In his deficit cutting speech today Obama offered no compromise or negotiation on raising taxes on the rich. Grand bargaining has been forgotten as the fight for America’s future begins.
Here is the video from MSNBC:
After repeating his call to pass the American Jobs Act, and running through the details of his spending cuts Obama said,
I’m proposing real serious cuts in spending. When you include the $1 trillion in cuts I’ve already signed into law, these would be among the biggest cuts many spending in our history, but they’ve got to be part of a larger plan that’s balanced. A plan that asks the most fortunate among us to pay their fair share just like everybody else. and that’s why this plan eliminates tax loopholes that primarily go to the wealthiest taxpayers and biggest corporations, tax breaks that small businesses and middle class families don’t get, and if tax reform doesn’t get done, this plan asks the wealthiest Americans to go back to paying the same rates they paid during the 1990s before the Bush tax cuts.
I promise it’s not because anybody looks forward to the prospects of raising taxes or paying more taxes. I don’t. In fact, I’ve cut taxes for the middle class and small businesses and through the American Jobs Act, we cut taxes again to put more money in the pockets of people, but we can’t afford these special lower rates for the wealthy. Rates by the way, they were meant to be temporary. Back when these tax cuts in 2001, 2003 were being talked about, they were talked about as temporary measures. We can’t afford them when we’re running these big deficits.
Now, I am also ready to work with Democrats and Republicans to reform our entire tax code. To get rid of the decades of accumulated loopholes special interest carve outs and other expenditures that stack the deck against small business owners and families who can’t afford fancy accountants. Our tax code is more than 10,000 pages long. If you stack up all the volumes, they’re almost five feet tall. That means that how much you pay often depends less on what you make, and more on how well you can game the system, and that’s especially true of the corporate tax code.
We’ve got one of the highest corporate tax rates in the world, but it’s riddled with exceptions and special interest loopholes, so some companies get out paying a lot of tacks while the rest of them have to end up footing the bill. This makes our entire economy less competitive and our country a less desirable place to do business. That has to change. Our tax code shouldn’t give an advantage to companies with best connected lobbyists. It should give the advantage to companies that invest in the United States and we can lower the corporate rate if we get rid of all these special deals.
So, I am ready. I am eager to work with Democrats and Republicans to reform the tax code to make it simpler, fairer and make America more competitive, but any reform plan will have to raise revenue to help close our deficit. That has to be part of the formula, and any reform should follow another simple principle. Middle class families shouldn’t pay higher taxes than millionaires and billionaires. That’s pretty straightforward. It’s hard to argue against that. Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett. There’s no justification for it. It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million.
Anybody who says we can’t change the tax code to correct that, anyone who has signed some pledge to protect every single tax loophole so long as they live, they should be called out. They should have to defend that unfairness. Explain why somebody who’s making $50 million a year in the financial markets should be paying 15% on their taxes when a teacher making $50,000 a year is paying more than that. Paying a higher rate. They ought to have to answer to that. and if they’re pledge to keep that kind of unfairness in place, they should remember the last time I checked, the only pledge that really matters is the pledge we take to uphold the Constitution.
We’re already hearing the usual defenders saying this is just class warfare. I reject the idea that asking a hedge fund manager to pay the same tax rate as a plumber or teacher is class warfare. I think it’s just the right thing to do. I believe the American middle class who have been pressured relentlessly for decades believe it’s time that they were fought for as hard as the lobbyists and some lawmakers have fought to protect special treatment for billionaires and big corporations.
Nobody wants to punish success in America. What’s great about this country is our belief that anyone can make it and everybody should be able to try. The idea that any one of us could open a business or have an idea and make us millionaires or billionaires; this is the land of opportunity, that’s great. All I’m saying is that who have done well, including me, should pay our fair share in taxes to contribute to the nation that made our successes possible. We shouldn’t get a better deal than ordinary families get and I think most wealthy Americans would agree. If they knew this would help us grow the economy and deal with the debt that threatens our future.
