FRONT PAGE CONTRIBUTOR
Obamises, Obamises: Are His Tax And Spending Plans Real, or Not?
Start Spreadin' The Wealth...
The media and the Obama campaign have repeatedly told us that the economy is the only issue in this campaign, and that Barack Obama’s proposals, rather than his record, are the only way to judge him on the economy. If they mean it, they will demand that he clarify where he stands on the promises at the core of his tax and spending platforms.
(1) No Taxes Hikes of Any Kind Below $250,000
Obama has made three unambiguous-sounding “read my lips” style promises about taxes and spending in this race. One of these he left himself no room to back away from:
If you are a family making less than $250,000 a year, my plan will not raise your taxes. Period. Not income tax, not payroll tax, not capital gains tax, not any of your taxes. And chances are you will get a tax cut.
I suppose the Clintonian wiggle room there is the “my plan,” present tense, and those of us who are familiar with the Democrats’ M.O., who remember Bill Clinton throwing his middle class tax cut under the bus barely weeks after being elected, and who (as the McCain camp has pointed out relentlessly) saw Obama vote for a party-line budget resolution that would have extended tax hikes much lower down the income ladder know that Obama is highly unliklely to keep this promise. But it has, in fact, been stated with such clarity that if elected, Obama will properly be found to have lied to the American people if he breaks it by raising any tax of any kind paid by anyone with an income below $250,000. George H.W. Bush can tell you how that worked out.
(2) Tax Cuts For 95% of…Who?
Here is Obama in the second debate: “I want to provide a tax cut for 95 percent of Americans, 95 percent.”
Is that 95% of current federal taxpayers? 95% of all households? 95% of all Americans, including children? Phil Klein of the American Spectator has tried to get the Obama campaign to clarify who this is 95% of and what the plan actually consists of (what rates, if any, will go down, for example), and can’t get an answer (this in contrast to, say, the Bush tax cut plan in 2000, which was famously detailed).
All but the clean car credit would be “refundable,” which is Washington-speak for the fact that you can receive these checks even if you have no income-tax liability. In other words, they are an income transfer — a federal check — from taxpayers to nontaxpayers. Once upon a time we called this “welfare,” or in George McGovern’s 1972 campaign a “Demogrant.” Mr. Obama’s genius is to call it a tax cut.
The Tax Foundation estimates that under the Obama plan 63 million Americans, or 44% of all tax filers, would have no income tax liability and most of those would get a check from the IRS each year. The Heritage Foundation’s Center for Data Analysis estimates that by 2011, under the Obama plan, an additional 10 million filers would pay zero taxes while cashing checks from the IRS.
The total annual expenditures on refundable “tax credits” would rise over the next 10 years by $647 billion to $1.054 trillion, according to the Tax Policy Center. This means that the tax-credit welfare state would soon cost four times actual cash welfare. By redefining such income payments as “tax credits,” the Obama campaign also redefines them away as a tax share of GDP. Presto, the federal tax burden looks much smaller than it really is.
The political left defends “refundability” on grounds that these payments help to offset the payroll tax. And that was at least plausible when the only major refundable credit was the earned-income tax credit. Taken together, however, these tax credit payments would exceed payroll levies for most low-income workers.
To any sane person, sending a check to someone who does not pay taxes is called “spending,” not tax cuts – a policy of taxes and spending designed explicily for purposes not of financing the government’s necessary operations but to “spread the wealth around,” as Obama now-famously told Joe the Plumber, or “for purposes of fairness” as he told Charlie Gibson in the debate back in April.
Obama should be forced to come clean: 95% of who? Will he cut any tax rates, or just offer to cut a bunch of checks? If he won’t clarify his promise, he can fairly be blamed for breaking another pledge if the percentage of current federal taxpayers whose tax liability doesn’t go down under an Obama Administration ends up being, as most of us expect, vastly lower than 95%.
(3) Has Obama Abandoned His Promise of a Net Spending Cut? Where are the Loopholes?
Here’s Obama in the second debate again:
[W]hat I’ve proposed, you’ll hear Sen. McCain say, well, he’s proposing a whole bunch of new spending, but actually I’m cutting more than I’m spending so that it will be a net spending cut.
