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What was said: President Obama has been hammering the so called “Buffett Rule” as a key part of his 2012 campaign and an important way to distinguish himself from Republicans on issues of economic justice and deficit reduction. Obama was in Florida today pushing the Buffett Rule, while his administration released a new report on it. From the White House’s Buffett Rule report:
The Buffett Rule is the basic principle that no household making over $1 million annually should pay a smaller share of their income in taxes than middle-class families pay. Warren Buffett has famously stated that he pays a lower tax rate than his secretary, but as this report documents this situation is not uncommon. This situation is the result of decades of the tax system being tilted in favor of high-income households at the expense of the middle class. Not only is this unfair, it can also be economically inefficient by providing opportunities for tax planning and distorting decisions. The President has proposed the Buffett Rule as a basic rule of tax fairness that should be met in tax reform. To achieve this principle, the President has proposed that no millionaire pay less than 30 percent of their income in taxes.
Whom the statement is for: The Buffett Rule is a well tested political idea that is meant both to rally the Democratic base and to appeal to moderate voters. Polls have consistently shown majority support for raising taxes on the rich to reduce the deficit. An AP-GFK poll from February found that 65 percent of the country favors the Buffett Rule.
Talking about this tax change also has the added benefit of highlighting how rich Mitt Romney is and the fact that he pays only about 14.5% in taxes. It makes Romney look out of touch and can potentially increase personal animosity towards an already unliked politician.
Does he really mean it/The record: Obama has a pretty poor track record on fulfilling his campaign promises to raise taxes on the rich. Ending Bush tax cuts for those making over $250,000 a year was a huge part of Obama’s 2008 campaign, yet after his election he made almost no effort to fulfill it.
Despite holding historically big majorities in Congress Obama did not push Democrats to quickly end the Bush tax cuts in early 2009. Obama did not ask the Senate to include budget reconciliation instructions to make it easy to eliminate them with a simple majority in the Senate. Finally, when they were about to expire, Obama agreed to extend them as part of a broader deal.
One would be remiss not to question Obama’s commitment to the Buffett Rule, given that he only started really pushing for it after Democrats lost the House, making its passage very unlikely. In fairness to Obama he has now spent so much time pushing for it that not trying to get it adopted would make him look terrible.
Likelihood it will ever actually happen: about 16% It is unlikely that Congressional Republicans would ever vote for the Buffett Rule, although there is probably a 2-3% chance they might accept it as one part of some larger, heavily lop-sided deficit deal that Obama still seems determined to achieve.
Most likely the only way the Buffett Rule will be approved is if Obama wins re-election and Democrats control both the House and the Senate. Currently Intrade puts the odds of Democrats winning the House at only 31.5% and that is probably too high.
Even if Democrats win control of Congress there is no guarantee they would even adopt the Buffett Rule. Again, think back to their handling of the Bush Tax cuts for the rich in 2009, and that was after winning historically big majorities. There is no way Democrats will win majorities that big this November. At best I think the chances of a victorious Democratic party actually implementing the Buffett Rule is only 50/50. All factors combined that gives you about a 15-16% chance of it ever happening.
Hedge fund managers are huge donors to both parties, and they have been very successful at protecting their unpopular tax breaks over the years. Betting they will eventually win again in our political system is normally a safe bet.
16 Comments
Jon, not to beat a dead horse but we know the Buffett Rule is kabuki for several reasons, among them the ones you mentioned. But there is something far more fundamental than that. If Obama truly wanted to raise taxes on the Rich , he merely has to refuse to sign an extension of the Bush tax cut. Just as he could have done in 2010. That is within Obama’s power, which is precisely why he isn’t doing it. The Buffett Rule is beyond Obama’s power and that is why he’s campaigning on it. The kabuki is think and dank.
If you’re a 1%er you can count on Zero. If you’re a 99%er don’t believe a word of the silver tongued huckster.
Didn’t Axe just say Obama would let the Bush/Obama tax cuts for the wealthy expire? Eh? I have trouble believing these people.
More hopey changey.
Didn’t know the Panderer-in-Chief was in Florida today. That explains the disgusting odor of hypocrisy that’s permeated the state.
More eleventy seven dimensional chess no doubt. Without looking, I’ll bet the Daily Kos is cheering him for this, Right?
spot on – if Obama will not promise to allow the Clinton rates to come back for all – with the Democratic Party making the same promise – you can add one more item to proof that the Democratic Party doesn’t give a damn about fairness or the debt or getting higher revenues.
