Apr. 16, 2012

Driving the Conversation:

Arena Ref: David Mark

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  David Mark Moderator :

  POLITICO's Seung Min Kim reports that on Tax Day eve, congressional Republicans are touting a tax cut to help boost the bottom line for small businesses. And Democrats are pushing the Buffett Rule, which would ensure that millionaires pay an effective 30 percent tax rate on their income. The proposal, named after billionaire investor Warren Buffett, comes up for a procedural vote in the Senate Monday.

   

  Is the Buffett Rule a step toward tax fairness? Or, as Hill Republicans argue, is it a gimmick that would do nothing to boost job growth or make a real dent in paying down the nation's ballooning debt? Which side argument will win politically in November?

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  Rep. Paul Ryan House Budget Committee Chairman (R-Wis.) :

  The president’s policies are not just failures of math, but they also fail the fundamental test of fairness.

  There is nothing fair about taking more from working families because politicians in Washington refuse to restrain their spending appetites. There is nothing fair about burying our children under a mountain of debt because a politician has decided the next election is more important than the next generation. There is nothing fair about crony politics that enrich the powerful, and empty promises that betray the powerless.

  The president’s budget racks up $1.75 billion in deficit spending each of the 3,650 days of his ten-year budget. This tax increase would cover less than three days each year of the president’s massive deficits. The president’s new argument in support of raising taxes? Tax hikes will boost economic growth. The administration insists the best way to grow the economy is to take more money from hardworking Americans and give it to politicians in Washington. Hasn’t the president already tried this approach? Aren’t millions of Americans still living with the painful consequences of his legacy of broken promises?

  Instead of policies aimed at growing government, we must advance policies that boost private-sector job growth. It is critical that policymakers put aside gimmicks and work together to meet our generation's defining challenge of restoring America's promise and ensuring greater opportunities for generations to come.

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  Rep. Pete Stark Congressman, (D-Calif.) :

  The Buffett Rule is absolutely about tax fairness.  

  There is something profoundly wrong with a tax code that permits millionaires to pay taxes at a lower rate than a typical middle income worker.  Because of this inequity, middle income taxpayers are subsidizing millionaires already exorbitant incomes to the tune of $47 billion over the next decade.  It is time end this loophole and work toward a more fair tax code.

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  Rep. Erik Paulsen Congressman (R-Minn.) :

  This is a stark contrast - on one hand, you have the House putting forth yet another initiative to create an environment for job creation with the Small Business Tax Cut Act; and on the other, the Senate and administration pushing the Buffett Rule which punishes small businesses and hinders their ability to grow, expand, and hire.

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  David N. Bossie President of Citizens United :

  The “Buffett Rule” is just a class warfare gimmick for President Obama’s reelection campaign and not real tax policy. This so-called rule, which is really a tax, will only hurt small businesses and will not help create a single job. President Obama and his campaign, with the help of the media, has created yet another smoke screen and highlighted a faux issue. What President Obama needs to focus on is bringing down gas prices. The recent spike in prices at the pump has in a sense been a tax hike on every American and small business. President Obama and Democrats in Congress need to focus on real issues that affect everyday Americans. The “Buffett Rule” is just an opportunistic waste of time.  

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  Jamie Chandler Political scientist at Hunter College :

  The Buffett rule is a gimmick. It’s a shiny key feint the president shakes to mobilize Democrats and play on the May 1st Occupy Wall Street protests.
   
  Buffett deals with one Lymantria dispar wracked tree in an arboreal sea of taxation. Broader reform is the priority, and fairness should ground it. But a bipartisan sit-down must also include revamping corporate tax rates, collapsing brackets, and eliminating the uncertainty generated by a globally uncompetitive system.
   
  Sorry people, no bars on your Bat phone to the bubble. No one in the Capital cares that 60 percent of you favor reform. Legislators are too busy currying campaign-boosting favor from special interests to call AT&T.
   
  Maybe the president “hot mic” comment is true. He’ll get this done next term. But I doubt it. If his 4-year back pedaling is any guide – fat chance.   
  
   

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  Tevi Troy Senior Fellow, the Hudson Institute; Former Deputy HHS secretary :

  The Buffet Rule would harm job creation, further complicate the ridiculously complicated tax code, and - by the White House's own admission - do little to address our ever expanding debt problem.

