believe in compromise -- which, in this case, would mean tax increases and spending cuts -- then enjoy the cliff jump, because it simply must occur.

 

I'll have more on what that world looks like later in the day. But let's just say that, if you like stocks going higher, you want the pledge broken. If you want them lower, then go with the pledge.

 

Cramer's face

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust.

 

 

 


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186Comments
Dec 3, 2012 2:01PM
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I don't care what any of you idiot liberals say. Obama is fighting for the rich man as much as the T-party republicans. He's fighting for something that won't dent the rich people - Higher percentage tax but same old laws and loopholes.

 

The republicans are just as bad --- offering tax code changes only knowing that Obama will not accept them......... You're used liberals..... just like your conservative brothers before you with Bush........ YOU'RE USED.

Dec 3, 2012 1:50PM
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The president leaves for annual Hawaii  vacation 12/16 with scheduled return 1/4/13 right in the middle of the cliff crisis. That tells me some partial deal will occur because if he leaves in the middle of crisis, republicans will crusify him (They already have the painting). As these partican fools play these games and the market starts to dramatically crumble, big business cries on how much money they are losing and there will be cries of outrage, part of the game. If he leaves on 12/16 he will then test the republicans on their suicidal pledge.  He then calls for congreess to return to Washington or at least the leaders before 12/15, ruining their Christmas if they don't compromise.  Games continue. Of course he can do this because the right knows he is a Muslim and just wants to destroy more Christian beliefs. Everything is show for the bases on both sides. American citizens of no consideration. It's all about the game, and puffing out your chest and who has the biggest b--ls.
Dec 3, 2012 1:50PM
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MIRAGE GUY;You should change your screen name to MIRAGE BRAIN, because we`ve

still looking for your brain.I think you lost it when you were flipping burgers at McDonalds

a couple of months ago.

Dec 3, 2012 1:47PM
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Norquist's operation is bought and paid for by Republican multi-millionaires and billionaires and all the Republicans who have signed his pledge are also bought and paid for by the Republican money-men who finance Norquist's operation.

Poll after poll has indicated that about sixty percent of the American people want the temporary Bush tax cuts to expire on the most fortunate and wealthy members of our society with the highest incomes. Yet the Republicans have signed a no-tax pledge to Norquist and the Republican billionaires who finance his operation not to let the temporary Bush tax cuts expire on the top 2.9% of Americans with the highest income. As a trend, this top 2.9 % of federal income taxpayers are paying the lowest effective tax rates that they have paid in decades, going back to at least 1990.

The Republican U. S. Senators and U.S. Representatives, who signed the pledge, their allegiance does not lie with the American people, their allegiance is to Norquist, to his pledge and to the Republican money-men who have bought and paid for his operation. The money-men are, after all, the primary benefactors of the Norquist operation which they finance.
Dec 3, 2012 1:45PM
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What are you talking about? Bush started a war we couldn't afford. He established a billion-dollar-a-day allowance for it and hired all his major campaign contributors to benefit from it. He redesigned our currency and built new printing presses BEFORE they were needed and raised the Debt Ceiling a record number of times. He didn't pay for any of it and let it carry over into the Obama terms. When Obama started out cutting everything he could in expenditures, he ran into a wall with military and BIG BUSINESS entitlements. We are here now with a Norquist Pledge saying let's just ignore the obvious and have a smaller government. Huh? No one in the right mind wants a military-dominated America. Let's keep the Post Office and do away with the Pentagon. Let's use the Army as Police and National Guard as Crossing Guards. The Air Force can fly our Commercial Airlines and the Marines can fix our roads. Everybody buys everything they need from Wal-Mart. It works too. Are YOU happy with compromise? 
Dec 3, 2012 1:45PM
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How about some people who live in the real world.Lobbyists don`t represent 99%

of us.Norquist is what`s wrong with the Repubs.

Dec 3, 2012 1:45PM
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Very Well Quoted...Brutus.....TJ had a lot of Common sense, along with other Founders.
Dec 3, 2012 1:43PM
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NTU: Let's not beat the drum against free trade without the surrounding facts.

 

What was the unemployment rate in the years following NAFTA's approval?  Here's what I see:

 

1993, 7.3%, 94: 6.6%, 95: 5.6%, 96: 5.6, 97: 5.3%, 98: 4.6%, 99: 4.3%, 2000: 4.0%, 01: 4.2%

 

Wages?  Here's the average wages for production and non-supervisory employees

 

93: $374.9, 94: $385.62, 95: $396.41, 96: $400.87, 97: $421.55,  98: $442.53, 99: $459.49, 2000: $473, 01: $488.72

 

Still think NAFTA caused a lot of unemployment and wage problems?  The stuff we outsourced ended up getting replaced by things that paid better because it was higher value.

Dec 3, 2012 1:43PM
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You're goddamn right...DLH, it is sick...Those people should not have been in Benghazi...That was stupid....The Ambassador was a ladder climber and the Contracted Security were making $100s of thousands a year....IT WAS GREED & EGOs THAT GOT THEM KILLED..nothing less.

And I won't back off my statements...IDIOTS are making a big deal out of almost nothing.

 

Whether you have been in a War or not, doesn't matter too me. BUT people DIE just because of the term...And the Majority of them are "innocent victims." or put in Harm's Way, by others that don't really feel the sorrow, unless it directly affects them...Which in most cases, is the case.

If you are not against our stupidy in the Middle East.....YOU ARE THE PROBLEM.

