Obama and Romney mostly agree on taxes

Matthew Yglesias looks at Mitt Romney’s jobs plan and explains that if you run the numbers, politicians who say we can get by with the Bush-era levels of taxation -- or even less -- are implicitly saying they will scrap Medicare or Medicaid. The math just doesn’t work out any other way.

But it’s not just true for Romney’s plan, which would cut taxes with no plausible vision for holding the growth in health-care costs to zero. It’s true for all the plans we have seen from all the Republicans thus far, and it’s also true for the plan we have seen from President Obama.

The Obama administration’s tax policy is straightforward: they want to let the tax cuts for income over $250,000 expire, but make the tax cuts for income under $250,000 permanent. That means they want to make about 80 percent of the Bush tax cuts permanent. Perhaps, in that world, we don’t need to scrap Medicare. Perhaps, in that world, we only need to scrap most of Medicare. But that world is a lot closer to Romney’s world than it is to a world in which there is adequate revenue to pay for our core commitments.

The point here isn’t that the Obama administration has a secret plan to end Medicare. It’s that they have an explicit plan to avoid leveling with the American people about taxes. That’s not an admirable stance under any circumstances, but it’s a particular problem because the Bush tax cuts are going to expire under their watch. If Congress does nothing, or if Congress does something and the president exercises his veto, we revert to Clinton-era tax rates for everyone, and the federal coffers fill with $3.6 trillion in additional revenue over the next 10 years — enough to stabilize deficits. This is a rare opportunity in which it’s Democrats who hold the hostage and Republicans who have to compromise.

But tell this to the folks at the White House, and they’ll say that this is like pointing a gun at their own head and threatening to pull the trigger. Raising taxes on anyone but the rich is unpopular, and a large tax increase is not what the economy needs right now. They’re right on both counts. But in this case, two rights make the wrong policy.

The right policy is to act now and say that the Bush tax cuts won’t be extended, and that this is the right moment to enact tax reform that raises the same amount as Simpson and Bowles proposed. But until the White House is willing to do that, they’re as complicit as Republicans, and perhaps more, as they really don’t want to end Medicare or abolish Medicaid.