September 21, 2011
Editorial
Political spinning and second-guessing have dominated the discussion of President Barack Obama's jobs bill and his 10-year proposal to reduce federal budget deficits.
There's no denying the campaign dimensions of the proposals: Mr. Obama is positioning himself as the candidate of working middle-class Americans who are struggling to survive the crushing economic squeeze of the Great Recession of 2007-2009. And he will portray Republicans as faithful servants of the upper classes.
Republican leaders immediately trotted out accusations of "class warfare," ignoring the disturbing truth articulated by multi-billionaire Warren Buffett several years ago. "There's class warfare, all right," Mr. Buffett declared. "But it's my class - the rich class - that's making war. And we're winning."
Republicans also recycled their tired claims that Mr. Obama's proposals to increase some high-income taxes would wreak havoc among small business people and so-called "job creators."
There is no evidence to support these claims. A 2009 study by the Center on Budget and Policy Priorities calculated that barely 2 percent of small business owners make enough money to qualify for the top two tax brackets, as struggling small business people already know too well. And with unemployment still around 9 percent, it's fair to ask what upper-income "job creators" have been doing since their tax rates were reduced in 2001.
Political positioning aside, some of the ideas in Mr. Obama's proposed jobs bill and his 10-year budget-deficit plan are worth examining on their own terms. "Middle-class families shouldn't pay higher taxes than millionaires and billionaires," Mr. Obama said Monday. No, they should not, but the administration has been short on details for revising the insanely complicated tax code to restore balance and fairness.
One provision Mr. Obama is backing, however, would raise substantial amounts of money to help pay for crucial services and help equalize the responsibility. The idea would reduce the value of tax deductions for the wealthiest Americans to the same value those deductions have for people with more modest incomes.
For example, the mortgage-interest deduction is worth about 35 cents on the dollar to people with adjusted gross incomes above $1.5 million. Under an administration proposal, the value of the deduction would be reduced to about 28 cents on the dollar.
The administration projects that these kinds of changes to tax deductions and exemptions would increase government revenue by some $400 billion over 10 years. About 75 percent of the cost would be borne by those earning more than $1.5 million per year, with the other 25 percent paid by families with adjusted gross annual incomes of at least $275,000, according to Citizens for Tax Justice.
In his remarks Monday, the president invoked the long-standing American principle of shared sacrifice in times of trouble. He also pointed out that the lion's share of sacrifice in these troubled times has been borne by America's middle-class and working poor.
"I will not support - I will not support," he repeated for emphasis, "any plan that puts all the burden for closing our deficit on ordinary Americans.... We are not going to have a one-sided deal that hurts the folks who are most vulnerable."
Republicans may well object to being branded the party of the ultra-wealthy and the multi-national corporations. All they have to do to counter the charge is to produce some policies that prove otherwise.