DEMOCRATS SAY he is simply being realistic about addressing the budget crisis, and at last doing so with an eye to their political base. That billionaires have to – and Warren Buffet says want to – pay their fair share. Republicans, that President Barack Obama is engaged in “class war” and not budget-fixing but electioneering. Obama insists “This is not class warfare. . . It’s maths. The money is going to have to come from someplace.”
Who’s right? All the above. The aspirations and analysis are not mutually exclusive. And, in truth, the best hope for budget reform and discipline lies in Obama’s re-election next year.
On Monday, in a speech in the White House Rose Garden, the president reopened the thorny deficit debate with a package of proposals that sought $1.5 trillion in new taxes as part of a plan to find $3.2 trillion in budget savings over the next decade. Last week’s jobs initiative would be funded and tax increases would come only from millionaires, he insisted. And he made it clear he would veto any plan that cut medical support to the old but did not raise revenue from the rich. (The top 400 wealthiest Americans paid an average income tax rate of 16.6 per cent in 2007, while the average middle class taxpayer is levied at the standard 28 per cent).
The proposals constitute Obama’s contribution to the work of the bipartisan “supercommittee” established as a compromise way through the August debt-ceiling crisis, and which must find $1.2 trillion to $1.5 trillion in savings by November 23rd. If it fails, the federal budget will automatically be reduced by $1.2 trillion starting in 2013, a cut that would be split between defence and domestic spending.
Now apparently convinced that Republican ideological opposition to any form of tax increase clearly makes his repeated appeals for bipartisanship look like weakness, Obama has delighted Democrats by coming out fighting. They saw bipartisanship as merely capitulation to Republicans. Here at last, they say, is something to rally round, a branding that gives them some chance of re-election.
Obama’s non-Republican critics complain, with some justice, that he has still not embraced badly needed root and branch reform of the tax system and that the debt-reduction plan saves only $3 trillion over a decade – well short of the $4 trillion needed. The chances he will, however, get even his limited programme through a Republican-dominated Congress are slim.