The president’s speech: Don’t take lead on cuts

The Supers were created to propose the next round of spending cuts. The
President should not jump ahead of them. Why? The demand for his
detailed plan is a GOP trap that has ensnared all the opinion leaders –
even many liberal ones – who have bought into the line that the
president is the one who needs to be “responsible” by being the first
Democratic chief executive to propose cuts to entitlement programs. It
is a false choice with high risk and little chance of reward for the
president.

The greatest threat to Obama’s re-election, as we have written, is not a
right wing GOP nominee but a third party candidate who can credibly say
there isn’t much difference between the two major parties. Entitlement
cuts on top of economic losses risk a working class/senior backlash of
incredible proportions.

Comprehensive tax reform is the top priority of the business community –
the very people Speaker John Boehner and Senate Minority Leader Mitch
McConnell want to please. That’s why the conventional wisdom on the
Supers is wrong. Boehner and McConnell stacked the group with members
willing to trade just about anything for comprehensive tax reform,
especially bipartisan job-creating tax credits.

The quid-pro-quo: Obama must take the lead for comprehensive tax reform,
not tax increases. During the debt-ceiling debates, Boehner declared he
had stuck his neck out for additional revenue increases approaching
$1,000,000.000.000 in the grand bargain negotiations. The White House
never denied it.

For years, business leaders have said their tax burden is too high,
calling it a “job killer” that is undermining America’s competitiveness.
But now they want the Super Committee to back sweeping tax reform,
drastically lowering income tax brackets yet supposedly increasing taxes
paid by nearly $1,000,000,000,000, mostly from the business community!

We concede skepticism about this seeming inconsistency. Business leaders
insist the revenues will come from new growth that today’s tax rates
prevent. But aren’t these the very Bush rates they previously promised
would unlock this growth? They now claim the real problem is an
“inefficient” IRS Code. Yet these “inefficiencies” were advanced by
their own lobbyists. The Clinton boom era tax rates were higher than the
Bush bust years.  The greatest era of real wage growth for middle class
families occurred in the 1950’s-60’s, when business tax rates were even
higher.

Treasury Secretary Tim Geither swears such revenue increases are real.
The President is in a tough spot. Since America’s next generation is
smaller than ever, the country needs the best educated workforce
possible. But our education policies risk economic failure because
leaders will not talk honestly about the growing racial and class divide
they help cause. Liberals can talk fairness 24/7. But without growth,
it is a hollow promise. Our cost of capital – money and human – is too
high. To lower it, everyone needs to raise our sights.

Tax reform promises the revenues needed to satisfy the second round of
spending cuts while not angering core political constituencies. It
further guarantees a rush of pro-job investments before the 2012
election, a private-capital stimulus especially if married to
job-creating tax credits.

The larger truth: Higher taxes per se have never been the bottom line business community concern.

This double whammy marriage of pro-growth/pro-jobs legislation has
another advantage for the President: it puts the GOP presidential
front-runners in a quandary. They opposed the business community on the
debt-ceiling deal. Can the future GOP nominee stiff-arm business a
second time without leaving the political middle – and huge campaign
contributions – to the President? Yet backing any deal with the
president risks their status as true 24/7 anti-Obamacons.

The President should take ownership of the new revenues and all the
jobs. He should not volunteer to take the lead on proposing entitlement
cuts – that’s the Super Committee members’ job, so let them own it.


Paul Goldman is former chairman of the Democratic Party of Virginia.
Mark J. Rozell is Professor of Public Policy at George Mason University.

Tags Boehner John Boehner

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