So how is President Obama’s new economic populism playing with the American people? A month ago, before Obama’s jobs speech to Congress and his change in strategy, Washington Post pollsters asked respondents who they trusted more to create jobs, the president or congressional Republicans. The result was a draw, with a plurality of independents siding with Republicans.
Today, things look quite a bit different. By 15 percentage points, Americans trust Obama more than congressional Republicans to create jobs. Among independents, a five-point margin for Republicans has become a 13-point margin for Obama.
Democrats seem determined to press that advantage. In the Senate, Majority Leader Harry Reid and others have decided to drop Obama’s initial tax-hike proposal on those households making more than $250,000, replacing it with a 5 percent surtax on millionaires. The measure would raise $450 billion, enough to finance the entire Obama jobs package.
According to the Post poll, 75 percent of Americans, including a majority of Republicans, support the surtax. Nonetheless, a spokesman for House Speaker John Boehner dismissed it as a “desperate tax hike gimmick” and congressional Republicans have pledged to defeat it on the grounds that it will destroy jobs.
Interestingly, an editorial in the business-friendly Bloomberg News dismisses that claim as flat-out wrong and cites Republican economists to back up that analysis.
“Look what happened under President Bill Clinton, when the top marginal tax rate was raised to 39.6 percent from 31 percent. Almost 23 million jobs were created, versus the 1.1 million new jobs under George W. Bush’s lower-tax years. Even more compelling: During the golden age of growth in the 1950s, the top tax rate was as high as 91 percent.
Then there is the argument that raising taxes on the rich will damage the small-business owners, many of whom pass their enterprise profits through to their personal income, where it’s taxed. By raising the top rate, the argument goes, entrepreneurs will have less profit with which to expand and hire.
Not really. The No. 1 reason that small-business owners say they’re not hiring is lack of consumer demand, not the burden of taxes. Moreover, a U.S. Treasury Department study of 2007 tax returns, released in August, concluded that only 8 percent of income covered by the top two tax brackets (33 and 35 percent) derived from small-business profits. More than half of small-business earnings were reported by taxpayers in lower brackets, the analysis found.”
(The Bloomberg editorial ends up opposing the millionaires’ surtax on grounds that such burdens ought to be shared more equally. I have some sympathy with that belief, and would be fine with a gradual elimination of the Bush tax cuts on all of us. However, that isn’t likely to happen, and since politics is the art of the possible, the millionaires’ surtax is an acceptable alternative under the circumstances.)
A few other pertinent questions from the Washington Post poll:
– Jay Bookman