The current back and forth between presumptive GOP presidential nominee Mitt Romney and President Obama over changes to the tax code does a pretty good job of illustrating the choice voters will face in November: On the one hand you have President Obama, who is stumping for a pointless, ineffective, almost entirely symbolic tax hike that's more about casting blame than actually fixing the country's considerable fiscal problems. On the other hand, you have Mitt Romney who definitely wants to not do whatever it is that President Obama is doing, and prefers do something vague and sort of Reaganesque instead, precise details TBD.
Today, President Obama is once again touting the "Buffett Rule" today, a proposed new tax on income over $1 million that President Obama says would ensure that the wealthy pay their "fair share" in taxes. It's almost pure gimmick, a political ploy designed in part to channel resentment against high earners and in part to exploit public distrust of his opponent, Mitt Romney, who is one of those high earners.
To be fair, Obama is trying to justify the tax as a way of paying for all the awesome government stuff he wants to give people. A Politico item on the President's Buffett Rule speech today reports that "Obama said that for education, research, infrastructure and other investments that benefit the country as a whole to continue, there must be a way to pay for it." Read the speech, and you'll see he's also pitching it as a way to reduce the deficit. But the Buffett Rule wouldn't pay for much—or meaningfully reduce the deficit. Estimates indicate that it would raise about $47 billion over ten years against the current baseline, assuming no other changes to today's law. Against a more realistic baseline, it would raise a little more: about $160 billion over a decade.
As a comparison, the Congressional Budget Office expects that the federal government will run a deficit of $1.2 trillion this year alone. Previous annual deficits under Obama were even higher. If the President were actually concerned about sky-high budget deficits, he might have considered not racking up record fiscal gaps for the first few years of his presidency. Fiscally, the Buffett Rule would be about as meaningful as running up a thousand dollar unpaid bar tab every night for a week, and then leaving the bartender a $100 bill as you leave on Friday night.
But like I said: This isn't about effective policy. This is about political symbolism, populist angst, and election-year attack lines. And that symbolism is directed mostly at making life difficult for a very specific well-off person—Obama's general election rival, Mitt Romney.
Romney, for his part, has laid into the Buffett Rule. It's class warfare, he says. "Let's find the very most successful in our country and say they're bad guys. Go after 'em. And let's divide America,'" is how he described the rule a in a campaign speech earlier this week.
How would Romney like to reform the tax code? With a series of big-ticket tax cuts. In 2008, Romney made it clear where his views on tax cuts came from: "I strongly have been of the view that one of the great lessons for Ronald Reagan was that lowering taxes helped built our economy." Here's the problem: Romney says he'd make sure that the tax cuts are revenue neutral. He'd cut some spending and get rid of existing tax loopholes to pay for them. Everyone wants a simpler tax code, right? But it's one thing to say that simpler is better. It's another to say which deductions, each of which benefits a class of people, should be scrapped. And Romney won't say which spending he'd cut, or which loopholes he'd close—and, in theory, this would be on top of additional spending cuts that's he's also declined to name. It's tax reform mystery meat.
Granted, Romney's Democratic rival is not exactly clearer. Obama has also taken up the rhetorical fight against tax loopholes too—and then proposed adding at least one new loophole.