Thursday, September 20, 2012

Why Obama is Winning on Taxes

I said relax. I got this.

Something is happening during this Presidential campaign that I never thought I'd see: a Democrat both wanted a debate on taxes and is so far winning it.

It took a few long steps to get there, but it started last year when President Obama began focusing like a laser on Paul Ryan's budget and on the issue of fairness in the tax code. Mitt Romney obliged by running further to the right than he probably needed to in the primary, resulting in him putting out a revised tax/budget plan that was very similar to the Ryan plan.

In 2010 the Republicans re-took the House mainly due to three issues:

1) the distortion on the Medicare "cuts" in Obamacare
2) the deficit/spending cuts
3) the economy

The first was a result of an older whiter electorate and the second was driven by the energy created by the Tea Party and the cynicism of the GOP caring about deficits only when Democrats are President. And the third was expected given the high unemployment rate and the Democrats controlling the entire government. David Frum pointed out, the Republicans cynically won back power without understanding why and then overestimated the electorate's support for their "real" agenda.

So it was a bit of a gift that one of the first major economic or budget visions the GOP put forth after winning the House was a budget that cut taxes on the rich, ended Medicare as we know it, and still didn't balance the budget for 40 years. In one House vote the Republicans lost credibility on the Medicare and deficit issues. And with no plan to create jobs and address this particular economic situation and not the one they wished existed, they began losing support on the economy as well.

Obama and the Democrats spent months earlier this year hitting Romney on Bain and creating narrative that Romney was a heartless CEO unconcerned about the plight of middle class Americans. As Jonathan Chait noted, then Obama began moving to phase 2 earlier in the summer, which was talking the Romney/Ryan budget and tax code fairness. If voters didn't feel Romney really understood and cared about their problems, they'd be more willing to accept Obama's argument about the choice between the two competing visions for the country.

Obama knew the GOP couldn't very well admit that they don't really care about deficits. So he was able to put Romney in a box over his tax plan. If he did indeed want to cut taxes on rich people above all else and since any plan has to be absolutely deficit-neutral, lest he want to annoy the Tea Party and the Randians, then there is no other way to make that plan work without deep spending cuts to popular programs, increasing taxes on the middle class, and/or eliminating or reducing many middle class tax deductions and tax credits through some type of comprehensive tax reform plan. It is now September 20th, and Romney has still yet to reveal any details about how this plan would work.

The Obama campaign deftly called the GOP's bluff on their fake concern over deficits and contrasted it with their overarching goal of lowering taxes on the rich. And they were able to show how there was no way to achieve both of those goals without screwing the middle class. With Romney's lack of credibility with his base he had no room to maneuver or nuance this issue, so he was stuck defending a plan that either can't work or will screw the middle class. All that doesn't fit on a bumper sticker, unfortunately, but the groundwork was laid for months. And enough voters apparently have come to understand this argument. As President Clinton said, it's arithmetic.

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