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

thestreet LOGO

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.




More from

Dec 3, 2012 1:02PM
You can tax the rich 90% and the poor will still envy and despise the rich and continue to be thankless and's the new America
Dec 3, 2012 12:58PM





                                          People are as Powerful as we allow them to be!



                                                                                       Thomas   Jefferson

Dec 3, 2012 12:54PM

Big problem we have is People like you MG.....You and Ilk are still screaming, Marxist, Socialist, 57 Donkeys and Leech class..

And on the other side, we have the 47%,people that hate the Rich, blame all their problems on the Elite, can't or won't get a job...And are yelling gimmee,gimmee,gimmee..And are tree huggers.


I wouldn't want to sit down at that Poker table, would you ??


BUT, we have re-elected this President, so we have to move on, and use some sense in doing so.

Dec 3, 2012 12:51PM

Rich people would rather see a tax percentage increase than a revision of the tax laws. They got this fixed. They will look like your whipping dog all the way to the bank again.


How does it feel to be used by your president liberals? He's not quite the patriot you thought he was.

Dec 3, 2012 12:38PM

I would rather take a pledge from lawmakers that any new war is coming with a war tax in exact amount of the war chest and for the duration. If you compare to the family budget the "rain-day funds" are put aside when the sun shines (and that was in 2000) and not when heavy rains are on us.

This way or that we will have to pay for the war we approved as a whole to profit few. 

Dec 3, 2012 12:36PM
It kind of goes beyond just signing the Norquist Pledge it identifies a huge problem in America. Basically, if any group, network, religion, association, club, collective, cell, sect... whatever, gets into a position of influence or authority YEA THAT MEANS LOBBIES TOO... they become terrorists by application. I can't think of anything better right now than to hold a vote in each state where elected Officials signed that Pledge and determine if the position represents the majority. If not, the cases begin to try them as terrorists. We have a war of terror so the scenario is already paved... years in a far off prison, neglect and psychological duress, finally, a military style tribunal where the matter is represented as crimes against the nation. Every single corporation where online job applications were used but alumni buddies got the roles are terrorists too.

America was attacked during the Bush Administration. While I lament for those killed in the 9/11 crashes, no one can deny that paper and button pushing FREAKS took us administratively over and drove us to today's brink of ruin. The BELL TOLLS, it tolls for connivers and jivers who didn't want to really work for a living but assumed themselves worthy of the perks AND for those who made wages and salaries for their working life and now condemn those who do now. Time for change has passed. Time for CORRECTION is here. ZERO tolerance for the Norquist thugs and the GOP Adverse Agenda.

Dec 3, 2012 12:28PM

Geezus christ, You all want to get partisan about this right out of the GATE...

You accuse Obama as a "my way or the highway" President about his policies...

YES, we know for a FACT, that is not the case with Boehner and the little boys,plus the TP'ers.

Sure we know that to be true, Right?.....YOU WANT TO PUT US RIGHT BACK to square one..

That is STUPID..

Funny, it was okay with Conservatives and Republicans, when "little Bushy" said, " I've got Political Capital" after being elected instead of appointed by SCOTUS...yeah you remember that don't you ??

Then he spent it and us, on the rest of TWO WARS...For absolutely NO REASONS..

Neither Bush 1 or Bushy 2 knew anything about fighting Wars in the MiddleEast, that was obvious.

The second time around was the kid, trying to SAVE FACE for his Daddy..They both were bunglers.


At least Clinton kept us out of almost WW3..which is about what this is now...He tried getting Osama a couple times....Damn near got him once...And they were doing it on the "sneak" as we should have....We DO NOT need to kill (or get them killed) 100s of thousands and 1000s of our own...

To get ONE or TWO people....Serves no useful purpose and everyone hates us for it.

Clinton knew that...And was one hell of a lot smarter or Political, when he made the deals with Republicans and they all stepped across for the "Good Times" we had.


Along comes Bush....We get "blown up" because of Bush Family ties to the ME and the Saudis, and "no controls" on Israel; It was a vendetta from the beaten down al Kaida and bin Laden...We knew it was coming.....And it has put us where we are today..So give this President a break.

