During yesterday’s White House press conference, NBC’s Chuck Todd tried to pin President Obama down on taxes. “Is there no deal at the end of the year if tax rates for the top 2 percent aren’t the Clinton tax rates, period? No ifs, ands, or buts?” Todd went on to ask whether the president was prepared to draw “a red line.”
Obama did not, saying instead he’s “open to new ideas,” and if lawmakers “have a great idea for us to raise revenue, maintain progressivity, make sure the middle class isn’t getting hit, reduces our deficit, encourages growth, I’m not going to just slam the door in their face.” It led some to suggest the president is already inching towards a major concession, but there’s another way to look at this.
These comments came in response to a separate question from Jessica Yellin, who noted that Obama gave Republicans the extension they wanted two years ago, and asked whether the president might accept new revenue from the wealthy through closed loopholes and fewer deductions, rather than higher rates.
Obama said 2010 was “a one-time proposition,” and made his position unambiguous: “What I’m not going to do is to extend Bush tax cuts for the wealthiest 2 percent that we can’t afford, and according to economists, will have the least positive impact on our economy.”
“I think that there are loopholes that can be closed, and we should look at how we can make the process of deductions, the filing process easier, simpler. But when it comes to the top 2 percent, what I’m not going to do is to extend further a tax cut for folks who don’t need it, which would cost close to a trillion dollars.
“And it’s very difficult to see how you make up that trillion dollars — if we’re serious about deficit reduction — just by closing loopholes and deductions. The math tends not to work.”
This wasn’t laying the groundwork for caving; this was giving Republicans a homework assignment they can’t complete.
In effect, Obama was establishing the parameters for the rest of the debate — if congressional GOP leaders are so desperate to shield millionaires and billionaires from paying a higher top marginal rate, they should try to find a comparable amount of savings from loopholes and deductions. But therein lies the point: there aren’t enough loopholes and deductions to make up the difference. The arithmetic just isn’t there. Which makes Obama’s proposed solution — Clinton-era rates on income above $250,000 — practically unavoidable. As a consequence, Republicans’ challenge isn’t to find imaginary savings in the tax code, it’s to decide whether to force higher taxes on everyone because they’re so committed to tax breaks for wealthy people who don’t need them. What’s more, Obama already looked to the next step, arguing yesterday that if/after Republicans agree to freeze lower rates on the middle class, then policymakers can tackle a larger, comprehensive tax-reform plan, which he said he’s eager to do. There just isn’t much in the way of wiggle room here; Obama said the top rates have to go up, and also said there’s no math that would allow an alternative. As best as I can tell, the president seemed quite resolute on this, leaving the ball in his rivals’ court. Indeed, over the next six weeks, there’s really only one driving question that needs an answer: just how much damage are Republican lawmakers prepared to do in order to protect the wealthiest 2 percent?
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