Yesterday was Tax Day. It's a day most Americans dread, as we scramble to gin up the extra cash owed to Uncle Sam while trying to avoid the smug few who did their taxes early and got refunds. (You know who you are…)
Needless to say, tax season isn't exactly an ideal time to push for tax hikes or defend record-high levels of government spending. And yet, Democrats seem oblivious to national moods on either topic, and have plunged ahead on both fronts.
Last week, President Barack Obama sent his proposal for the FY2014 budget to Congress (more than two months after the deadline for its submission). The White House plans to spend $3.78 trillion in the next fiscal year — the highest level of federal spending yet in the Obama administration. Obama says the budget asks for another $580 billion in tax hikes over the next 10 years, which follow $600 billion in tax hikes over the next 10 years that Obama won in his New Years' standoff with House Republicans.
However, McClatchy reported yesterday, as Americans rushed to file taxes already owed, that Obama only told half of the story on tax hikes in his budget. The actual total for all tax hikes and "fees" in the Obama budget comes to $1.1 trillion over the next 10 years, not the $580 billion announced by Obama in promoting his new proposal. This includes $75 billion in cigarette-tax hikes to fund expanded pre-school education, despite the dubiousness of claims that such warehousing of pre-school-age children actually improves their education. TIME's Joe Klein trotted out this inconvenient truth about the urge to spend more on Head Start despite evidence that it is "nearly worthless" as an example of the incompetence of the Obama administration.
Does the White House believe that tax hikes will be popular? It depends in part on who gets hit by the hikes. Obama won re-election last November by casting Mitt Romney as a villain for, er, following the law to reduce his tax burden, playing the class-warfare card to perfection. The White House spin on Obama's new budget proposal tries the same strategy, which is why Obama conveniently forgot about half of the tax hikes in his own budget. The cigarette tax is particularly regressive rather than progressive, for instance, and won't generate the kind of revenue it projects because it prices smokers out of the habit.
Nor does it help that Obama turned out to be just as sensitive to legal reductions in tax burdens as the opponents his campaign castigated all of last year. MSNBC host Joe Scarborough vented his disgust over the revelation that the Obamas reduced their effective tax rate to 18.4 percent for 2012, rather than set an example for the rest of the nation by eschewing deductions to pay the same rate as their staff. "He wants to jack tax rates up to 39 percent," Scarborough told viewers, "and if you live in Connecticut or New York or Illinois or California, you're paying over 50 percent in taxes after you take the local, the state, and the national! And Barack Obama, class warrior, is playing 18 percent in taxes. … Does 'limousine liberal' apply in this case?"
A Washington Post/ABC poll run perennially at the end of tax season showed that the overall tax system remains popular… among Democrats, 53 percent of whom express favorable impressions of the federal income tax. That stacks up against 66 percent of Republicans and 62 percent of unaffiliated voters who see it unfavorably. A Rasmussen poll released last week showed that voters overwhelmingly reject tax hikes as a way to fix the budget, with almost 63 percent overall opposing — and even a plurality of Democrats saying no (47 percent). With job creation still stalled and the U.S. at a 34-year low in the labor force participation rate, the potential economic damage that tax increases will cause doesn't help, either.
With that it mind, it's worth pointing out the newest effort from Democrats at the other end of Capitol Hill. Attempting to take a page from Grover Norquist and Americans for Tax Reform, Reps. Alan Grayson (D-Fla.) and Mark Takano (D-Calif.) have started a pledge of their own — to vote against any kind of cuts to entitlement programs. The pledge comes in response to one of the few lucid signs in Obama's budget, a switch to chained CPI as the calculation for annual increases in Social Security benefits. (Only in Washington can a reduction in future spending increases be called a "cut," by the way, which is also the case with Obama's proclaimed "spending cuts" in a budget that will spend more than any of his others.)
Despite the fact that the Social Security Administration has sunk into deficit spending for the last couple of years to pay benefits and that trillions in unfunded liabilities are rapidly approaching in Medicare, the group working with Grayson and Takano insist that all is well. "Social Security has a $2.5 trillion surplus, is solvent for decades, and doesn't add to the deficit," Matt Wall, a spokesman for Progressive Change Campaign Committee, told the Daily Caller, calling for new Social Security taxes and claiming that pharmaceutical-market interventions would solve Medicare's problems.
In other words, there isn't a spending cut that Democrats can't demagogue, even when it's not a spending cut at all. That's the core problem with Obama's budget and the reaction from Grayson and Takano. Norquist's pledge has impact because tax hikes remain unpopular, especially when broadly applied, and the tax system itself is particularly unpopular. On the other hand, spending cuts are popular at least in principle, which means a pledge to never cut a government program even to save it from collapse is not going to rival Norquist in throwing weight on Capitol Hill. It's much more likely to be a millstone around the neck of Democrats, along with this Obama budget, and one more piece of evidence that tax-and-spend Democrats have gone back to their roots.
