In New Tax Offensive, A Reversal of Obama’s Deficit Debate Strategy

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Jason Reed / Reuters

President Obama doesn’t take mulligans when he plays golf. The same cannot be said for the way he governs. Just weeks after negotiations over the debt limit hobbled the nation and his presidency, Obama appeared in the Rose Garden on Monday to do what he had not done before: He laid out a specific plan for deficit reductions, including more than $1 trillion in new taxes, and promised to veto any plan that cut entitlements without raising taxes on wealthier Americans and corporations.

In place of general statements about “balance” and “compromise,” Obama proposed $310 billion in new cuts to Medicare, Medicaid and other health programs, $270 billion in other cuts and reforms, and $1.5 trillion in new tax revenue that Obama said would be borne mainly by the wealthiest Americans and corporations. The President spent much of July publicly minimizing the differences between himself and Republican House Speaker John Boehner as he chased after an elusive “grand bargain” on deficit reduction. But now he described a sharp contrast, and offered two ultimatums: First, the promise to allow all the 2001 and 2003 tax cuts to expire at the end of 2012 if Congress cannot reach a tax reform agreement, and secondly, a promise to veto any bill that takes a dime from Medicare beneficiaries without raising taxes on the wealthy and large corporations.

“Middle class families should not pay higher taxes than millionaires and billionaires,” Obama said, laying out a message that will likely carry him through next year’s election. “That’s pretty straightforward. It’s hard to argue against that.”

It was a speech designed to shift the debate over spending and taxation onto Democratic turf, away from the debate on spending toward a debate on what is fair for the middle class. “Anybody who says we can’t change the tax code to correct that,” he continued, “anyone who has signed some pledge to protect every single tax loophole so long as they live, they should be called out. They should have to defend that unfairness, explain why somebody who’s making $50 million a year in the financial markets should be paying 15% on their taxes when a teacher making $50,000 a year is paying more than that, paying a higher rate. They ought to have to answer for that.”

Obama went so far as to name names, calling out his old negotiating partner, Boehner, for laying down his own iron clad marker, by promising not to raise taxes. “The Speaker says we can’t have it ‘My way or the highway’ and then basically says ‘My way or the highway,’” Obama said.  “That’s not smart. It’s not right.”

But by issuing his own hard-line veto threat and ultimatum, Obama showed he is willing to play the game he has spent months disparaging in public paeans to flexibility. The new Obama strategy is a clear acknowledgement that the two parties are unlikely to work out its disagreements in the coming months, and that a long term plan for deficit reduction will likely need to be worked out in the lame duck session, after next year’s election, but before steep cuts to military spending and Medicare providers, agreed to in August, are scheduled to take effect. The White House continues to hope, however, that both parties will still be willing to work together on short-term tax cuts and other stimulus measures, with an understanding that paying for their costs would be worked out at another time.

Throughout August, White House aides argued that there was a silver lining to the summer dysfunction. On issues like taxation and deficit reduction, clear majorities of the country favor the policy approach of Obama. It’s on that contrast that his advisers now plan to mount the President’s re-election campaign. Republicans, meanwhile, think their issue weakness among much of the American public will not prove fatal at the polls; they hope that like 2010, 2012 will be a referendum on Obama’s handling of the economy.

To win this contest, White House aides know Obama will have to find a way to elevate the debate beyond policy details or competing ideologies. On Monday, Obama continued this effort, speaking in moral terms about the choices facing the country. “It’s also about fairness,” Obama said. “It’s about whether we are, in fact, in this together and we’re looking out for one another. We know what’s right; it’s time to do what’s right.”

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