The dysfunctional U.S. Congress is hurting stock market prices again this morning. Politicians on the right are stubbornly holding to an uncompromising position on "no new taxes". Many politicians on the left are stubbornly holding to an uncompromising "no cuts" position. The expected failure of the Deficit Super Committee to come up with a deal demonstrates the depth of the divide. Thus, U.S. voters are stuck with a government that seemingly values slogans over solutions. The U.S debt will continue to grow by about $4 billion per day as the increasing unpopular Congress kicks the can down the road without coming up with deficit cutting compromises.
In a 60 Minutes interview broadcast on Sunday evening, Grover Norquist last night stated "The Republicans won't raise your taxes. We haven't had a Republican vote for an income tax increase since 1990.".
The interview made explicitly clear the locked in nature of the "no new taxes" pledge of most Republican legislators and presidential candidates. And as Norquist explained, any Republican primary candidate that dares to flaunt the "no new taxes" orthodoxy will be in for a tough fight due to incurring his wrath.
The "no new taxes" message is a good way to appeal to Republican primary voters. However, a refusal to compromise on any taxes at all, particularly those that target "the rich", is bad politics for a general election. The U.S. is highly likely to get another divided government in 2012 because of the Republican party's adherence to Norquist's orthodoxy. It is challenging to imagine how a divided government can take the steps necessary to shrink the deficit. Also, another crisis could be looming as the U.S may hit the debt ceiling cap prior to the November 2012 general election.
Thus, the losses in the stock market this morning may be due to more that just the expected failure of the Deficit Super Committee to reach a deal. It may also be due to increased awareness of how unlikely the Grover Norquist driven Republican party is to agree to reasonable deficit cutting compromises that include tax increases. And of course on the other side of the failure to compromise is the 36 million member AARP aggressively demanding "no cuts".