  It is clearly a political gimmick, and every one knows it is. A much better way to get at the same problem is tax reform, which would simplify the code, make tax avoidance more difficult, and spur job creation and economic growth. Ronald Reagan spearheaded a successful bipartisan tax reform in 1986, and Barack Obama should head down the Reagan path rather down the road of political gimmickry. 

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  Ryan Rudominer Former National Press Secretary, Democratic Congressional Campaign Committee :

  President Obama and congressional Democrats have wisely doubled down on framing the 2012 elections on the basic American value of fairness. They’ve posed the following choice for the American people: do we want to live in a nation where millionaires and billionaires pay lower taxes than the rest of us, or one where everyone pays their fair share?

  It's not even a close call what most Americans would choose.

  The "Buffett Rule" is commonsense - in America, Wall Street insiders and Big Oil executives should no longer pay lower taxes than their secretaries, and our nation’s teachers, firefighters, cops, and nurses.

  However, if Mitt Romney and Congressional Republicans have their way, the working middle class will pay even more so Mitt Romney and others in the richest one percent can pay even less.  That’s the Romney rule – an America where millionaires and billionaires pay lower taxes than the rest of us.  

  Voters know the GOP’s plan is completely unfair and will make that crystal clear in November.

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  Rory Cooper Director of communications, Heritage Foundation :

  President Obama’s answer to everything is raising taxes. Gas prices are high? Let’s raise taxes! Millions of Americans are uninsured? Let’s raise taxes! Unemployment is going up? Let’s raise taxes! The problem is that his proposed tax hikes never do anything to fix any problems facing America. On energy, his tax hikes would cause gas prices to rise. Obamacare is worsening quality of care while increasing costs. And the Buffett Rule won’t do anything but give Washington liberals more hard-earned taxpayer money to waste on Stimulus projects like Solyndra. Above all of this, Americans will suffer even more in January when the biggest tax hike in history descends on the U.S. at the behest of this President, known as Taxmageddon.

  Senate Democrats haven’t bothered to pass a budget in three years, despite having the votes to do so, yet will laughingly turn their attention to a bill that even Senator Sherrod Brown (D) this morning said “It doesn’t help with job creation.” President Obama once said this was about reducing the deficit, but when faced with “math” he rescinded that claim. It’s supposed to penalize job-creators for earning income above the level President Obama deems acceptable, yet the top one percent of income earners already pay more than 38% of all federal income taxes while earning 20 percent of all income. So this bill doesn’t help create jobs, doesn’t help reduce the deficit and doesn’t help the economy. Yeah, that’s a gimmick. If only Americans could pay their rising bills and put food on the table with President Obama’s idea of “fairness.”

  President Obama is playing a very dangerous game pitting Americans against one another while tarnishing the American Dream. For him to use this tactic in order to distract from a terrible economic record and lack of any substantive policy idea is a sad state of affairs. Washington doesn’t need more money, it needs more leadership.

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  St. Del. Nancy Guthrie Member, West Virginia House of Delegates (D) :

  I think in November the Democrats will win because voters are beginning to recognize that you can drive a truck through the logic Republicans are pandering on the tax fairness rule.

   Finally, Democrats are clearly articulating what the American middle class and poor know on a gut level.  We all have an obligation to pay our fair share, no one gets a free ride unless they are so poor they are unable to pay, and then we create enough jobs so the poor aren't poor any more and can likewise pay their fair share.  Unless a market economy can create jobs it can't survive and the Republican strategy of sitting back and letting the invisible hand of the market work has resulted in the creation of invisible jobs.

  Tax fairness is only a small part of pulling the economy out of the toilet but it is a small step in the right direction. The financial markets still need massive reforming, and savings from defense cuts need to be redirected into a massive rebuilding America program.  But until the American public has confidence that the wealthiest among us are pulling their fair weight, it will be hard for Republicans to sell voters the American dream with a straight face.

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  Phil Kerpen President of American Commitment :

  Tax hikes are a ridiculous campaign platform under any circumstances, but especially during a time of persistent economic weakness.  Raising taxes will not create a single job.
  