Pretty unambiguous: he has promised the American people a net reduction in federal spending. Even if we assume that Obama (silently) excludes spending on existing entitlements from that calculation, it’s another read-my-lips promise he can be held to, and that he is 100% certain to break if elected.
Now here is Obama in the third debate – watch carefully:
OBAMA: Well, first of all, I think it’s important for the American public to understand that the $750 billion rescue package, if it’s structured properly, and, as president, I will make sure it’s structured properly, means that ultimately taxpayers get their money back, and that’s important to understand.
But there is no doubt that we’ve been living beyond our means and we’re going to have to make some adjustments.
Now, what I’ve done throughout this campaign is to propose a net spending cut. I haven’t made a promise about…
SCHIEFFER: But you’re going to have to cut some of these programs, certainly.
OBAMA: Absolutely. So let me get to that. What I want to emphasize, though, is that I have been a strong proponent of pay-as- you-go. Every dollar that I’ve proposed, I’ve proposed an additional cut so that it matches.
OBAMA: And some of the cuts, just to give you an example, we spend $15 billion a year on subsidies to insurance companies. It doesn’t — under the Medicare plan — it doesn’t help seniors get any better. It’s not improving our health care system. It’s just a giveaway.
We need to eliminate a whole host of programs that don’t work. And I want to go through the federal budget line by line, page by page, programs that don’t work, we should cut. Programs that we need, we should make them work better.
Now, what is true is that Senator McCain and I have a difference in terms of the need to invest in America and the American people. I mentioned health care earlier.
If we make investments now so that people have coverage, that we are preventing diseases, that will save on Medicare and Medicaid in the future.
If we invest in a serious energy policy, that will save in the amount of money we’re borrowing from China to send to Saudi Arabia.
If we invest now in our young people and their ability to go to college, that will allow them to drive this economy into the 21st century.
But what is absolutely true is that, once we get through this economic crisis and some of the specific proposals to get us out of this slump, that we’re not going to be able to go back to our profligate ways.
And we’re going to have to embrace a culture and an ethic of responsibility, all of us, corporations, the federal government, and individuals out there who may be living beyond their means.
Some of Obama’s blogospheric supporters on the far left, like Matt Stoller and Firedoglake, think that line about “once we get through this economic crisis and some of the specific proposals to get us out of this slump” means that he’ll suspend his “pay as you go”/”net spending cut” promise for as long as he can say we are working to get out of a slump. On the Right, Soren Dayton and Jon Henke agree with Stoller’s reading. (Ezra Klein noted in 2007 that Obama promised YearlyKos that he would not treat many of his new spending programs as subject to “PayGo” rules – he may be creating a loophole for himself by calling them “investment,” although he revealed none of that in the debates.)
Me, I don’t see it; I think a natural reading of Obama’s statement was that he was promising that the spending discipline he claims to be imposing would persist even after budgetary good times returned. But the media should press him to commit on this. Those of us who recall the porous “firewall” of the “peace dividend” debates of 1991-94 remember well how skilled Congressional Democrats are at coming up with “exceptions” to spending rules that allow them to spend money they promised not to spend.
On that note, Obama should answer two more questions. One, which I think his plan already answers, is that he’s not going to count cutting his “spread the wealth” checks to non-taxpayers as spending. If you can hand out a trillion dollars in checks, your political need to “spend” is greatly alleviated.
The second is whether he’s planning to support billions in additional spending pushed by his party’s Congressional leadership on top of this year’s budget, in special sessions after the election:
After consulting with Barack Obama, Democratic leaders are likely to call Congress back to work after the election in hopes of passing legislation that would include extended jobless benefits, money for food stamps and possibly a tax rebate, officials said Saturday.
The bill’s total cost could reach $150 billion, these officials said.
The officials stressed that no final decisions have been made. They spoke on condition of anonymity, saying they did not want to pre-empt a formal announcement. House Democrats have announced plans for an economic forum on Monday “to help Congress develop an economic recovery plan that focuses on creating jobs and strengthening our economy.”
Democrats said Obama’s campaign has been involved in discussions on a possible stimulus package.
If Obama is planning to push $150 billion in new spending in November, will he insist on a net spending cut, or is this yet another loophole so he can tell the American people one thing and do something completely different?
Or will the press just focus on Joe the Plumber’s record?