First, the pledge's hard and fast prohibition on tax hikes can prevent signers from agreeing to compromises that would result in outcomes most conservatives would consider highly favorable. This was dramatically illustrated during an August 2011 debate at which all eight Republican presidential candidates indicated that they would not accept a deficit reduction deal that included $10 of deficit reduction for every $1 of new taxes.
Most conservatives care about reducing the deficit and downsizing government in addition to reducing taxes. The pledge's exclusive focus on taxes treats other conservative fiscal goals as irrelevant. In a 2012 congressional hearing, former Florida Gov. Jeb Bush, who has never signed the pledge, said he would accept a deal in which every dollar of higher taxes was matched by $10 of spending cuts. An absolutist stance against any and all tax increases means there will never be a bipartisan deal for putting U.S. government finances on a sustainable path. It is difficult to believe that all signers of the pledge and voters who support them want that outcome.
A second problem with the pledge is that it can give politicians who make little effort to keep taxes low a valuable stamp of approval. So suppose a state's economy is booming, and as a result, that state has a large budget surplus. Already in possession of Norquist's coveted endorsement, the governor may feel inoculated against any attack that he is a slacker when it comes to minimizing taxes. So instead of cutting taxes, he proceeds to use the new funds to address other pressing political priorities. Because the pledge is so simple, there is no adjustment for varying degrees of effort. Either you comply with the pledge or you don't. "It's heads or tails. The coin never falls on the edge -- it's either a tax increase or it isn't," Norquist said in a 2011 interview with The Atlantic.
A third shortcoming of the pledge is that it can actually discourage aggressive tax cutting. Experience demonstrates that official forecasts of future economic conditions and revenues are often inaccurate. Given that widespread uncertainty, lawmakers who want to avoid violating the pledge may want to think twice about bold tax cuts. If tax cuts are too aggressive in one year and then it turns out that forecasts had been too optimistic, lawmakers could find themselves forced to raise taxes in a later year. The pledge is broken even if the tax increase is small relative to the prior tax cut because the pledge does not allow exceptions for prior good behavior.
The situation in Kansas illustrates this point. Arguably the biggest and boldest antitax conservative in recent years has been Republican Gov. Sam Brownback. He is tied for first place among governors in the Cato Institute's Fiscal Policy Report Card on America's Governors for 2014. Brownback did not just talk about enacting large tax cuts. He got the job done. On May 22, 2012, Brownback signed into law the largest tax cut in state history, reducing revenue by an estimated 13 percent. The good news for Brownback is that he won reelection in November 2014. But the hoped-for supply-side response to his tax cutting has not yet materialized, so revenues have fallen far below projections. As a result, in January Brownback in January proposed major cigarette and liquor tax increases and the slowing of scheduled income tax reductions. Norquist immediately wrote Kansas legislators and urged them to oppose Brownback's proposal even though Norquist had previously been one of Brownback's biggest supporters.
In many ways, Brownback's tax odyssey follows Ronald Reagan's. Reagan initially got Congress to approve large tax cuts in 1981. But then, confronting larger-than-expected budget deficits, Reagan had to increase income taxes in 1982 and 1984. If Reagan had signed the pledge, his post-1981 tax policy would have repeatedly put him in violation of it.
Republicans in other states are paying close attention to Kansas, and it is making them lose their appetite for big tax cuts. Rather than gunning for dramatic mega-cuts (like Reagan's in 1981 or Brownback's in 2012) that might need to be offset with future tax increases, Republican governors are adopting a cautious attitude. More modest approaches are in vogue, such as trying to enact small tax cuts every year (as in Wisconsin) or phasing in tax reductions, with future tax cuts conditional on specific budget targets being met (as in Missouri).
A fourth problem with the pledge is that it makes it harder to cut subsidies in the tax code than to cut direct spending subsidies. These days Republicans are putting a lot of emphasis on eliminating “crony capitalism.” So cutting spending programs that favor particular industries is a perfect way for conservatives to reduce the deficit. But if in the same spirit a lawmaker wanted to eliminate a subsidy for a particular industry delivered in the form of a tax break (i.e., a tax expenditure), the revenue loss from elimination of the tax subsidy would have to be offset by a tax cut in order to avoid violating the pledge. Under the pledge, tax subsidy cuts cannot be used for deficit reduction
Insisting on adherence to the clean and simple no-tax-hike pledge has revolutionized fiscal politics. But conservatives may want to start allowing exceptions to the rule--not because of criticism from the left about the need for more revenue -- but because strict adherence to the rule does not always further their own goals.