President Obama outlined his plan to reduce the nation’s deficit this week with an unapologetic call for higher taxes on the wealthy. The plan proposes $2.1 trillion in cuts to defense, health-care, and nondiscretionary spending, and $1.5 trillion in new taxes on corporations and Americans earning over $250,000 a year. It also includes a special tax on millionaires, nicknamed the “Buffett Rule” after billionaire financier Warren Buffett, who has argued that the rich should pay higher taxes. The plan would save the government $3.2 trillion over the next decade, and would pay for the jobs bill proposed by the president two weeks ago. Adopting an aggressive new tone, Obama warned Congress that he would veto any “one-sided” deficit-reduction bill that cut Medicare benefits without asking wealthy Americans to contribute more. “This is not class warfare, it’s math,” Obama said. “The money is going to have to come from someplace.”
Republicans, who have ruled out revenue increases as part of a deficit-cutting deal, said that raising taxes on the rich would unfairly target small-business owners and job creators. “Class warfare may make for really good politics,” said Rep. Paul Ryan, “but it makes for rotten economics.”
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What the editorials said
It’s only fair to ask the rich to pay more, said the Newark, N.J., Star-Ledger. “The facts on America’s growing class divide are irrefutable.” The wealthiest 10 percent reaped “100 percent of the gains” of the past two decades of economic growth, while the other 90 percent worked harder and longer and saw their incomes stagnate or decline. Our economy has undergone a dramatic transformation, said The Boston Globe, making tax reform necessary. Government investment in research and protection of intellectual property—not to mention billions in Wall Street bailouts—have helped the financial and tech sectors boom, enriching “private-equity investors and high-tech businesses.” Surely millionaires whose incomes have grown exponentially can afford to “kick in more” without hurting the economy.
But wealthy Americans are already paying their fair share, said The Wall Street Journal. IRS data show that those who earned $1 million or more in income paid federal income taxes at an average rate of 23.3 percent, while those who earned between $50,000 and $100,000 paid 8.9 percent. Warren Buffett’s famous charge that CEOs regularly pay lower tax rates than their secretaries is pure “Omaha hokum.” Obama’s proposal isn’t “tax justice,” or even good policy. “It is all about re-election politics.”
What the columnists said
Obama’s “militant tax-hike threats” are a sign of desperation, said Larry Kudlow in NationalReview.com. With unemployment stuck at 9 percent, he’s now relying on “liberal-left class-warfare ideology” to convince voters that the rich are to blame for their lack of jobs, instead of failed Obama administration policies. It remains to be seen whether voters will be taken in by this “con job,” said Terence Corcoran in FinancialPost.com. A “demagogic class war” may not be enough to hide the increasingly apparent “failure of Obamanomics.”
Unfortunately for Republicans, said Derek Thompson in The Atlantic, raising taxes on the rich “polls spectacularly well.” Americans support increasing taxes on wealthy families by two-to-one, according to a Gallup poll, and only 26 percent oppose raising taxes on corporations. Little wonder the Obama administration wants to turn the 2012 election into a referendum on whether the wealthy have a responsibility to pay more if Grandma has to give up some of her benefits. “This is the debate it thinks it can win.”
Say goodbye to the Great Compromiser, said Ezra Klein in The Washington Post. Obama has finally realized the GOP has no interest in a Grand Bargain, and has made him look weak and ineffectual by blocking his every move. So now he’s demanding that Republicans raise taxes on the rich, while knowing full well they’ll pay a political price for refusing. This isn’t the conciliatory path Obama instinctively prefers. “It is, let’s admit it, politics-as-usual.” But having failed to change Washington, the White House must now play by its rules. “It’s the only option they have left.”
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