Washington Merry-Go-Round

Obama’s middle class tax cut strategy

IMMEDIATE RELEASE 22 January 2015

WASHINGTON MERRY-GO-ROUND

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Obama’s middle class tax cut strategy

By Douglas Cohn and Eleanor Clift

WASHINGTON – The time honored way to appeal to the American public is through tax cuts. The Republicans have owned that turf for years, and they’re furious that President Obama in his State of the Union speech turned the tables, putting the Democratic Party squarely on the side of middle-class economics.  What Obama proposed will not make it through the GOP’s legislative grip on Capitol Hill, but he has laid the groundwork for the next election, drawing a bright line between the two parties and placing the GOP on the defensive over tax cuts.

It is a place Republicans never imagined they would be a few short months after winning strong majorities in the House and Senate, along with a record number of state houses and legislatures around the country. Obama was vanquished, wounded, a lame duck who would never regain his mojo. The president proved wrong those early reports of his political death, delivering an assertive, confident State of the Union speech that embraced progressive ideals and policies.

He zeroed in on what the middle-class cares about most, pocketbook issues that can make a real difference in the day to day life of American families. USA Today featured on its front page a box with a downward arrow featuring three of the tax cuts that Obama showcased: a tax credit of up to $500 for two-earner families; a child-care tax credit for families earning up to $100,000; and student-loan consolidation to provide up to $2,500 more in aid.

Another box with an upward arrow explains how the administration proposes to pay for these enhanced benefits. Closing the “trust fund” loophole, imposing a fee or tax on transactions by the biggest financial firms; and boosting the capital gains tax from the current 20 to 28 percent (on incomes in the 39.6 percent bracket), the rate it was when President Reagan was in the White House.

Republicans scream that it is class war, and Obama is a “redistributionist,” a label that is political poison. During the 2008 campaign, Obama made an offhand remark to a man on a rope line that he wanted to “spread the wealth.” That blew up into a major gaffe when the man, briefly famous as “Joe the Plumber,” campaigned for Republican presidential candidate, Sen. John McCain, R-Ariz.

The politics have since shifted. The gap between the very rich and the middle class has grown to the point where even the staunchest Republicans cannot ignore it. The crop of emerging 2016 GOP candidates is as focused on income inequality as their Democratic counterparts.

Just as inequality and fairness have been considered Democrats’ turf, calling for tax cuts has been part of the GOP playbook since Reagan took office in January 1981. Reagan’s successor, George H.W. Bush, deviated from the GOP script when he raised taxes across the board after pledging in his Convention speech “no new taxes.”

The lesson Bush learned when he was defeated for reelection in 1992 is you can’t raise taxes on the middle class. A little known governor of a small Southern state upended Bush with a campaign that called for a middle class tax cut. Bill Clinton’s colorful campaign manager, James Carville, coined the slogan, “It’s the economy, stupid.” When Clinton entered the campaign in October of 1991, Bush’s approval rating reached 90 percent; he had just led American forces in a successful campaign in the Persian Gulf to drive Iraqi forces out of Kuwait.

War and peace is important, but if Americans feel their president is keeping the country safe from outside threats, their attention will return to their pocketbooks.  Raising taxes is never popular, but a president who calls for more revenue has to pick his or her targets carefully. Obama has done that, and while he might not get what middle-class voters want, woe to the Republican who has to defend his or her opposition to government lending a hand to hardworking families.

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© 2015 U.S. News Syndicate, Inc.

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