  Elevating Warren Buffett only compounds the political blunder by Democrats. Buffett lobbied for and benefited from the Wall Street bailout. He is one of the biggest winners from Obama's veto of the Keystone XL pipeline because he owns the Burlington Northern railroad. And Buffett has been fighting the IRS for years to avoid paying a huge tax bill the IRS claims his company owes. Normally I side with anyone who fights the IRS, but to do it while begging for higher taxes the height of hypocrisy.
  
  That said, the House Republican idea of a small-business tax credit is more demand-side stimulus and moves in the opposite direction of fundamental tax reform by adding more complexity to the code. That's why I'm headed over to the Herman Cain Solution Revolution this morning. Cain and his enthusiastic supporters understand that any tax reform worth pursuing would end the punitive double and triple taxation of savings and investment and unleash a genuine supply-side boom.
   

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  Brad Bannon President, Bannon Communications Research :

  The Gallup Organization often asks Americans to rate policies that would reduce the federal budget deficit. At the top of the list of responses are make sure that wealthy Americans pay their fair share of taxes and to reduce corporate tax breaks. At the bottom of the list are cuts in Social Security and Medicare. That sounds fair to me and it also looks like the Democratic platform.

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  Jason Stanford Democratic opposition research consultant, Co-author of upcoming Rick Perry book "Adios Mofo" :

  Do Republicans really expect us to believe that their objection to the Buffett Rule is that it doesn't raise taxes enough?
   

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  Donna Robinson Divine Professor of government, Smith College :

  President Obama is talking about tax rates as a matter of equity; Republicans, for the most part, are speaking about taxes as instruments for generating economic growth.

  Which argument prevails in November will determine who will serve as president for the next four years. The argument has almost nothing to do with real economic conditions.  Thus the argument that prevails will depend on how fluently it is delivered and how well the delivery connects with people's [read voters'] lives.

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  Sally Kohn Political commentator and Fox News contributor, sallykohn.com :

  If Republicans can argue that cutting a few million to public broadcasting helps the deficit, then Democrats can damn-well argue that taxing millionaires and billionaires fairly and generating $47 billion in revenue is more than a drop in the bucket.  

  Meanwhile, since the idea of billionaires paying lower tax rates than middle-class families is not only patently unfair but, according to polls, wildly unpopular, the real question is:  Why are Republicans throwing themselves on their swords to defend the very, very rich?

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  Roger Pilon Vice President for Legal Affairs, Cato Institute :

  Not only will the "Buffett Rule" not reduce the national debt, but because it's meant to offset the revenue lost from changes in the Alternative Minimum Tax, the combined effect will be to increase the debt. To quote from Saturday's Wall Street Journal: "The Joint Tax Committee—the official scoring referee on tax bills—calculates that the combination of AMT repeal for the middle class and the Buffett tax would add $793.3 billion to the debt over the next decade."

   

  Far worse than that, as a tax on capital, the Buffet Rule will drive investment, and jobs, overseas. But will "fairness" win in November, even if not this week in Congress? As a Democratic wag once said, "You can fool all of the people some of the time, and some of the people all of the time, and that's good enough." We shall see.

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  Elayne Rapping Professor of American Studies, State University of New York at Buffalo :

  It may be small potatoes monetarily, but it's a big deal symbolically. It voices the values of the the vast majority of Americans.

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  Jeffrey Taylor Managing partner, U.S. Government Relations Intl., LLC :

  The Buffett Tax is a gimmick; even many Democrats on the Hill see it as a stunt. 

  The sad reality is that it is much more than a gimmick.  It’s the crowning achievement of a president who rode into The White House in 2009 on grand rhetoric and aspirations of hope and change; a man who would be post-partisan in a divided country.  He was a man who had a compliant media and a job approval north of 70 percent when he took the oath of office.  But with this phony Buffett Tax, he has now fully embraced the bottom dwellers in his party who thrive on class envy and jealousy and who see the tax code as a way to punish the wealthy, achievers, and employers in our society… and for what?

