Just How Big of a Dive is Obama Taking on Tax Cuts?

Reporting on Politics and Policy.
Dec. 6 2010 9:30 AM

Just How Big of a Dive is Obama Taking on Tax Cuts?

You could seriously argue that if Democrats approve extensions of all the Bush tax cuts, it would be as big a cave-in than George H.W. Bush's cave-in on the 1990 budget. If you paid any attention to Barack Obama's 2008 presidential campaign, he was adamant about what he'd do to the Bush tax cuts. He would get rid of the cuts that went to people making more than $250,000. There was no waffling on this, because getting rid of those tax cuts was the only way in which Obama's spending priorities made sense.

A couple of examples here. Obama on June 3, 2007:

David Weigel David Weigel

David Weigel is a reporter for Bloomberg Politics


BLITZER: Senator Obama, what is a definition of rich?

OBAMA: Well, the definition that I'm using with respect to paying for my health care plan is those making over $250,000 a year. Keep in mind that all we're talking about is going back to the tax levels, the marginal tax rates that existed when Bill Clinton was in office. So we're not talking about going back to huge marginal rates.

Obama on May 4, 2008:

I've got a plan that says if you've got health insurance, we're going to lower your premiums by $2500 per family per year. And if you don't have health insurance, we're going to give you health insurance that is at least as good as the health care I have as a member of Congress and we will not exclude for pre-existing conditions. And we will emphasize prevention so we have a health care system, instead of a disease care system and we won't wait 20 years from now to do it or 10 years from now to do it. We can do it by the end of my first term as president of the United States of America.

And to pay for that, we're going to have to roll back the Bush tax cuts on the top two percent. And they can afford it. I can afford it. As the fact of the matter is we didn't need it and weren't even asking for it

The final Democratic primary debate, April 16, 2008:

[Y]ou can't take out a credit card from the Bank of China in the name of our children and our grandchildren, and then say that you're cutting taxes, which is essentially what John McCain has been talking about. And that is irresponsible. I believe in the principle that you pay as you go. And, you know, you don't propose tax cuts, unless you are closing other tax breaks for individuals. And you don't increase spending, unless you're eliminating some spending or you're finding some new revenue.

The final presidential debate, October 15, 2008:

OBAMA: So, look, nobody likes taxes. I would prefer that none of us had to pay taxes, including myself. But ultimately, we've got to pay for the core investments that make this economy strong and somebody's got to do it.

MCCAIN: Nobody likes taxes. Let's not raise anybody's taxes. OK?

OBAMA: Well, I don't mind paying a little more.

Before Obama said most of those things, he made a Kinsley gaffe in an interview with the Reno Gazette-Journal. He argued that Bill Clinton hadn't been a transformative president in the way that Ronald Reagan had been. This irritated Bill Clinton for obvious reasons, one of them being that the line was true -- Clinton had not shifted the center toward his views, while Reagan had. Americans ended the Reagan years believing that supply-side tax cuts always grew the economy; they did not end the Clinton years agreeing that increases in marginal tax rates could close the deficit. But Obama won the 2008 election promising to raise some tax rates. Game over.

And this is why liberals can't stomach a compromise on tax rates. They were promised by Obama -- by every Democratic candidate, really -- that the tax rates would be restored to pay for social programs. They thought they proved in the 1990s that these were fair tax rates under which the economy could grow wildly, and that Bush proved in the 2000s that lower marginal tax rates for the wealthy didn't spur real economic growth. It was an important debate, and they won it. They have polls telling them they won it, and most Americans are find with restoring the top rates. And here's Obama, about to throw the game, affirming the conservative line that tax cuts of any size at any time are good for the economy.

David Weigel is a reporter for Bloomberg Politics



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