Why Obama Can Call for Tax Hikes

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In this case, it isn't terrible politics. Really.

Obama deficit speech 4 - AP Photo Pablo Martinez Monsivais - banner.jpg

Much has been made of President Obama's attempts to emulate Ronald Reagan. But in his flag-planting deficit-reduction speech this week, Obama sounded a lot more like Walter Mondale, Reagan's 1984 opponent, who famously and disastrously told voters, "Mr. Reagan will raise taxes, and so will I. He won't tell you. I just did."

Since Mondale's landslide loss, presidential candidates have taken great pains to disavow any hint of a tax increase--including George H.W. "Read My Lips" Bush and Bill Clinton, who both, in fact, raised taxes as president. Obama broke that trend by campaigning in 2008 on letting George W. Bush's tax cuts expire for the wealthiest Americans. On Wednesday, in a policy address that sounded like the first major salvo of his reelection campaign, Obama doubled-down on his tax-raising pitch.


"Some will argue we should not even consider ever--ever--raising taxes, even if only on the wealthiest Americans," he said in announcing his plan to cut the deficit by $4 trillion over 12 years. "It's just an article of faith to them. I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more."

It was a hanging curveball for Republicans who have long knocked Democrats around the electoral park on tax policy. "Any plan that starts with job-destroying tax hikes is a nonstarter," House Speaker John Boehner, R-Ohio, said in a written statement after the speech. "We need to grow our economy--not our government--by creating a better environment for private-sector job growth."

Voters hate taxes as much today as they did during Reagan's tenure, maybe more.  But setting the economic arguments on various deficit-reduction plans aside, it's not clear that the tax attack will be the millstone around Obama's neck that it was for Mondale, for three reasons.

First, the deficit fight isn't an up-or-down choice on taxes. It's an either-or choice between two concepts that voters detest. The Republican plan, championed by Rep. Paul Ryan, R-Wis., cuts federal health care spending by transitioning Medicare to a private insurance-voucher program. Check out the polling on Medicare popularity--Gallup's latest numbers show that three in five Americans want only minor changes to the program, or none at all.

Second, raising taxes on the rich actually polls pretty well. The same Gallup survey found that three in five Americans want next year's federal budget to "include higher taxes for families with household incomes of $250,000 and above." By contrast, a CNN poll this week found that seven in 10 respondents believe that GOP-pushed budget cuts "unfairly favor some groups more than others." The swing-voter group that feels most defensive about Medicare--senior citizens--might well be the least-defensive group about tax rates. A Fox News poll released on Wednesday shows that two in three seniors say they pay "about their fair share" in taxes. That's more than any other group, including self-identified liberals.

Finally, Obama isn't alone in the deficit fight in talking about raising some tax rates. Ryan is, too--at least if you count eliminating some tax loopholes as a tax increase, which, for some individuals and corporations, it would be. That's true even if, as Ryan proposes, a tax-reform package reduces marginal rates across the board and ends up revenue-neutral. In other words, the whole "reform" discussion complicates what has long been a black-and-white tax argument.

That's not to say the Republican presidential nominee won't have ample opportunity to convince voters that Obama's tax hikes would be far more damaging than any budget cuts, a message that several GOP contenders amped up this week. It's just not clear that the message will work as well now as it has in the past.

"There's a ton of evidence that voters don't want cuts or a major overhaul of Medicare/Medicaid; there's a ton of evidence that voters don't like tax hikes generally but would approve of a modest increase for the most wealthy," said Mark Blumenthal, senior polling editor for The Huffington Post. "When poll questions try to combine these concepts or force voters to prioritize, you get a lot of variation and sensitivity to wording."

No one's sure which voters fear more, the taxes or the cuts. Consider the next year and a half one big experiment to determine if attitudes have changed since 1984.



Image credit: Pablo Martinez Monsivais/AP

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Jim Tankersley is a correspondent (economics) for National Journal.

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