America faces a true financial crisis. The president has responded with a hackneyed political gimmick
On Monday night, the Senate voted on the Buffett Rule tax proposal, which would have added a surtax on earned income over $1 million. The result was a foregone conclusion; the proposal needed 60 votes to overcome the threat of a GOP filibuster, and the procedural motion failed with only 51 votes. In the end, one Republican and one Democrat crossed party lines, but it didn't make any difference, as the House would not have passed the bill or even brought it to a floor vote. This vote was purely symbolic.
Of course, symbolic votes are hardly new, especially in election years. Both parties will try to force the other to cast votes that will be tough to defend in November. The Republican-controlled House staged a symbolic vote on Barack Obama's budget proposal earlier this month, which failed to garner even one vote from the president's fellow Democrats. We can expect even more of these stunt votes as the summer rolls into the fall campaign.
The White House has run out of ideas, and will do almost anything to distract Americans from finding that out.
In this case, though, the failure of the Buffett Rule bill puts the Obama administration in a tough spot, especially after the stunt vote on Obama's budget. The problem? Team Obama has nothing else to offer on the budget or the economy. In fact, President Obama has spoken of nearly nothing else but the Buffett Rule for the last eight months, since the launch in September of his "fairness" campaign. The White House has sold this proposal as a panacea for nearly all of the nation's financial ills. The White House spins this surtax as a debt and deficit stabilizer "for the next decade" (September), as well as a strategy for economic growth (in his most recent Saturday address), and finally both, as David Axelrod argued on Fox News Sunday.
Wow! The Buffett Rule must provide an amazing amount of revenue — or so one would think listening to this hype. But it would actually raise just $31 billion to $47 billion … over ten years. Compare that to Obama's own proposal for the FY2013 budget, which had a projected deficit of more than $900 billion, and ask how $47 billion "stabilizes" the annual deficit, let alone the national debt. As for economic growth, Obama's 2009 Cash for Clunkers spent more than $3 billion in three weeks and didn't do anything more than move demand from a future month forward. The American economy will generate more than $14 trillion in this year; even the higher-end number of $4.7 billion would amount to a tiny sliver of the economy, hardly enough to create a hiccup in growth — even if one believes that taking capital away from investors and putting it into the hands of government amounts to a growth strategy.
Treasury Secretary Tim Geithner hit the Sunday talk show circuit this weekend, appearing on both NBC's Meet the Press and ABC's This Week to discuss economic policy. On both shows, Geithner spent most of his time either talking about the Buffett Rule or defending the economic performance of the Obama administration. On Meet the Press, David Gregory asked him point-blank to defend the anemic recovery of the past three years, to which Geithner asserted, "If you measure what we did relative to the record of the United States in past crises, and the record of other countries, history will judge what he did as remarkably effective crisis management."
Remarkably effective crisis management? First, the crisis management mostly took place in the fourth quarter of 2008, when George Bush and Democrats on Capitol Hill pushed the Troubled Assets Relief Program (TARP) into law. The bailout itself started well before Obama took office, although he requested and received the second tranche in the first few weeks of his presidency. Obama and his administration like to confuse the crisis management part of the story with the $787 billion stimulus plan, which the administration claimed would keep unemployment below 8 percent — a level which, three years later, the U.S. has never yet dipped below.
If Geithner wants to compare that record to previous American crises, he's more than welcome to do so — but he won't like the results. The Minneapolis Federal Reserve Bank has a website tool that allows one to graphically compare post-World War II recessions and recoveries, and the Obama recovery comes in dead last among them:
(Courtesy of The Federal Reserve Bank of Minneapolis)
The U.S. faces significant economic and fiscal problems, joblessness among them. We do need to stabilize our national debt, which has grown by more than $4.4 trillion in the three years since Obama signed the FY2009 omnibus budget bill two months after taking office ($11.066 trillion to $15.539 trillion at the end of last March), after the Democratic-controlled Congress refused to pass a budget for Bush to sign the previous September, as required. We need tax reform to simplify and broaden the tax base and get more revenue through growth, and we need rapid job creation to fuel that revenue increase.
Instead, though, the Obama administration has spent eight months and uncounted hours of presidential stump time demanding a tax tweak that would solve only 0.45 percent of the annual deficit crisis, provide no growth opportunity at all, and do nothing to create jobs. The Treasury Secretary can only point to three-year-old crisis management as a defense of the administration's economic policies. No one in the White House has a plan to solve the larger problems, and as this weekend shows, they don't even want to talk about the larger problems anymore. All they want to discuss is how unfair life is, reminisce about the good ol' days of 2009, and point out to anyone listening that Mitt Romney is really, really rich.
The Obama administration has the opposite problem. They are intellectually bankrupt. This weekend demonstrated that the White House has run out of ideas, and will do almost anything to distract Americans from finding that out.
Other stories from this topic:
- Opinion Brief: Why doesn't General Electric pay taxes?
- Opinion Brief: Is it finally time for an internet sales tax?
- Controversy: Do the super rich have a 'duty' to pay higher taxes?