Monday, February 14, 2011

Pulping the bully approach to presidential leadership, cont.

Once again, Clive Crook combines solid fiscal sense with political obtusity.  Hammering the obvious need for tax reform and tax hikes in response to the U.S. structural deficit, he accuses Obama of a lack of political courage for not endorsing Bowles-Simpson or laying out a revenue-raising plan of his own.  But Crook's argument carries the seeds of its own refutation.

Crook acknowledges the political realities that make it impossible for Obama to get anywhere if he unilaterally proposes the tax hikes the country needs -- even if those hikes come from radically reducing targeted tax breaks while cutting marginal rates:

This is the nub of the problem. Politically, a timid budget might well be wise. The White House fears, with reason, that if it backs a plan on the lines of last year’s Bowles-Simpson deficit reduction commission, it will expose itself to a withering GOP assault. The commission rightly insisted higher taxes must be part of the solution, and it explained how this could be made more palatable – income tax rates would actually come down – if reformers focused on closing tax exemptions and broadening the tax base. But in the end higher taxes are higher taxes; and doing as the panel suggested would require Mr Obama to break one of his 2008 election promises.

If congressional Republicans included many responsible fiscal conservatives, the White House could hope to build a cross-party alliance. Forget that. The maniacal cut-baby-cut strand of conservative thinking is in the ascendant. The new House Republican majority wants to chop as much as possible, and then some, from public spending. It will not countenance tax increases of any kind. If Mr Obama took up the balanced Bowles-Simpson approach, the GOP would savage him for it.
Exactement, Monsieur Crook. So why ask Obama to walk into the buzz saw when you've forecast the likely consequences: stalemate, followed by an vastly increased chance of Republican victory -- which would erase all hope of ever balancing the budget, since tax hikes are taboo for the GOP?

Blogging is a repetitive business...yesterday I cited several strong sources, from Kent Conrad to Brendan Nyhan arguing that presidential crusades launched on politically polarized issues are generally counterproductive. Crook half-recognizes this:
Polls show US voters are worried about public borrowing – but firmly opposed to increases in their own taxes. It might take more than Mr Obama’s powers of persuasion to change their minds.
Bingo again!   Cf. Nyhan:

I've repeatedly pointed out that Reagan's powers of persuasion have been wildly overstated. Contrary to the claims of John Judis, George Packer, and others, neither Reagan's thematic message nor his populist rhetoric prevented him from suffering politically as a result of the 1981-1982 recession. Similarly, despite the claims of his former chief of staff Ken Duberstein (who is quoted making a similar statement by Time), Reagan's high-profile speeches didn't build consensus for his agenda -- they often increased opposition to it, prompting his own pollster to suggest that he stop using that approach. 
What would those who accept Nyhan's argument have Obama do?  Crook characterizes the president's approach as "'Why do today what you can put off till 2013?'"   That not it.  Rather, recognize that global, once-per-generation tax reform is a multi-year process, and find a way to start incrementally.

That, I think, is what Obama is doing.  He's selected a proving ground, an early season game, a dress rehearsal. Crook blew right past it, tacking it onto the tail end of a list of Obama's main SOTU proposals: "...reform corporate taxes."

Corporate income taxes account for about 12% of the Federal government's revenue.  Obama's core premise for reforming them is structurally similar to the Bowles-Simpson commission's approach to personal tax reform: reduce targeted tax breaks while lowering the overall rate, currently at 35%.  As Obama told the Wall Street Journal way back in June 2008, the U.S. has among the highest nominal corporate rates and the lowest actual rates in the developed world.  Reforming corporate taxes is perhaps easier than reforming personal taxes on two fronts (in addition to scale): both sides have agreed that the reform should be revenue-neutral;  and the myriad "tax expenditures", i.e. targeted tax breaks, that would be slated for elimination are  more numerous,  more narrowly targeted, and have narrower constituencies (albeit very powerful ones) than those in the personal tax code. Cutting a deal on corporate taxes would perhaps set a template for a global tax/deficit reduction bargain. 

As with so many of the major problems the U.S. faces today, it is far too early to judge Obama's "leadership" on the tax/deficit front.  If he gets re-elected and never makes a serious effort to raise revenue, scale back our military commitments, and continue work on bending the Medicare/Medicaid cost curve (which means in large part defending and warding off defunding of the PPACA), then it will be time to say he failed to lead. Not now.

UPDATE 2/15: In today's WSJ, budget director Jacob Lew, who helped Clinton outmaneuver the GOP on budget matters, is explicit about the low-profile approach to presidential leadership:
By trimming programs dear to his party's liberals, Mr. Obama may improve his credibility as a budget-cutter. Yet the White House budget plan offers little new on one of the nation's most fundamental problems, spending on mandatory programs, which would grow to nearly $3.5 trillion by 2021 from $2.1 trillion next year.

That omission is by design. Jacob Lew, Mr. Obama's budget director, said such proposals had a better chance in closed-doors talks with Republicans.

House Republicans attacked that as a dereliction of duty...
"House Republicans attacked"....Andrew Sullivan continues to be drawn into that political trap; Obama refuses to.

UPDATE II 2/15: In a press conference  today, Obama himself explained that he thinks coming out with a full-blown plan would be counterproductive, for the reasons outlined above.


  1. Sprung, solid analysis here.

    2 quick points:

    Style-wise, that's a clever line about how "an argument can carry within it the seeds of its own refutation".

    Substance-wise, as a media consultant, would you consider the Healthcare law debate (and its feature of town hall fights and death panels) a case in point for why a president's "unilateral leadership" may not be the most politically constructive strategy?

    Some may argue that Obama's initiation of healthcare reform is why we actually have the new healthcare reform law today. Thoughts?

  2. Or perhaps, Obama's attempt to "take the lead" on healthcare reform is exactly why we have the very weak healthcare reform we got. It's the best that could be hammered out amongst the wailing and gnashing of teeth.

    Perhaps a more measured, back-room approach would have achieved a better plan for everyone, without any openings for death panel distractions.