  Any American who has passed sixth grade math understands that the Buffett Tax - which ostensibly doubles the tax on cap gains – will not do anything to reduce the size of the president’s $1.4 trillion deficit or create jobs in a jobless recovery.  Noted columnist Charles Krauthammer distilled the Buffett Tax brilliantly and simply in a recent op-ed: “The Joint Committee on Taxation estimates this new tax would yield between $4 billion and $5 billion a year. If we collect the Buffett tax for the next 250 years - a span longer than the life of this republic - it would not cover the Obama deficit for 2011 alone.”  

  The president couches this debate in fairness. The top one percent of income earners pay at 40 percent of all federal income taxes. The top 10 percent of income earners pay at 70 percent of all federal income taxes.  Yet somehow, the president says that employers, investors, achievers, and those who are considered wealthy do not pay their fair share.

  When people say there is no difference between the two major political parties, this debate should be Exhibit 1.  Should Americans pay over 50 percent of their hard earned income - the fruits of their own labor - to federal, state and local governments?  Democrats say yes; Republicans no.  The Buffett Tax will assure that many Americans will now provide more on an annual basis to their government than to housing, clothing, and feeding his or her own family.  I do not call that fair; not for one second.

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  Scott Paterno Republican strategist :

  The idea behind the Buffett Rule - that we should have floor on effective tax rates - is hardly the problem. The problem is the perception that high-earners will - correctly - have as a result: that they are a politically acceptable target for singular tax hikes. This has a great effect on the psychology of this tax hike, and leads to an even more negative effect on investment and job growth than just the impact of the diversion of investment funds from the pool to government coffers.

  The problem is exactly what the Obama administration is trying to do with the Buffet rule - it is an attempt at a class-based populism bent on an us versus them mentality. This is evident in the rhetoric of the president and his surrogates, and it was the central them of the near-lifeless "Occupy Movement." It is this position -- the masses coming for the few's accumulated wealth and higher incomes - that lead to a drawing back of investment funds. The wealthy by and large like their lifestyle and will hold in reserve greater sums anticipating future tax hikes. This depletes the investment pool further than just the tax hike, which results in fewer jobs being created. Call it trickle down pain felt most dramatically, yet again, by the bottom of the income scale.

  This problem is alleviated in across-the-board tax increases, as data proves. A move to the Clinton-era brackets - ALL of them - would have a much less detrimental effect. The psychology and politics of it are simple - if the whole tax base is tied to increases then it becomes politically harder to do. When there is a political cost to a tax increase they are seen as shared pain and unlikely to be repeated every time there is an election cycle.

   

  Quite simply, a targeted tax increase on the rich alone is very bad for the economy. An overall restructuring of the tax base-- which could include elements of the Buffet rule - is nowhere near as dangerous, and, if the experience of the 90s is accurate, potentially beneficial. But we must all be in this together - when we are divided for base political gimmickry the end result is bad policy in exchange for seemingly good short term politics.

   

  In the end, maybe that should be the slogan for Obama-Biden 2012.

   

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  Clyde Prestowitz Founder and president, Economic Strategy Institute :

  The Buffett Rule is a step toward tax fairness and fiscal sanity and will prove more popular with the public than the proposed small business tax cut of the Republicans. This tax cut also would not create jobs if it happened to be passed because it would not be tied to new employment but would simply enable wealthy small business owners law firms incorporated as LLCs to increase their already high take home pay.

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  Ken Feltman Past president; International Association of Political Consultants :

  Senator Russell Long remarked, "Don't tax you, don't tax me. Tax that fellow behind the tree." The Obama Administration has spotted a lot of people - like Mitt Romney - behind a lot of trees.

  The Obama campaign is betting that it can sell the populist "tax the rich" argument. This is about politics, not economic policy. The Republicans believe that their defense of small business will win with voters as well as economically. Polls show a majority of Americans are in favor of both the Buffett Rule and a small business tax break because people are willing to try almost anything in this economy. Who is right? The Democrats.

  The Republicans may have the sounder economic argument but the Democrats have the better political gambit. They could end up winning more votes with the Buffett Rule, leaving the Republicans to wonder why better economic policy has cost them at the polls again. Take off the green eye shades and look out at a nation of desperate voters willing to soak the rich.

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  Theda Skocpol Professor of Government and Sociology, Harvard :

  Long overdue fairness.

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