U.S. no-tax pledge creator entreats Republicans

WASHINGTON (Reuters) - The creator and enforcer of a no-tax-hike pledge huddled with a small group of Republican lawmakers on Thursday in Washington to help strengthen their resolve ahead of tax battles expected to intensify in coming months.

Only a handful showed up to get an "education" on the so-called Taxpayer Protection Pledge signed by nearly every Republican lawmaker, and enforced by anti-tax activist Grover Norquist.

The pledge has frayed a bit recently, with some Republicans suggesting it ties their hands in addressing the nation's fiscal problems.

Democrats have tried to make Norquist a symbol of Republican obstructionism on fiscal issues.

"The blitz he's doing is a sign of weakness," said Senator Chuck Schumer, a member of the Senate Democratic leadership. "His relevance has been openly questioned for the first time lately and he's in full damage-control mode."

The meeting was billed as a tutorial by Norquist, the founder and president of lobby group Americans for Tax Reform, who claimed wavering Republicans are rare and can be "educated."

Republicans command a majority in the U.S. House of Representatives, with 242 out of 435 voting members.

By signing the pledge, lawmakers agree to "oppose any and all efforts to increase the marginal income tax rate for individuals and business" and "oppose any net reduction" in deductions and credits not matched dollar for dollar with further tax cuts.

"When they keep that pledge to their voters, it means tax increases are off the table," Norquist told reporters after the meeting, adding that Democrats "want higher taxes, and the answer to that is simply no."

South Carolina Republican Senator Lindsey Graham and former Republican Florida Governor Jeb Bush are among prominent Republicans suggesting recently of the need for more flexibility on tax issues.

The meeting was ostensibly about how the pledge fits into a revamp of the tax code, an effort to reduce marginal tax rates while scrubbing the code of deductions and credits that economists say distort investments.

Norquist said that sticking to the pledge will help Republicans resist Democratic efforts to raise revenues by eliminating tax breaks.

Republicans who have signed Norquist's pledge want to renew all of the tax cuts that expire at year-end and pursue revenue-neutral tax reform, while slashing government spending.

"If you've taken tax deductions and credits and spent them, they're not available to reduce rates," Norquist said. "The pledge protects against people looting the tax code to spend money rather than to do tax reform."

But Democrats say federal tax revenue, which is at its lowest level in decades as a percentage of U.S. economic output, needs to increase in order to shrink deficits to sustainable levels. They criticized Tuesday's meeting as an effort to protect the wealthy and special interests.

PREACHING TO FAITHFUL

The small handful of Republicans emerging from the meeting said they were sticking with the pledge.

"We believe that if you make the taxes simpler and can actually lower the taxes, the government takes in more money," Representative Mick Mulvaney, a South Carolina freshman Congressman said after the meeting.

Conservative freshman lawmakers allied with the Tea Party movement hold considerable sway in the Republican-led U.S. House of Representatives.

The meeting comes as both parties grapple with strategies for an expected end-of-year clash over expiring tax cuts for nearly every American, enacted originally under President George W. Bush in 2001 and 2003.

Democratic President Barack Obama agreed to extend all the lower rates for two years in 2010, despite a preference among him and most Democrats to let the lower rates expire for the most affluent Americans.

Obama again is calling for extending all rates except for high earners.

(Additional reporting by Thomas Ferraro; Editing by Eric Walsh)