Analysis: Smart Politics Trumps Policy in Obama Budget
A piece of advice: If you’re worried about President Barack Obama’s budget, find something else to fret over. The president’s blueprint has about as much chance of becoming law as yours. It’s all about election year 2012, not fiscal year 2013.
Don’t take my word for it. Take Harry Reid’s. The Senate majority leader — the Democrat most responsible for moving Obama’s agenda through Congress — said Friday that there’s no need to bring the budget to a vote this year.
“It’s done. We don’t need to do it,” Reid said, citing spending outlines agreed to in August’s debt ceiling agreement.
This isn’t shocking news. It’s been more than 1,000 days since the Senate passed a formal budget. Washington governs today by lurching from one fiscal crisis to the next. Budget plans are about drawing clear political and ideological lines between Democrats and Republicans.
Voters are now less than nine months away from deciding whether Obama will have a second term. He wants to make sure you know where he stands — sort of. His $3.8 trillion budget, like those of Democratic and Republican predecessors alike, shines a light on what he considers to be his most popular tax and spending proposals while blurring politically painful choices that will ultimately have to be made to right our debt-laden ship of state.
Start with taxes. Obama’s plan hikes taxes on the wealthiest Americans to the tune of roughly $1.5 trillion. It ends the Bush-era tax cuts for families making over $250,000 annually while enacting the so-called Buffett Rule, requiring households earning more than $1 million to pay at least a 30% rate.
The name of the game is shared sacrifice. The GOP-controlled House won’t play along. But you should expect to hear a lot more about it, especially if Mitt Romney wins the Republican nomination. Romney, worth as much as $250 million, pays an effective tax rate of approximately 15%.
Obama also hits a populist note by going after Wall Street fat cats. Remember the incredibly unpopular bank bailout? The administration’s budget includes a “Financial Crisis Responsibility Fee.” The tax would raise $61 billion over the next decade from large financial institutions to help offset both the cost of the bailout and Obama’s mortgage refinancing program.
Assuming Republicans remain dead set against any new taxes this fall, Obama will try to hang Wall Street around the GOP’s neck.