NY Times: A Call for Fairness

For Immediate Release:

September 19, 2011

Contact:

Editorial
NY Times

This time, President Obama did not compromise with himself beforehand, or put out a half measure in hopes of luring nonexistent Republican support. This time, he issued an unabashed call for economic fairness in cutting the federal deficit, asking as much from those on the economy’s upper rungs as from those lower down whose programs may be trimmed.

And this time, standing in the Rose Garden on Monday, he seemed to speak directly to a public that has been parched for farsighted leadership in Washington. The one troubling note of the day was Mr. Obama’s failure to provide enough specifics on some of his proposals, and his aides’ inexplicable continued faith in the idea of Congress working out a sensible middle ground on taxes.

But the president’s plan to cut $3.6 trillion from the deficit over the next 10 years is a well-proportioned mix. It proposes about 60 percent spending cuts (including winding down two wars that his predecessor started fighting off the books with the eager support of the supposedly fiscally responsible Republicans in Congress) and 40 percent tax increases on the wealthy and corporations.

It pays for the desperately needed jobs plan he sent to Congress last week without more mindless hacking at government programs, and would be a much better alternative to the $1.2 trillion in across-the-board spending cuts that loom if Congress does not pass a debt plan this year.

Republicans will, of course, mount obdurate opposition in Congress, since they have no intention of allowing the government to ask anything from the wealthy and corporations. Even before the plan was announced, the party’s leaders had rolled out their rusted artillery, calling an increase in taxes on high earners “class warfare” and insisting that it would fatally wound “job creators.” (In fact, less than 2 percent of the nation’s small businesses would be affected by the tax increases.)

For once the president did not let that predictable line of argument stop him, and even had a good rejoinder: “This is not class warfare. It’s math. The money is going to have to come from someplace.” It could come from the middle class, from the elderly and the poor, by asking them to give up benefits from programs like Medicare, Medicaid and food stamps — as many Republicans are advocating. It could come by pulling money from road building, schools, food inspection and other vital government services.

Those are unacceptable choices, he said, particularly if the rich give up nothing, and he made it clear he would veto any plan that cut Medicare but did not raise revenue from the rich. He called for Congress to rewrite the tax code to ensure that the rich pay the same effective tax rate on their income as the middle class. (He referred to Warren Buffett, who famously said on our Op-Ed page that his secretary pays a higher rate than he does.) It’s time Washington fought as hard for the middle class, he said, as lobbyists fight for billionaires and corporations.

That’s the kind of language Mr. Obama needs for the campaign trail next year, to draw a strong comparison with Republicans who may well start to be seen as fighting for the interests of a small moneyed elite.

But the president would have done better to tell Congress precisely how the Buffett Rule should work, instead of laying out broad principles and hoping a divided and leaderless group of lawmakers would figure it out themselves. As he did during the debt ceiling fight, he called for the expiration of the Bush tax cuts for families making more than $250,000 (which would bring in $866 billion over a decade) and limiting the same group’s itemized deductions (saving $410 billion). But as Mr. Buffett has pointed out, most millionaires benefit from an extremely generous 15 percent tax rate on investment income. Mr. Obama should have explicitly called for an increase in that rate.

White House aides have said the president is open to other methods of equalizing the burden, including changing the alternative minimum tax — which now affects many middle-class taxpayers — to apply specifically to millionaire-level income, and at a much higher rate.

Treasury Secretary Timothy Geithner said the administration did not want to give Congress a detailed road map of tax reform, but that will leave the field to special-interest lobbying, partisan fear-mongering and dithering. Raising capital-gains taxes is the most reliable way to make sure the richest Americans don’t avoid taxes.

On the spending side, the president’s plan takes a sensible approach toward saving money in Medicare and Medicaid. More than 90 percent of the $248 billion in Medicare cuts over 10 years would come from reducing payments to drug companies and health care providers that are unnecessarily high. The effect on the elderly would be limited, with higher premiums for high-income beneficiaries starting in 2017, and increased deductibles for new beneficiaries. Mr. Obama proposed a modest cut of $66 billion in Medicaid over a decade, well below the Republicans’ proposed $770 billion cut.

Mr. Obama also asked military retirees to pay increased contributions for health benefits, bringing that expensive system more in line with private-sector plans.

After nearly three years of destructive compromise and concession on the budget, this plan was far too late in coming. But the public is listening now, and has demanded shared sacrifice. The burden is now on Mr. Obama to sell his plan, and on Congress to buy it.