Rupert Cornwell: Grover Norquist: The man who is holding the US to ransom

Out of America: Crucial talks to find $4trn of savings could fail because of the influence of one anti-tax zealot

(ap)

Who or what is the biggest obstacle in the way of a grand bargain between the parties to slash the US budget deficit, raise the federal government's debt ceiling and, oh yes, prevent the world economy plunging into chaos come 2 August?

Republicans might blame that crypto-socialist named Barack Obama. Democrats will accuse Republicans of not recognising a good deal when one is offered on a plate. Both would also point to the never-ending campaign season here, right now focused on the 2012 presidential and congressional elections, that rules out rational bipartisan agreement on anything.

But the answer could be none of the above. Some here in Washington would point to a pudgy, slightly dishevelled man with a reddish beard, in his mid-50s, and of whom practically no one who doesn't make a living from politics has ever heard. His name is Grover Norquist. He heads an innocuously named interest group called Americans for Tax Reform (ATR) – and arguably he has done more than anyone to create the anti-tax dogma in the Republican party that is the single largest impediment to a deficit deal.

This afternoon House and Senate leaders will reconvene at the White House for a crucial session at which Mr Obama says Republicans and Democrats must stop playing chicken and set out in earnest on the path to compromise. The goal is to find $4 trillion of savings over the next decade, mostly by spending cuts championed by Republicans, but also via what is politely known as "increased revenue".

Two spectres, however, will be in the room. One is of possible US government default, triggering who knows what manner of financial apocalypse if the existing borrowing limit of $14.3 trillion is not raised by the early August deadline. The other is of Mr Norquist. He and his outfit are quintessential creatures of conservative Washington. They hold no elected office and are accountable to no one, yet they wield immense ideological influence. For three decades, Mr Norquist has been a Republican activist, with close ties to Ronald Reagan and the two President Bushes. A director of the National Rifle Association, he is also a powerful advocate of gun rights.

But Mr Norquist's real interest is taxes; or, more exactly, reducing taxes and the government that levies them, to the smallest possible size.

ATR was reputedly set up at Reagan's request in 1985. Three years later, Mr Norquist was behind George H W Bush's fateful line during his acceptance speech at the Republican convention: "Read my lips, no new taxes." In those days Republican presidents would still raise taxes, if the real world left no other choice. In 1990, Mr Bush did so, as part of a budget package to cut the deficit; his reversal, Mr Norquist insists, was why he lost the White House in 1992, and that belief is now Republican orthodoxy.

There were of course no such problems with Bush Jr, who slashed taxes as soon as he came to office, and then fought two wars on the never-never, before bequeathing what was then the biggest federal budget deficit in US history (since surpassed under Mr Obama, alas) when he left office in January 2009. So much for "Starving the Beast", the theory advanced by tax cutters that if you deny revenue to detested government, it will be forced to tighten its belt. But in one respect at least, Dubya kept the faith: he never raised taxes.

Starving government is the core of Mr Norquist's creed. As he once pithily declared, his goal is to shrink the beast to the point that "you can drag it into the bathroom and drown it in the bathtub". And how do you bring this about? By having Republican legislators make a promise.

The "Taxpayer Protection Pledge" is Mr Norquist's real claim to fame. "I pledge to taxpayers... and to the American people," it reads, "that I will: one, oppose any and all efforts to increase the marginal income tax rate for individuals and business; and two, oppose any net reduction or elimination of deductions and credits unless matched dollar for dollar by further reducing tax rates."

True believers therefore must not only resist tax increases. They are not even allowed to close tax loopholes (including the one for instance, whereby billionaire hedge fund managers pay tax on their income at 15 per cent, instead of the 35 per cent top rate for ordinary mortals) unless the money is immediately given back somewhere else. Naive souls might believe that the only pledge applicable to elected politicians here is that of upholding the constitution. But 41 of 47 Republican Senators and 236 of 242 Republican Congressmen have signed up to Mr Norquist's promise, according to the ATR website.

Throw in the pressure exerted by the Tea Party movement and it's easy to understand why Republicans refuse to countenance anything that can be construed as a tax increase to help sort out the current budget mess. And this despite the fact that federal tax revenue, as a share of the total economy, is just 14.9 per cent, the lowest level since 1950, at a time when the gap between America's rich and poor is the greatest since the Wall Street Crash of 1929.

But just maybe, Mr Norquist is beginning to lose sway. Last month, more than 30 Republican Senators defied the pledge, voting for an end to the government's $6bn support of the ethanol industry, even though ethanol subsidies are holy writ in the corn state of Iowa, whose presidential caucuses are just eight months off.

And that may be only the start of it. For the moment, the Bush tax-cuts are safe. But top Republicans now say they are ready to close other, even larger loopholes, in the taxcode. And other concessions could well follow. Will they be enough to get a deal? No one can say. But common sense may finally be on the march.