How Obama Plans to Solve Unfair Taxes—and Electoral Distress
Washington has never enjoyed a reputation for its taste in décor, but the room the White House chose this week for a briefing on economic policy displayed a strong, if unrefined, palate for political messaging.
Poster-size photos of President Obama studiously examining a car on the factory floor and glad-handing with hard hat-wearing workers festooned the walls. The message of the day was clear before anyone opened their mouths: This guy sure does love those regular folks and their American dreams. Not even the crown molding or fussy drapes could distract from the Springsteen-ness of it all.
The reason for all this is that April, true to her reputation as the cruelest month, has brought the beginning of the general election campaign for president. Mitt Romney seems to have finally thrown off his Santorum shackles, and this week President Obama pressed on the gas, deriding the former Massachusetts governor in a feisty speech in support of a new GOP budget that dramatically cuts government spending on social programs and lowers taxes for the wealthy, which Obama called “thinly veiled social Darwinism” and “an attempt to impose a radical vision on our country.”
The president’s pointed words speak volumes about his reelection message—Obama is in it for the middle class, and the Republicans aren’t. If the administration has a crystallizing thesis for this argument, it might very well come in the form of the Buffett Rule, a proposed reform in the tax code that would require households making over $1 million to pay a minimum tax rate of 30 percent. Forget everything you heard in the primaries about reproductive rights and marriage equality; this thing really is going to be all about the economy, stupid.
The rule is named for Warren Buffett, the billionaire investor who famously implored, via a New York Times op-ed, that the government “stop coddling the super-rich” with lower tax rates. He noted that while his secretary paid 35.8 percent of her income in taxes, he paid 17.4 percent thanks to a variety of tax breaks and the large amount of his income that comes from investment gains. The average tax rate for a married household with two children making a combined $80,000 is about 11.4 percent. Romney, a perfect foil to Obama’s everyman posturing, pays a tax rate just below 14 percent and has gone on the record against the proposed reform of the tax code.
“You’re going to choke off a lot of the capital that goes into creating new enterprises and creating jobs… you’ll choke off the growth of America’s economy,” Romney said after the Buffett Rule’s rollout in January’s State of the Union address.
But over the last 50 years, the average tax rate for the wealthiest Americans has been cut in half. The rates for the middle class have drifted upward, something the Obama administration is quick to point out, along with the fact that the tax cuts passed by the previous Bush administration did little to stimulate growth in the economy over the last decade.
Next week, in a bit of legislative performance art timed perfectly for Tax Day, the Democrat-controlled Senate is expected to vote on the Buffett Rule. It’s unlikely that the measure will become law—House Republicans roundly oppose it—but that’s not really the point. The White House just wants to get the GOP on the record in support of the super-rich in the hopes that the post-Occupy American psyche won’t like the optics of gazillionaires dodging the tax grind.
"The Buffett Rule is not something we proposed as a way to get the deficit under control,” says Jason Furman, deputy director of the National Economic Council, said. “It was something that’s a basic principle of tax fairness… whether it raises 47 million or 47 trillion or anything in between.”
The administration is getting hands-on in its efforts to promote its association with a fair and transparent tax process, launching the Federal Taxpayer Receipt, an online program that allows users to see how much of their tax payments go to certain government programs. The page features a bold-faced blurb about the “1,470 people who made more than $1 million in 2009 paid $0 in federal income taxes.”
“I think people across the political spectrum understand that our tax system isn’t as fair as it should be,” President Obama said during a ‘surprise’ appearance at the briefing. “[The Buffett Rule] is something that I think the vast majority of people agree with when they have that information, when they see that there are hundreds of not just multi-millionaires, but billionaires, that are able to drive down their tax rates to a very low level at the same time as there are people who are solidly middle class who have significantly higher tax rates.”
While voters might connect with Obama’s message of righteous anger over income inequality, the Buffett Rule and accompanying hoopla are also a clever way to frame the economic debate around in a way that benefits Obama. The administration is all too aware of its economic weaknesses in 2012—the euphemistic term “headwinds” was used several times by different officials to gloss over a number of sticky questions ranging from the price of gas to the slow rate of jobs growth. No one is in the business of painting a rosy picture of things this time around, although they have a few ideas for who to blame.
Gene Sperling, director of the National Economic Council, chided Republican opposition to the president’s infrastructure proposals, saying that if Congress had approved the measure, along with provisions to prevent teacher layoffs, the country would be getting unemployment under 8 percent. “There will never be a better time than right now for a significant acceleration of our infrastructure,” Sperling said. “When will there ever be lower interest rates, when will there ever be more construction workers hungry to get back to work?”
With plenty of voters still feeling the pinch close to home, Obama's message can't be on economic performance alone, but the White House believes their guy has the common touch—especially when he's talking about fair taxes. That makes all the difference when you’re running against a man with car elevators in his garage.
Asked to respond to Romney’s assertion earlier this week that he had lost touch with the personal finance situations of ordinary Americans, the president grinned. “Our personal finances, not having to worry about bills at the end of the month, gas prices or what have you, really weren’t stable until fairly recently, so in that sense, I would say Michelle and I have had a quintessentially middle-class experience,” the President said. “I expect this is a contrast to some of the presidential candidates who are out there. So, in terms of who’s in touch and who’s not with what ordinary folks are going though day to day, I have no problem with people making that comparison.”
Watch out, America, it’s going to get personal. At least on the internet.
Photo courtesy of the White House