National Journal’s Jim Tankersley writes: “If the Buffett Rule was a serious pitch to help the jobless, it would deal with one of those main drivers of unemployment. It would boost persistently weak aggregate demand or incentivize business investment. It does neither. Instead, it tells America’s job-seekers, Don’t worry, we’re going to make the tax code look more fair to you. Lots of polls suggest that’s a good political argument. But that’s what it is: a political pitch.” But even if one accepts the fairness gambit this is a pathetically weak way to go about it. (“It’s also not nearly enough to dent the widening income inequality in America that research suggests is a serious underlying problem in the economy but probably not the main driver of persistently high unemployment now.”)
So the Buffett rule is not about job creation. It’s not really about fairness (not in a serious way). And it sure isn’t about debt reduction. As the Associated Press pointed out, “A bill designed to enact President Barack Obama’s plan for a “Buffett rule” tax on the wealthy would rake in just $31 billion over the next 11 years, according to an estimate by Congress’ official tax analysts obtained by The Associated Press. That figure would be a drop in the bucket of the over $7 trillion in federal budget deficits projected during that period. It is also minuscule compared to the many hundreds of billions it would cost to repeal the alternative minimum tax, which Obama’s budget last month said he would replace with the Buffett rule tax.” As Americans for Tax Reform says: “To put that in context, that is less than one-tenth of one percent of all tax revenues that CBO expects the federal government to collect over that time period, and this assumes (wrongly) that no one would change their behavior as a result of the tax.” (ATR also provides helpful charts showing how progressive the current tax code actually is.)
The Buffett rule is a political talking point, a feeble attempt to get by the fact that there is no budget coming from the Democratic Senate, that Obama has not put comprehensive tax reform on the table and that Obama’s hasn’t proposed systemic and serious change in entitlement programs.
It’s not even clear his gimmick is good politics. A new poll of independent voters in swing states shows that a combined 75 percent of these voters favor opportunity promotion or giving Americans more freedom over creating more income security (19 percent). By a 57 to 38 percent margin they favor strongly or somewhat reducing the budget over promoting more income equality. By an 80 to 15 percent margin they favor a candidate who wants to promote opportunity over one who wants to reduce income inequality. Either the White House thinks it can win this election by turning out the base or it has become deluded that critical independent voters think just like liberal statists.
Faced with the paltry result from the Buffet rule, the more honest liberals claim, “It doesn’t do much, but it couldn’t hurt.” In fact, like most of the other Obama gimmicks-in-place-of-policy maneuvers, the rule would do real harm.
First, anything that diverts us from the real need for serious debt reform and the real driver of the debt (entitlement spending) is counterproductive and worsens our ongoing fiscal situation. It’s like saying there is no harm in not passing a budget because Congress isn’t making things worse. But the status quo in this case is false; Unless we start addressing our fiscal mess time and compound interest will worsen our plight.
Second, it sends yet another message to investors and employers that this president is coming after them for all he can wring out in the name of “fairness.” It is not simply that the Buffett rule doesn’t help job creation; rather it impedes it as does the prospect of other Obama tax hikes. (The Wall Street Journal editorial board reminds us: “Mr. Obama’s plan would raise the capital-gains rate on January 1 to 20% on those who earn more than $200,000 ($250,000 for couples), plus a 3.8% investment surtax to finance ObamaCare. That 23.8% rate amounts to a nearly 60% increase from the 15% rate in effect since 2003. And that’s without his new ‘Buffett rule,’ which would take the rate to 30% for many taxpayers.” All of these measures, together with ObamaCare and Obama’s regulatory spree, impede growth, counsel employers to hold down hiring and create uncertainty.
And finally, it will make governance harder in the event Obama is re-elected. He is still perpetuating the myth that a little tax here and there on the super rich and slashing defense will fix our fiscal woes. But when the reality hits home that either massive news taxes are needed or real entitlement reform actually does have to be undertaken what consensus has he built? What has he done to prepare the electorate for the “flexibility” he’ll need to prevent a fiscal trainwreck after 2012?
Sometimes bad policy really is bad politics. In this instance, that seems to be the case — and reveals the low esteem with which Obama holds the voters, whom he imagines can be goaded into class envy and distracted from the real policy decisions that must be made.