The logic of letting the Clinton rates return, with new tax laws to help the middleclass (via tax cuts) proposed after the election (with the new tax cuts financed by loophole closing on the rich), is rock solid. Any other approach is just a dance to divert attention until the next grand bargain.
But good luck getting Obama on record endorsing the above approach.
So given Obama will never endorse letting the Clinton rates return for everyone, it is hard to see a reason to worry about a win by Mitt if you are on the left – we get the same next 4 years of sell outs to the rich no matter who wins, and indeed we may get fewer sell outs with Mitt as the Senate Dems may actually use the 60 vote rule to stop a non-Democratic Party president.
The problem is the low rates on capital income (carried interest, dividends and long term capital gains). It causes a real horizontal equity issue, Peyton Manning’s $18 million salary is taxed at 35%, while a hedge fund manager making the same amount is taxed at 15%. Not the greatest injustice in the world, Manning will be fine either way, but it makes it much harder to make the income tax more progressive (vertical equity) without tackling horizontal equity first. Most of the income of people on the Forbes 400 richest people is capital income.
What would the President propose if he was serious about getting something passed? Eliminate the low capital income rate and tax all income, “from whatever source” with the same income tax rates– this would divide the 1% between those already paying 35% and those only paying 15%. Next, he could put the Republicans on the spot by designing it to comply with Grover Norquist’s no new taxes pledge. It has two parts:
ONE, oppose any and all efforts to increase the marginal income tax
rates for individuals and/or businesses; and
TWO, oppose any net reduction or elimination of deductions and
credits, unless matched dollar for dollar by further reducing tax rates.
The top income tax rate isn’t going up from 35%. In fact, eliminating the deductions and credits (a term so broad it can mean anything) given to capital income can be matched “dollar for dollar” to reduce all the tax rates across the board (reducing all tax rates, to spitball it, by a tenth).
The President could dare the Republicans to vote against giving everyone a revenue-neutral permanent tax cut that doesn’t violate the taxpayer protection pledge they’ve signed. But he won’t of course, this is all an exercise in changing poll numbers, not tax policy.
He has had his chance to end the Bush/Obama tax cuts. That train has left the station. GWB: fool me once, fuck me, and you ain’t gonna fool me again.
What is this evil man thinking? He lied to us once, when he ran on raising taxes on the rich. Does this brown-eyed handsome man think we’ll fall for his shit again?
Indeed. Yer cherry’s gonna be pushed so far back you could use it for tail light, no matter who’s elected.
Opinion shades as to whether it might be more advantageous for Obama to lose in November from a progessive view. I tilt in that direction, but, either way, it’s raw dog.
Yes, it will never happen.
This is the best time of the campaign for Obama. No attention on him and his record. All attention on the GOP circus.
And, all he can manage is a few percent increase in approval?
If that is the best he can do during the most advantageous time for him, he’s in trouble.
Ahh yess…Lucy Obama yanks the football away once again.
At last, change I can’t believe in.
Consider where we are:
The other day JW posed the query of what Obama hopes to accomplish in a second term? From what I saw, nobody had an answer that didn’t involve cutting the social safety net through Obama’s beloved “Grand Bargain.” Now we bear the spectacle of Team Obama centering its campaign on “tax fairness” when the scheme is a half-hearted farce: Obama knows the House won’t pass the Buffet Rule and it’s almost as likely that the Senate won’t either. And almost no one believes any longer that Obama has any serious intention of letting the Bush-Obama tax cuts expire on the Rich. And now we see that most people expect Obama’s key second term initiative to be cutting the social safety net. So Obama’s re-election campaign is a kabuki dance of economic populism when what he actually intends is a flat-out assault on the very basis of Middle Class American economic security. Do you feel the tingles of hope and change?
Vote Green in 2012. Jill Stein for President.
Maybe we shouldn’t be so harsh on Obama, maybe it’s the times we live in. It’s hard not to notice, in its “about us” section FDL still describes itself as “progressive”. It doesn’t seem very “progressive” that Jon finds a need to even minimally shelter Obama from the criticism he deserves. Why write that Obama deserves “almost no credit” when he DESERVES NO CREDIT? Why not write, OBAMA DESERVES ALL THE BLAME for extending ….?
Check out Glenn Greenwald today to get a clearer idea of how the “democratic ideals” Progressives consider critically important are no longer a consideration for our leading “independent” Dem. analysts & commentators.
http://www.salon.com/writer/glenn_greenwald/