(CNN) A top Republican U.S. senator brushed off the anti-tax pledge pushed by activist Grover Norquist and embraced widely for years by GOP lawmakers.
"I care more about my country than I do about a 20-year-old pledge," Sen. Saxby Chambliss told Georgia television station WMAZ, a CNN affiliate, on Wednesday. "If we do it his way, then we'll continue in debt and I just have a disagreement with him about that."
Congress faces a year-end deadline to reach agreement on taming the U.S. budget deficit or take other steps to avert the so-called fiscal cliff of mandatory tax increases and spending cuts that experts say would push the country back into recession.
At the heart of budget standoff is disagreement over how to raise new revenues to help reduce red ink.
President Barack Obama and Senate Democrats call for an increase in tax rates for the wealthiest Americans, while House Republicans, who control that chamber's majority, favor other approaches for bringing in money, such as closing certain tax loopholes and eliminating deductions.
Norquist, who heads the conservative group Americans for Tax Reform, has been successful over the years in lobbying a strong majority of congressional Republicans to sign his pledge to not raise taxes.
Many GOP candidates who ran for office also signed the promise, but earlier this year, a small number of freshman lawmakers rejected the idea that they were bound to the document.
Chambliss, along with 38 other senators and 219 House members entering the next Congress, have signed the pledge, according to the website for Americans for Tax Reform.
But Chambliss, who has previously criticized Norquist's stronghold on anti-tax sentiments, said this week that the fiscal conservative's ideas stand in the way of finding a solution for ballooning debt.
"Norquist has no plan to pay this debt down," said Chambliss, who is up for re-election in 2014.
The anti-tax crusader has said he predicts congressional Republicans will stand firm and negotiate a deal that excludes tax hikes.
Asked if Chambliss is concerned Norquist may use his resources to combat a re-election bid, the senator said, "In all likelihood, yes."
"But I don't worry about that because I care too much about my country," he said. "I care a lot more about it than I do Grover Norquist."
The two-term senator from Georgia added he's "willing to do the right thing and let the political consequences take care of themselves."
CNN's Adam Levy contributed to this report.
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when will people realize we have a spending problem and not a lack of revenue.
because not a single economist agrees with that statement or is it what the data shows. the only people saying there is a spending problem are politicians who know nothing about economics. the major causes of the current deficit are from supply-side tax cuts and waring. neither of which benefits the US economy.
deficits increasing during the Reagan years, stayed the same under Bush Sr., then Clinton raised taxes on the rich while cutting some spending and then GWB came and cut taxes on the rich again and the deficit blew up.
Costco's Dividend Tax Epiphany
Obama's fans in the 1% vote to beat Obama's tax increase.
When President Obama needed a business executive to come to his campaign defense, Jim Sinegal was there. The Costco COST +2.00% co-founder, director and former CEO even made a prime-time speech at the Democratic Party convention in Charlotte. So what a surprise this week to see that Mr. Sinegal and the rest of the Costco board voted to give themselves a special dividend to avoid Mr. Obama's looming tax increase. Is this what the President means by "tax fairness"?
Columnist Mary Anastasia O'Grady on Costco and other companies paying out fatter dividends this year to avoid the tax cliff. Photo: Associated Press
Specifically, the giant retailer announced Wednesday that the company will pay a special dividend of $7 a share this month. That's a $3 billion Christmas gift for shareholders that will let them be taxed at the current dividend rate of 15%, rather than next year's rate of up to 43.4%—an increase to 39.6% as the Bush-era rates expire plus another 3.8% from the new ObamaCare surcharge.
More striking is that Costco also announced that it will borrow $3.5 billion to finance the special payout. Dividends are typically paid out of earnings, either current or accumulated. But so eager are the Costco executives to get out ahead of the tax man that they're taking on debt to do so.
Shareholders were happy as they bid up shares by more than 5% in two days. But the rating agencies were less thrilled, as Fitch downgraded Costco's credit to A+ from AA-. Standard & Poor's had been watching the company for a potential upgrade but pulled the watch on the borrowing news.
We think companies can do what they want with their cash, but it's certainly rare to see a public corporation weaken its balance sheet not for investment in the future but to make a one-time equity payout. It's a good illustration of the way that Federal Reserve Chairman Ben Bernanke's near-zero interest rates are combining with federal tax policy to distort business decisions.
One of the biggest dividend winners will be none other than Mr. Sinegal, who owns about two million shares, while his wife owns another 84,669. At $7 a share, the former CEO will take home roughly $14 million. At a 15% tax rate he'll get to keep nearly $12 million of that windfall, while at next year's rate of 43.4% he'd take home only about $8 million. That's a lot of extra cannoli.
This isn't exactly the tone of, er, shared sacrifice that Mr. Sinegal struck on stage in Charlotte. He described Mr. Obama as "a President making an economy built to last," adding that "for companies like Costco to invest, grow, hire and flourish, the conditions have to be right. That requires something from all of us." But apparently $4 million less from Mr. Sinegal.
Vice President Joe Biden, left, standing next to Costco co-founder Jim Sinegal, right, in Washington on Thursday.
By the way, the Costco board also includes at least two other prominent tub-thumpers for higher taxes— William Gates Sr. and Charles Munger. Mr. Gates, the father of Microsoft's MSFT -1.24% Bill Gates, has campaigned against repealing the death tax and led the fight to impose an income tax via referendum in Washington state in 2010. It lost. Mr. Munger is Warren Buffett's longtime Sancho Panza at Berkshire Hathaway BRKB +0.13% and has spoken approvingly of a value-added tax that would stick it to the middle class.
Costco's chief financial officer, Richard Galanti, confirms that every member of the board is also a shareholder. Based on the most recent publicly available data, they own more than 4.1 million shares and more than 1.3 million options to purchase additional shares. At $7 a share, the dividend will distribute roughly $29 million to the board, including Mr. Sinegal's $14 million—at a collective tax saving of about $8 million. Even more cannoli.
We emailed Mr. Sinegal for comment but didn't hear back. Mr. Galanti explained that while looming tax hikes are a factor in the December borrowing and payout, so are current low interest rates. Mr. Galanti adds that the company will still have a strong balance sheet and is increasing its capital expenditures and store openings this year.
As it happens, one of those new stores opened Thursday in Washington, D.C., and no less a political star than Joe Biden stopped by to join Mr. Sinegal and pose for photos as he did some Christmas shopping. It's nice to have friends in high places. We don't know if Mr. Biden is a Costco shareholder, but if he wants to get in on the special dividend there's still time before his confiscatory tax policy hits. The dividend is payable on December 18 to holders of record on December 10.
To sum up: Here we have people at the very top of the top 1% who preach about tax fairness voting to write themselves a huge dividend check to avoid the Obama tax increase they claim it is a public service to impose on middle-class Americans who work for 30 years and finally make $250,000 for a brief window in time.
We got ourselves into this mess, people need to realize the status quo is not going to be the norm.
We did in the sense that we have been remiss in requiring our elected representatives to represent us, the people, rather than a political ideology. Grover Norquist didn't elect but one, maybe two, people in congress so I'm not sure why so many represent him instead of those who really did vote for those in congress.
If gunners were as violent as anti-gunners believe, logically there wouldn't be any anti-gunners left.