Barack Obama unveiled his budget proposal for the 2013 fiscal year Monday, a document best understood as a blueprint for how he would contrast his tax policies this fall with those of former private equity titan and likely Republican presidential nominee Mitt Romney.
Pitching his approach as the surest way to continue the economic recovery and warning that the GOP would throw up roadblocks to help the wealthiest Americans at any cost, Obama told supporters at a community college in Northern Virginia that he was no class warrior, just a thoughtful president.
“Right now, we’re scheduled to spend nearly $1 trillion more on what was intended to be a temporary tax cut for the wealthiest 2 percent of Americans,” he said, referring to the tax cuts enacted under George W. Bush in 2001 and 2003 and renewed in 2010. “I don’t need a tax break. We don’t need to be providing additional tax cuts for folks who are doing really, really, really well. Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep investing in everything else — education, clean energy, a strong military, care for our veterans? We can’t do both — we can’t afford it.”
With his plan to let the Bush tax cuts expire for the wealthy — and in particular his proposal to tax investment income at the same rate as regular income, the so-called “Buffett Rule” he rolled out a few weeks ago and featured heavily in his State of the Union address — Obama used the budget to strike a populist contrast with the Republicans seeking his ouster.
“There’s a new provision to tax dividends as ordinary income” said Jared Bernstein, an economist at the Center for Budget and Policy Priorities who worked in the Obama administration from 2009 to 2010. “I’ve not lost hope that the high-end Bush tax cuts could sunset at the end of the year; certainly the president is going to pursue that. But as long as you have this [Republican-dominated] House in place that’s going to be a heavy lift.”
Bernstein is referring to the president’s proposal to raise the rate on dividends from 20 percent to 39.6 percent, where it was at the start of the Bush presidency in 2001. Some $200 billion in revenue would be raised over 10 years. Unlikely to make it through Congress, the tax plan is a marker for friends and foes alike.
“Because our economy has become dangerously lopsided and unequal, we need to follow the President’s lead in giving worker protection agencies the funding they need and asking millionaires to pay taxes at the same effective rates as middle class families,” said Richard Trumka, president of the AFL-CIO.
Gearing up for what one columnist is already calling the most corrupt campaign in history, the president rallied his troops around common goals of progressive taxation and broadly-distributed economic prosperity. He needs the Democratic base of younger voters, union members, African Americans and Latinos, and progressive white liberals to turn out in greater numbers than ever to compensate for what could well be a poorer showing among the white working class than he earned during his 2008 victory.
Obama also managed to steer the national conversation back to how investment income is treated by Uncle Sam, a topic that has been good for his poll numbers. Mitt Romney, on the other hand, has seen his support plummet ever since Newt Gingrich got under his skin by prodding him into releasing his tax returns and thereby giving Americans a taste of just how good the one percent have it these days. He paid about 14 percent of his generous (mostly investment-based) income in taxes.
And whereas Romney fought the president to a statistical tie as recently as November, he trailed 52 to 44 percent in this latest Pew survey.