By Will Marshall - 09/26/11 10:50 PM EDT
President Obama’s plan to raise taxes on the rich has liberals brimming with excitement. Finally, a Democrat who fights back against the plutocracy!
Given the steady erosion of his personal approval rating this year, it’s little wonder that Obama’s tax initiative is having a tonic effect on his demoralized base. Substantively, it’s a frontal assault on the GOP’s anti-tax fundamentalism, which unquestionably has become the chief obstacle to solving the nation’s fiscal crisis.
What’s more, the populist mantle sits on Obama like an ill-fitting suit — it just doesn’t jibe with his essentially rational and equable persona.
Unlike the Washington commentariat, the public isn’t all that interested in Obama’s repositioning(s) along the political spectrum. Against monolithic GOP opposition, it doesn’t matter whether Obama shifts to the center or feints to the left. What Americans want is the man a solid majority of them voted for — a leader who can rise above today’s polarization and rally the country behind a convincing vision for solving the nation’s structural problems and recapturing America’s economic mojo.
Instead, the president’s tax proposal seems designed to strengthen his negotiating position against Republicans in this fall’s deficit-reduction battles. The underlying logic seems to be that we must first put Republicans on the defensive for favoring the rich and powerful and then we can get down to a serious conversation on deficit reduction.
Unfortunately, the president has yet to offer a credible plan for how to get there. When stripped of gimmicks, the blueprint he submitted to the congressional supercommittee achieves only $1.9 trillion in new savings over the next decade. That, says the Committee for a Responsible Federal Budget, doesn’t come near what’s needed (at least $4 trillion in deficit reduction) to stabilize the national debt and put it on a downward slope.
Apart from commendable cuts in farm spending and military healthcare, the president’s new plan ducks serious entitlement reform. There’s no mention of changes — raising the Medicare retirement age and further means-testing benefits — that Obama apparently had embraced in negotiations with House Speaker John Boehner (R-Ohio) during the summer debt-ceiling crisis. There’s nothing on Social Security reform. How can anyone expect Democrats on the supercommittee to go where their president fears to tread?
There’s little doubt that most Americans are on Obama’s side on the narrow question of taxing millionaires. Republicans’ weird solicitude for the wealthy is the tax policy equivalent of their opposition to abortion even when a mother’s health or life is threatened — an abject pandering to right-wing pressure groups. By scaling back tax deductions and exemptions for the highest income earners, Obama might be able to drive a wedge between conservative anti-tax zealots and Tea Partyers who distrust Wall Street and big business.
Even so, his tax offensive entails real costs, teeing up a debate that pits tax hikes for the affluent — which the GOP House certainly won’t pass — against cuts in domestic and defense spending, which will happen automatically if the supercommittee can’t agree on a formula for at least $1.2 in deficit reductions. That’s the worst outcome of all, since it would concentrate the burden of debt reduction on low- and middle-income Americans and undermine economic growth by cutting public investment in science, infrastructure and education.
Second, the “fairness” argument reinforces the myth that jacking up taxes on the rich can somehow spare us from making painful spending cuts. As Obama himself has often said, there’s no way to solve the debt crisis without broadly shared sacrifice. Yet he keeps promising to spare the middle class from higher taxes, which can only mean more drastic cuts in both mandatory and domestic spending.
That Obama is now reduced to tactical maneuvering on taxes is a consequence of his decision not to endorse the plan forged by his own fiscal commission. It achieved a political breakthrough when Republicans agreed to embrace higher revenues in return for tax reform and a Democratic commitment to reforming Social Security. Precisely because it requires commensurate concessions from the two parties, that “grand bargain” remains the only plausible way a divided government can solve the fiscal crisis.
It’s not too late for Obama to take this road. Of course he must be a skillful tactician, but presidential leadership is first and foremost a matter of setting clear goals for the nation — and letting the tactics follow.
Marshall is the president and founder of the Progressive Policy Institute.