It comes down to this. We have to prioritize. Both parties agree that we need to reduce the deficit by the same amount, by $4 trillion. So what choices are we going to make to reach that goal? Either we ask the wealthiest Americans to pay their fair share in taxes or we have to ask seniors to pay more for Medicare. We can’t afford to do both. Either we gut education and medical research or reform the tax code so that the most profitable corporations have to give up tax loopholes that other companies don’t get. We can’t afford to do both.
This is not class warfare. It’s math. The money’s going to have to come from some place. and if we’re — if we’re not willing to ask those who have done extraordinarily well to help America close to deficit, and we are trying to reach that same target of $4 trillion, then the logic, the math says everybody else has to do a whole lot more. We’ve got to put the entire burden on the middle class and the poor. We’ve got to scale back on the investments that have always helped our economy grow. We’ve got to settle for second rate roads and bridges and airports, and schools that are crumbling. That’s unacceptable to me. That’s unacceptable to the American people, and it will not happen on my watch. I will not support — I will not support any plan that puts all the burden for closing our deficit on ordinary Americans, and I will veto any bill that changes benefits for those who rely on Medicare, but does not raise serious revenues by asking the wealthiest Americans or biggest corporations to pay their fair share.
We are not going to have a one sided deal that hurts the folks who are most vulnerable. Look, none of the changes I’m proposing are easy or politically convenient. It’s always more popular to promise the moon. Leave the bill for after the next election or the election after that. That’s been true since our founding. George Washington grappled with this problem. He said, towards the payment of debts, there must be revenue. That to have revenue, there must be taxes and no taxes can be devised which are not more or less inconvenient and unpleasant. He understood that dealing with the debt is, these are his words, always a choice of difficulties, but he also knew that public servants weren’t elected to do what was easy. They weren’t elected to do what was politically advantageous. It’s our responsibility to put country before party, to put what’s right for the future.
That’s what this debate is about. Not about numbers on a ledger. Not about figures on a spread sheet. it’s about the economic future of this country and it’s about whether we will do what it takes to create jobs and opportunity while facing up to the legacy of debt that threatens everything we’ve built over generations and it’s also about fairness. It’s about whether we are in fact in this together, and we’re looking out for one another. We know what’s right. It’s time to do what’s right.
In the most direct and bluntest terms that he has yet used in his presidency, Obama called out Republicans and demanded that they explain why they believe that millionaires should not pay their fair share. The concept of fairness was the theme of this entire speech, and he was correct. This isn’t about class warfare. The tax issue is about values and priorities. The question is what do we value more as a country, Medicare or the Bush tax cuts?
By making his argument in moral instead of statistical terms, the President has found his voice and is connecting with people in a way that they can understand. Everyone knows that the Republicans are never going to increase taxes on the wealthy. Anyone who judges Obama’s proposal by the success or failure of the legislation is missing the point. The president is trying to make the argument not only for his own reelection, but also why the House Republicans need to be booted out of office.
The most striking thing about this speech and Obama’s American Jobs Act speeches has been their simplicity. The administration seems to understand now that the vast majority of Americans don’t follow politics very closely, so the message has to be simple and repetitive. Obama’s repetition of phrases like “pass the bill” and “fairness” is not an accident. These phrases are not rhetorical, but messaging devices.
Once again the words negotiate and compromise were nowhere to be found in his speech. Obama separated the tax code issue from increasing taxes on the wealthy. He separated Medicare from rolling back the tax rates to Reagan levels. He is not going to give Republicans a hostage to take. There isn’t going to be a negotiation. This is his plan. Republicans must either accept it, or explain to the voters in 2012 why you are against creating jobs, and the wealthy paying their fair share.
Obama has offered the Republicans no compromise and given them no quarter. The grand bargain is dead, as the street fight for America’s future has begun.