Dec 3, 2012 1:41PM
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Why does no one address the problem of our representatives making pledges to a person about the way they will vote on certain issues, when they are supposed to pledge their loyalty to the American people whom they serve. Why is it even legal for representatives to make such pledges? Maybe they should not ever be sworn in if they take these outside pledges that obstruct their ability to compromise as they legislate.
Dec 3, 2012 1:36PM
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how about they pledge something novel and new  ?to act on best behalf of the majority of people in this country instead of catering to people like grover
Dec 3, 2012 1:31PM
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If the Oath of Office doesn't already forbid our elected officials from signing any other pleges, IT SHOULD!
Dec 3, 2012 1:30PM
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We are not talking about "taxing" the Rich at 90% or even 50%....Those types of taxes have been gone for decades.

What we need is a fair an equitable tax on Income,dividends and interest or profits...

 

It is not right for the Middle Class to pay 20+% percent, while making maybe $50-60,000.

And a multi-millionaire pay maybe 10% on all money coming into their pockets; Because they have tax-cheating Accountants and Lawyers...

And that does not include investments and accounts;....HIDDEN OFF SHORE.!!! 

Dec 3, 2012 1:30PM
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Much like thinking those in DC don't understand what is busting American jobs.  Does anyone really believe the politicians don't understand the effects of this outsourcing and NAFTA stuff? Those folks completely understand the pain this transitioning is doing to the American workers.  They have been convinced there will be a pot of gold at the end of the rainbow after the New World Order is enacted.   They know darn well American labor wages and benefits will need to be reduced to ultimately complete the internationals goals.  Obama is one great player for the role of fox in sheeps clothing. You have to remember what he has said to understand the goal.  He says he "wants fairness and opportunity for that kid in Indonesia" which world trade will clearly enhance.  He has clearly stated "American workers have had it too easy for too long", and so goes that commitment for the American middle class. Rather than listening to your own rhetoric listen intently to what these people let out a little now and then over time and their story and goals become clearer.  The art of the deal as Trump would say is breaking down the expectations of working class Americans to avoid social violence while the plan is enacted.  We are now seeing this plan accelerate to completion. This Cliff nonsense is doing just that.  Do we not all feel something is slipping away from us?  The ultimate goal is American manufacturing wages to mirror those in China, India, and Korea.  Anything else is just noise.  This Cliff stuff fits in very well with making a gigantic move in this direction.  It creates the required doom message for action while leaving the true benefactors out of the picture. .Get it?  well we did it to the rich and now you need to do a little in return. Ever hear a media person ask one of these characters the ultimate goal?  Ever wonder why not? Go ahead ask your Congressperson why they continue to allow massive unemployment with this outsourcing and free trade. Dem or Repub are all on board.  They will continue to allow banks to be publicly supported because they are as well an integral part of the grand design. This Norguist thing will not stand up too politics as required and I believe is just a form of lip service.  From a spoken political perspective it sounds like something every responsible conservative would support right? What politician do you know that would ever give up his sovereign right to charge for his vote?.  It is still all about the money and the power.
Dec 3, 2012 1:23PM
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Both sides have a good argument.  Taxes on the rich should be raised and spending should be lowered.  The fiscal cliff is real and if it happens it is the failure of our politicians.  If we go into recession it will be the fault of the Norquist Republicans!  If the Republicans don't raise taxes on the rich and force the spending cuts and higher taxes on the middle class during this weak recovery they should be kicked out of office and it even scares me, because I don't trust the Democrats with unchecked power.  However, this reality should light a fire under Boehner's **** and get him to work with the Democrats, because he and his party may have to get a job in the real world if they don't get to work now!!!

Dec 3, 2012 1:19PM
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"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them." - Thomas Jefferson
Dec 3, 2012 1:18PM
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This "fiscal cliff" is not a sham, nor smoke and mirrors..It's real, VERY REAL.

 

And some are "hung up" on Fast and Furious and Benghazi...That's your "smoke and mirrors."

 

We have had some children and young parents(about 6) get killed around here in car crashes over the last couple months...

Do you think I am real concerned about 1 Ambassador, and 2-3 Contracted Security people dying in Benghazi...?

They should not have been in Libya ANYWAY....It was an Ego trip for all of them..

Dec 3, 2012 1:07PM
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30 years of running up massive defecits while cutting taxes at the same time-most especially for the  well  highlyoff in our society-----give credit and blame where it is due
Dec 3, 2012 1:05PM
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Sweet Geezus.....Earlier comment I had Clinton trying to kill Obama, that has since been corrected and now reads Osama, as in bin Laden...I need more coffee.

 

And about these Wars.....THOSE THAT PROFIT from them, should have to FUND them, with their own money and FAMILY members....If so, all wars would stop in a matter of days.

 

The days of Kings and Knights marching at the front..Disappeared eons ago.

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Better now to go over the fiscal cliff

 

look at it this way the national deficit is about 1.8 trillion and as more and more baby boomers retire and minimum wage slum workers replace them the deficit is only going to grow bigger.

 

To trim $1 trillion over 10 years or 100 billion a year (even this does not start right away but in a couple of years)  is not going to put a dent in the national deficit it will grow by this amount or more each year

 

We are so doomed folks looking only two years out the deficit will hit $2.5 trillion and only get worse.

 

The policticians are not telling you the truth. The Federal Reserve is having to buy US debt just to keep the country afloat. And those mafia guys are not going to do it forever.

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