The President’s Reversal?

Monday April 11th, 2011   •   Posted by Craig Eyermann at 11:00am PDT   •  

How much has the recent debate over federal spending changed things in Washington D.C.? Consider that at the beginning of the year, both the President and the members of his political party believed that any cuts to their previously proposed levels of spending would be unthinkable.

After all, it was only two months ago that President Obama proposed simply freezing the federal government’s spending at the elevated levels to which they’re reached during his administration.

Now, let’s flash forward to today:

President Barack Obama will lay out his plan for reducing the nation’s deficit Wednesday, belatedly entering a fight over the nation’s long-term financial future. But in addition to suggesting cuts�the current focus of debate�the White House looks set to aim its firepower on a more divisive topic: taxes.

In a speech Wednesday, Mr. Obama will propose cuts to entitlement programs, including Medicare and Medicaid, and changes to Social Security, a discussion he has largely left to Democrats and Republicans in Congress. He also will call for tax increases for people making over $250,000 a year, a proposal contained in his 2012 budget, and changing parts of the tax code he thinks benefit the wealthy.

But for members of the Democratic Party, that’s news:

The White House move caught Democrats in Congress off guard, according to aides, and details of the president’s proposals were sketchy.

White House political advisor David Plouffe was making the rounds on Sunday’s political talk shows to try to set the field for what the President will propose later this week:

In an effort to go on the offensive in the battle over government spending, Obama will look for cuts in �all corners of government,� senior adviser David Plouffe said on several Sunday talk shows.

Although Obama�s health-care law is projected to curtail Medicare spending over time, �we have to do more,� Plouffe said Sunday, marking the first time the administration has made an explicit commitment to changes in entitlement programs for the purpose of deficit reduction.

Contrasting the president�s approach with what Republican leaders have put forward, Plouffe said Obama will use a �scalpel� and not a �machete� as he seeks to preserve funding for education and other areas he considers crucial to the country�s long-term economic success.

Here’s what to expect on Wednesday:

Mr. Plouffe said the president will name a dollar amount for deficit reduction, although the White House wouldn’t provide specifics. Introducing taxes into the discussion has the potential to complicate the resolution of coming budget fights, specifically the need to raise the debt ceiling, a move needed to prevent the U.S. defaulting on its debt.

Plouffe’s “scalpel and not a machete” comment suggests that most of the President’s proposed deficit reduction and the corresponding reduction in the growth of the national debt will be provided by tax hikes. The Wall Street Journal reports:

In his speech Wednesday, Mr. Obama will use himself as an example to make the case for raising taxes on the wealthy, while preserving those for the middle class. “People like him, as he’ll say, who’ve been very fortunate in life, have the ability to pay a little bit more,” Mr. Plouffe said.

Eliminating the Bush tax cuts for the highest earners, however, will only put a small dent in the projected deficit.

So, if President Obama can’t get enough in higher income taxes from the individuals he considers to be wealthy, let’s graphically point out just which group of people really make the greatest amount of taxable income in the United States:

Now for a quick logic exercise. If President Obama can’t get enough money to eliminate the U.S. government’s massive budget deficit by taxing the wealthy, who might he go after next, seeing as he only wants to take a “scalpel” to his ambitious spending agenda?

As a general rule in life, whenever a politician appears to swing to a position they’ve opposed before, they’re really trying to mask their intent to continue pursuing the exact same political objectives they’ve been pursuing all along. It’s just business as usual in Washington D.C.

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April 2011