The President began his public PR effort to get the top marginal tax rates back to their Clinton-era position today, but I think the way he framed his remarks does show a bit of his hand here.
President Obama expressed optimism in a “framework” for deficit reduction being worked out before Washington disperses for the holidays as he urged Congress to act quickly and extend tax cuts for 98 percent of Americans.
“I believe that both parties can agree on a framework that does that in the coming weeks. In fact, my hope is to get this done before Christmas,” he said, flanked by people who the White House said responded to emails asking them how a preserved lower tax rate would help them.
He said an immediate extension of tax cuts for those Americans would allow Democrats and Republicans to focus on long-term deficit reduction.
“Families and small businesses would therefore be able to enjoy some peace of mind heading into Christmas and heading into the New Year. And it would give us more time than next year to work together on a comprehensive plan to bring down our deficits.”
In other words, there’s very little daylight between Obama’s strategy and the one endorsed by House Republican Tom Cole. Get the tax rate discussion out of the way, and then the President will play ball on a larger deficit discussion. Now, John Boehner rejected this approach out of hand, and Erskine Bowles gave Republicans some hope by announcing that the White House would be “flexible” on that top tax rate. (Amazing that this guy was even considered to run the Treasury Department.) But Bowles-Simpson assumed the expiration of the top tax rates, and then a bargain on top of that. This would be the gameplan going forward.
I have to say, the mania with which leading Democrats, from the President on down, just want Republicans to “ditch Norquist” (a DCCC email I got today had the subject line “Ditch him already!”) has gotten weirdly personal, and you have to question the real agenda here. Forcing Republicans to give on taxes has a political advantage, but it also serves a policy goal. Once Republicans part with their base, in the Democratic establishment mind that frees them up to part with their own base. Taxes have always been the fig leaf that allows a deal to go forward. And that means targeting social insurance programs, and keeping public investment at the lowest level since the 1950s, despite massive increases in federal responsibilities. This is what the officialdom wants, and DC Democrats are eager to please.
This puts in perspective the White House’s tough bargaining on the rates issue. They feel it unlocks a whole host of other changes distasteful to their base. The public detests things like raising the Medicare eligibility age, but for some reason, Democrats think they can manage social insurance program “reforms” as long as they get Republicans to ditch Norquist. They feel their voters will be too busy celebrating to watch the aftermath.