2012 Tuesday: Obama gives ‘tax the rich’ one more heave
We learned a few things yesterday with President Obama’s announcement that he wants to extend the current individual income tax rates for one more year, but only for those making less than $250,000 a year:
- The current rates — commonly described as the “Bush tax cuts” even though they have been in full force for nine years, two years of which required Obama’s signature — apply to more than just “the rich.” Otherwise, how could they be extended for everyone who isn’t rich?
- Even Obama understands that the economy is still too weak to withstand a major tax hike during the next presidential administration (his second, or Mitt Romney’s first). That is a pretty strong, if tacit, admission that his entire first term has failed to see a middle-class recovery of any consequence, just a stop to the bleeding — at most. Once upon a time, he theorized that such a result would lead to a “one-term proposition” for himself.
- This move has nothing to do with being serious about the deficit, because the vast majority of the budgetary effects relate to the rates for sub-$250,000 earners, and always have.
- If Obama were serious about the deficit, he would join other notable Democrats — and Republicans — in embracing the proposals of the Bowles-Simpson report he commissioned. Among other things, this would mean lowering rates across the board, while broadening the tax code to eliminate loopholes, carve-outs and subsidies/spending disguised as tax breaks.
- If it doesn’t have anything to do with the deficit, it’s plainly about politics. But it’s the same “eat the rich” politics that Obama and the Democrats tried in 2010 — and which cost them spectacularly in the midterm elections. Maybe he thinks it will play better this time because his opponent is (like him) a rich guy, but I suspect most Americans still care more about what each candidate’s policies mean for their own wallets than those of other people.
- Even other top Democrats think $250,000 is too low of a threshold: House Minority Leader Nancy Pelosi and Sen. Chuck Schumer previously argued for keeping rates steady for anyone earning up to $1 million. Obama is out of step with his own party’s leadership and trying to lead Democrats even further to the left on this issue.
- This president still doesn’t have any new ideas. Tax the rich, borrow and spend more money, make government bigger with proposals that in some cases have been around for decades — these are the same things he’s been trotting out for four years, with the result of mediocre approval ratings and an electorate sour on the direction the nation is taking.
- There is an enormous opportunity for Romney to talk about the need to avoid the path on which Obama would take us — to explain the benefits of free enterprise and the fairness of rewarding people for the work they do and the risks they take. But he must make that case, and not count on a strategy of criticizing Obama’s class-warfare rhetoric.
The basic campaign messages of each side so far amount to:
Romney: Obama has failed!
Obama: Never mind that; Romney is an evil, rich capitalist!
Of the two, Romney’s message has the better chance of resonating with American voters. But he must pair it with a vision of what success would look like and how he would lead us there. Obama is giving him yet another opportunity to do that. He has to start acting on those opportunities.
– By Kyle Wingfield
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