Dec 3, 2012 12:24PM
I'll say it again...This jerk (grover) is a bully and a dictatorial political cult leader. He is not elected to anything, deriving his "power" from self anointing, and the gullibility of those who signed and continue to adhere to this "pledge".  Embarrassingly, my congressman (rob bishop) is among the lemmings who populate the halls of congress. Shame on us for having re-elected him.
Dec 3, 2012 12:22PM
There is no better economy it is all smoke and mirrors for the mindless masses !  Bank of America (TO CROOKED TO FAIL) DIE BANK OF AMERICA DIE !
Dec 3, 2012 12:17PM

Compromise is also not coming out of the mouths of the Democratic leadership in Congress. 

Dec 3, 2012 12:15PM
Republicans and Democrats always break their pledges. Why would the Grover Norquist  pledge be any different for the Republicans to break? Didn't they pledge to compromise? This 2 party 180 degree polarization in this country really sucks. I'm beginning to think that both parties would rather see this country fall apart and burn in flames than to reach an agreement with the other party.
The big picture is clear but neither party can seem to see it with their blindfolds on.
Dec 3, 2012 12:09PM

Final consumption sales tax only - no item or person exempt – When a family goes into a grocery store and buys $100 in groceries and the clerk adds $5 for local tax, $7 for county, $15 for state tax, $35 for federal tax and $45 to pay off the federal debt, the crap will come out of the American peoples head about the cost of government. 


Then give the American people the right to directly decide what they are willing to buy through government, (by pass congress). Socialism, liberalism, high government spending will end. In 4 years the American people will reduce government spending by 35% and increase the productivity of our tax dollars by 400%

Dec 3, 2012 12:09PM
This whole cliff thing is a sideshow.  The same individuals who created this monstrous failure called managing the US economy want and need your attention.  They want you leaning left and then get you with the right.  The repositioning of tax rates on the wealthy is merely the ointment needed to absolutely crush the middle class wage and the benefit programs.  Anybody thinking otherwise is a fool.  Get those working folks roused agreeing to get those greedy rich SOBs and then the entire dink is all about busting American wages and benefits.  The saving of the wealth class is paramount to maintaining support through this entire New World Order Transition. All this other stuff is just filler. This is one gigantic fools play.  The Republicans are willing to look like fools and take blame knowing full well the payoff will come later.   The Repub/Dem union is the strongest in the world and it will not be broken.  Remember the goal.  Internationals need expansion to India and China for future generations of investors.   This tax increase should be viewed as nothing more than seed corn.  JMHO
Dec 3, 2012 12:05PM
Maybe BoBo should try explaining what is wrong with the Norquist Pledge in the light of the exposed abuse of the Federal Government when it comes to spending? What is wrong with you people that think we should give them more tax money when they don't spend what we give them now responsibly? It's like telling your kid he can't buy candy instead of a balanced lunch. You don't fix that problem by raising his allowance.
Dec 3, 2012 12:04PM

We have compromised ourselves into over 16 trillion dolars in US debt, over 121 trillion dollars in US unfunded liabilites, and over 4 trillion dollars in debt among the 50 US states.


We are such fools!! "Thank you sir, may I have another?"

Dec 3, 2012 12:03PM
Four times , in 20 years , The Republicans ,take us to the wall . Voters!! Your job , is not done , when you vote . You must follow-up ,on these radicals !! The next step , is a fast and furious  recall movement  . Thise is  your second and last defence against big money . You haven't even started , to get rolling!! KGK
Dec 3, 2012 12:03PM
What me worry santelli actually said President O blame A .....

Is that what you call Rise Above CNBC ?
Dec 3, 2012 12:01PM
The rich pay 35% my @ss ....even romney (who)  adMITTed that he paid only 15% .......most of them pay their accountants more than they pay their country!!
Dec 3, 2012 11:59AM
CNBC has become a voice for the rich ......santelli's latest rant about the "blame game" where he says we cannot move forward if everyone is blaming the other side and then he quickly moves on to defend norquist and blame President Obama toothed doosh ...... and cramer what the hell did you "pull up" with norquist? Your pants ?

Also who voted for Norquist and the koch sukker sisters .....NOBODY !!!!!  
Dec 3, 2012 11:56AM
So, Jimmy, your solution?   Keep putting off the problem and let the cliff go higher and higher and higher?  If we are going to fall off of a cliff, which this nation is going to do eventually, I would much prefer for the cliff to be 20 feet high as opposed to 200 feet high.  I can live with a broken leg but I dont think I could make it falling 200 feet.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125 rated 1
267 rated 2
455 rated 3
612 rated 4
682 rated 5
695 rated 6
632 rated 7
472 rated 8
279 rated 9
147 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.