Thursday, July 28, 2011

Hoping for less change

Ezra Klein today puts his finger on Obama's core underlying weakness in the budget battles. The expiration of the Bush tax cuts at the end of 2012 gives Democrats the ultimate leverage: if Republicans don't negotiate tax reform on their terms, we revert to Clinton-era rates and get $3.6 trillion in additional revenue over ten years. But as I've noted before (and again), Obama doesn't want that revenue:
When Obama talks about taxes, a bit of incoherence creeps into the argument. “We can test the two theories,” Obama has said, comparing Bush tax policies with the Clinton policies that preceded them. “You had what happened during the ‘90s, right? Taxes for wealthy individuals were somewhat higher, businesses boomed, the economy boomed, great job growth. And then the 2000s, when taxes were cut on wealthy individuals, jobs didn’t grow as fast, businesses didn’t grow as fast.”

If the Bush tax cuts expire, we’ll go back to the tax rates of the ‘90s -- the period Obama posits was a golden age. If we extend the Bush tax cuts for every household making less than $250,000, then we’re adopting a tax policy very similar to what we had in the slow-growing Aughts. Yet that’s the Obama administration’s stated preference.
The tax reform outlined in the Bowles-Simpson plan splits the difference between no new increases and a Clinton reversion, raising about $2 trillion over ten years by reducing tax expenditures while reducing rates. While the plan was too conservative for many progressives, it was too liberal for Obama, who continues to hold to his own "98% Norquist" -- that is, no new taxes on anyone but the top 2% of earners.That translates to new revenue in the range of $1 trillion over ten (or twelve) years. In the face of GOP intransigence, it may be all or nothing: no new revenue or a Clinton reversion. And if a Republican wins the White House, would Democrats filibuster a massive revenue giveback? Don't bet on it.

The current rematch of the Clinton budget battles of 1995-96, with its pending sorry result, brings back to mind the moment in the 2008 campaign that more or less tipped me in favor of Obama. It was in a debate just after Iowa, Jan. 5, when Obama articulated his desire to be the transformative president that he suggested Bill Clinton wasn't:
Look, I think it's easier to be cynical and just say, "You know what, it can't be done because Washington's designed to resist change." But in fact  there have been periods of time in our history where a president inspired  the American people to do better, and I think we're in one of those moments  right now. I think the American people are hungry for something different  and can be mobilized around big changes -- not incremental changes, not small changes.

I actually give Bill Clinton enormous credit for having balanced those  budgets during those years. It did take political courage for him to do  that. But we never built the majority and coalesced the American people around being able to get the other stuff done.

And, you know, so the truth is actually words do inspire. Words do help people get involved. Words do help members of Congress get into power so that they can be part of a coalition to deliver health care reform, to deliver a bold energy policy. Don't discount that power, because when the American people are determined that something is going to happen, then it happens. And if they are disaffected and cynical and fearful and told that it can't be done, then it doesn't. I'm running for president because I want to tell them, yes, we can. And that's why I think they're responding in such large numbers.
Memo to Mr. Change-the-Trajectory:  Republicans like big change too.  And they seem more willing to fight for it than Obama. And, while it's too early to judge,  it's looking like Bill Clinton was better than Obama at holding the line.


  1. I feel like comparing Clinton and Obama's relative positions is wholly unfair.

    The debt situation IS significantly worse now than it was in the 1990's. While the Republican solution to the problem is extreme, unmoral, and unfair, it is not unfair to say that our debt situation needs to be addressed (how long are the markets really going to give us before we are consumed with interest payments and are forced to make draconian cuts to government programs?). The state of economic affairs (both jobs and the debt) and the severity of consequences for not raising the debt ceiling gives Obama significantly less room for the tough negotiating that Clinton engaged in.

    I also don't think liberals should be afraid of the "grand bargain." I'd rather see Obama make small adjustments to entitlements now than see severe changes down the road when they are in worse shape than they are currently.

  2. Boehner and Cantor are being drawn and quartered.