Rejecting Republican demands for massive cuts in federal programs while maintaining tax breaks for the wealthy as not “sustainable,” President Obama used a press conference Wednesday to argue that serious negotiations about balancing the budget and addressing deficits and debt must include plans to end tax breaks for “millionaires and billionaires, oil companies and corporate jet owners.”
Making the case that new tax revenue will be needed—in combination with cuts—to achieve even a measure of balance in budgeting, Obama said, “You can’t reduce the deficit without having some revenue in the mix. And the revenue we’re talking about…is coming out of folks who are doing extraordinarily well.”
The president presented an extended and substantial argument that fair taxation of the wealthy is reasonable and needed. Rejecting the notion that there is anything “radical” about demandig that the wealthiest Americans share the sacrifice that is being demanded of working Americans, the president explained: “If you are a wealthy CEO or hedge fund manager in America right now, your taxes are lower than they have ever been. They are lower than they have been since the 1950s. And they can afford it. You can still ride on your corporate jet. You’re just going to have to pay a little more.”
Obama’s position with regard to taxing millionaires and billionaires is the proper one—economically and politically. And he deserves credit for stating it as bluntly as he did Wednesday.
He also deserves some credit for detailing the dangers inherent in the Republican proposal to place all of the budget for balancing the budget on the backs of working families at a time when so many are unemployed or underemployed.
At the same time, however, Obama’s continued talk of compromising with Republicans should raise concerns.
It is neither good policy nor good politics, for instance, to presume that Republican acceptence of a few tax increases for the wealthy should go hand-in-hand with Democratic acceptence of cuts in entitlement programs.
The president’s remarks come in the context of an increasingly intense partisan debate about raising the so-called “debt ceiling.” Historically, Congress has approved adjustments in plans for borrowing money based on the expansion of the population and the role of the federal government in economically demanding times.
This year, Republicans in the House and Senate are holding the process hostage in hopes of forcing the Obama administration and Democrats in Congress to join them in embracing politically unpopular schemes (outlined by House Budget Committee chair Paul Ryan) to steer Medicare and Medicaid money away from patient care and toward for-profit insurance companies that donate generously to GOP campaigns.
Any White House compromise on the Medicare and Medicaid fronts—even in return for GOP acceptence of tax hikes for corporations and the wealthy—would tear the social safety net and provide a massive new bailout for the insurance industry. Similarly, any compromise on Social Security privatization would be such a boon to Wall Street speculators—another sources of campaign money—that Republicans might accept it.
But such a compromise would be unacceptable for America.
So Obama’s strong stance on tax breaks is to be celebrated. It is the right one. But his talk of compromise and negotiation ought to be viewed cautiously. Some compromises will be necessary, But any compromises on Medicare, Medicaid and Social Security will hand the Republicans, the insurance industry and Wall Street the keys to the US Treasury that they have for so long coveted.