Opinion: Rep. Ryan’s budget proposal walks GOP into another political trap

Here is Joel Benenson, President Obama’s top campaign pollster, speaking to reporters last week about his view of the 2012 race for the White House: “This election has fundamentally shaped up -- and rightly so -- as a battle over contrasts of economic values and economic vision.”

Here is Sen. Marco Rubio (R-Fla.), a man high on the list of Republican vice presidential possibilities, last week offering me, in a Fox News Latino interview, a similar view of the heart of the fall campaign:

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“I think we Republicans have an opportunity to offer a very clear contrast to the direction that Barack Obama has taken the … U.S.” In Rubio’s opinion, President Obama is “undermining” the American free enterprise system, which Rubio said is “the best system in the world for upward mobility and economic empowerment.”

Absent some foreign policy crisis, Benenson and Rubio have it exactly right -- this fall’s presidential campaign will be another replay of “It’s the Economy, Stupid.”

And the blueprint for campaigns can be found in the recent budget proposal from Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee.

David Plouffe, the president’s senior adviser, is already calling the Ryan budget “the Romney-Ryan plan.” And Mitt Romney is cooperating by endorsing Ryan’s proposal as “an excellent piece of work.”

The Republicans are falling into a trap.

The Ryan plan calls for reducing individual income tax rates to 10 percent and 25 percent from the current top rate of 35 percent and he also reduces the corporate tax rate from 35 percent to 25 percent.

The Wisconsin Republican claims his budget offsets the tax dollars lost to the tax cuts for upper-income Americans by eliminating tax loopholes, tax shelters and many tax deductions estimated at an incredible $4.6 trillion over 10 years. But while Ryan specifies the cuts in tax rates, he never identifies these giant tax breaks he wants to kill.

And that one false move opens the door for President Obama’s reelection campaign to paint Romney as secretly protecting the rich and a man who is “not in touch with the lives of ordinary Americans and doesn’t really care about the struggles they are facing …”

That is precisely Benenson’s description of Romney during a roundtable last week hosted by Bill Schneider of Third Way, the center-left think tank. “Romney didn’t just get to 50 percent unfavorability,” Benenson said. “People are clearly picking up on something.”

And that something is that he is rich and looking out for the rich.

So far, the GOP response to this line of attack from the White House has been to cry foul against a campaign of class warfare. They point out that the top 20 percent of taxpayers pay 75 percent of the total federal tax burden and get only 10 percent of entitlement spending. And the Republicans are right to point out that Americans in the bottom 40 percent of the income distribution pay less than 1 percent of the tax burden and receive about 60 percent of the entitlement spending.

But the GOP argument that the rich are being ripped off by the poor falls apart when the focus shifts to the mass of loopholes and deductions that Ryan’s budget is bringing to everyone’s attention.

The government funds tax incentives for everyone from homeowners who make their homes more energy efficient to corporations who offer health benefits to their workers. Tax breaks to encourage charitable contributions alone cost the government $39 billion. The nonpartisan Tax Policy Center (TPC) estimates that these tax breaks add up to more than $1.1 trillion

By lowering the tax brackets, Ryan will have to find a stunning $4 trillion in cuts to loopholes and deductions to avoid adding to deficit spending. But he did not identify one such cut.

Leaving that much spending on the rich in place at a time when the rest of the nation is still anxious about its economic future is a fatal political stand. 

Already, according to TPC, a family earning more than $1 million before taxes receives an average of $447,259 from tax breaks. But a family earning $10,000 -- or less -- gets an average of only $427. That puts a different light on the entitlement spending that goes to seniors, the middle class and the poor to keep them from falling out of the social safety net.

And in the years to come, the Ryan plan further shrinks the middle class.

The TPC’s analysis of the Ryan budget in the year 2015 found that those making $1 million or more would enjoy an average tax cut of $265,000 and their after-tax income would increase by 12.5 percent. By comparison, half of those making between $20,000 and $30,000 would get no tax cut at all.

As William Gale, an economist with the Brookings Institution, recently wrote, the Ryan budget is “essentially an effort to have low- and middle-class households bear the entire burden of closing the fiscal gap and to have them bear the costs of financing an additional tax cut for high income households.”

On Friday in Vermont, the president described the GOP approach to budgeting and taxes as, “You’re on your own economics.”

“If you are born into poverty, lift yourself up by your bootstraps even if you don’t have boots,” he said in describing the Republican attitude. “You are on your own.”

Get ready to hear more of that tune.