Obama's Ohio Speech

The quarrel over extending the Bush tax cuts is escalating. In his Ohio speech the president gave the issue prominence. He said the country could not afford to keep the cuts in place for high-income households: it would cost a fortune, and have relatively little effect on employment. Such a policy would be fiscally irresponsible, he said.

With all the other budgetary pressures we have -- with all the Republicans' talk about wanting to shrink the deficit -- they would have us borrow $700 billion over the next 10 years to give a tax cut of about $100,000 each to folks who are already millionaires.  And keep in mind wealthy Americans are just about the only folks who saw their incomes rise when Republicans were in charge.  And these are the folks who are less likely to spend the money -- which is why economists don't think tax breaks for the wealthy would do much to boost the economy.

Extending the cuts for high-income households permanently, as Republicans have advocated up to now, would indeed be irresponsible. So it was interesting to see John Boehner on Wednesday saying he was open to a two-year extension. This is an important change. The high-income part of a two-year extension would cost less than a fifth of the $700bn Obama mentioned. Some Democrats might think that this was a price worth paying for the larger middle-class tax cuts, even if, other things equal, they would rather not cut taxes for the rich.

A two-year extension of all the cuts happens to be what Obama's former OMB director just suggested as a workable political compromise: see my previous post. Of course, Orszag wants all the cuts, for rich and middle class alike, reversed in two years -- which neither Obama (who wants the middle class cuts made permanent) nor the Republicans (who want them all made permanent) favor. Still, that is a problem for another day. The question of what to do about income taxes in 2011 remains. It might be significant that Obama has not yet promised to veto a measure that extends all the cuts.

Obama again chose to put Boehner in the spotlight. As on Monday, he referred to him by name, and slammed the Republicans for refusing to say anything but No. This is an entirely fair criticism, and Boehner does make an unusually tempting target. Still one wonders how effective this strategy is going to be. Well, EJ Dionne is impressed: "There are enough pro-Democrat, pro-Obama voters available to help the party head off disaster -- if they can be persuaded to show up and vote." Apparently, you get them to show up by complaining that Republicans are evil and you are being treated like a dog.

Doesn't the Democratic base already despise Republicans? Can they really be made to hate them any more? Disappointment with the White House, not lack of anger at Republicans, is surely the problem. Not that I have a better suggestion for energizing the base. If progressives feel let down by an administration that has given them a historic healthcare reform despite the country's reservations, it's hard to say what it will take to impress them.

For the rest, the speech seemed a little tired to me. Obama was more passionate on Monday -- in front of a union crowd, by the way, something which centrist voters might view with mixed feelings. And the personal history -- "Michelle can still remember her father heading out to his job as a city worker long after multiple sclerosis had made it impossible for him to walk without crutches," and so on - went on too long. All that was necessary (not just necessary, extremely effective and often genuinely moving) in the presidential campaign, when people wanted to know who Obama was. Voters have moved on. Now, they are interested in results not back-story.

He also recycled themes about self-reliance, individual responsibility, upward mobility and the American dream. Mixed messages? That's centrist talk. You don't get the progressive base out with stuff like that. And independents might get a little confused, too, to hear this alongside the insistence on higher taxes on the rich, who've had it too easy for too long. How come upward mobility stops being a good thing at $250,000 a year? Since when did the American dream put the limit on ambition that low?

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