Biden, Democrats ‘in a much worse position’ in midterms with tax and spend agenda: Grover Norquist

As President Biden and the Democratic Party still have plans to pump money into the U.S. economy, one tax expert is signaling that a Republican congressional majority could "absolutely" ease Americans’ financial stress.

"Here's the good news – we've done this twice before," Americans for Tax Reform president Grover Norquist told FOX Business’ Maria Bartiromo Friday. "Bill Clinton came in with a majority of the House and Senate, taxed too much, spent too much, lost the House and Senate… Then we had the same thing happen with Obama. Obama got a Democratic House, Senate and president, spent too much, taxed too much, Obamacare, lost the House, lost most of the Senate."

"We're looking at something very much like that, that the Republican House and/or a Republican Senate could do this," Norquist continued. "Biden's in a much worse position than either of those other two gentlemen were."

On "Mornings with Maria," Norquist expanded on how the Biden administration’s "massive" inflationary spending and tax reform agenda could cost Democrats’ control of Congress, with the economy at the top of voters’ minds ahead of the midterm elections.

I.R.S. RELEASES INFLATION ADJUSTMENTS FOR 2023 – HERE'S HOW IT COULD IMPACT YOUR TAX BILL

Last week, the Internal Revenue Service (IRS) raised the amount that Americans can set aside for retirement in their 401(k) and other tax-deferred plans next year by about $2,000, or 9.8%, to $22,500 – the biggest jump since 2007, when the limit was $15,500.

The IRS makes such cost-of-living adjustments annually, but in times of painfully high inflation, the increases are more significant and impactful for taxpayers. The government reported last week that the Consumer Price Index, which measures a basket of everyday goods, rose by 8.2% in September, much more quickly than expected. Core prices, excluding gasoline and food, jumped by 6.6%, the fastest rise since 1982.

But Norquist warned that taxpayers aren’t seeing a "real" gain, as capital gain taxes are not indexed to inflation.

"You and I and everybody, that 58% of people who own shares of stock in a 401(k) or an IRA, you pay your taxes not just on the real increase, but on the increase in inflation as well," the tax expert explained. "For a lot of people, even before all this massive Biden inflation, 40% of what they paid capital gains taxes on were actually inflation gains, not real gains."

A Republican majority could halt the White House’s attempt to pass a sizable hike in the capital gains tax rate for the wealthy, which is a proposed 20% rate that would hit both the income and unrealized capital gains, Norquist argued. The GOP could also reverse the $80 billion earmarked for new IRS agents.

"We need to get rid of that, there is legislation, and the good news is it has passed the House once and the Senate twice over the last years. And Democrats like Schumer and Pelosi have both endorsed it," Norquist said. "This may be something we can agree on after the election, and the Democrats are going to be able to say they did something about growth and inflation."

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After Biden took a premature victory lap on cutting the national deficit, Norquist advised Americans to be "gentle" towards the president.

"If you had raised inflation the way he did, if you had shot up spending the way he did, if you had nothing to show for it, if you'd shut down energy production and it made Europe less safe and Ukraine threatened, what would you want to talk about? You would just grab any single piece of data, however out of context as that one is," Norquist said.

"He has nothing to talk about that's pleasant," the tax expert continued. "He's got almost two weeks before the election and he's going to have to keep saying things, and it's just not going to be any fun to be him."

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FOX Business’ Megan Henney contributed to this report.