Did Obama pull a bait-and-switch on tax increases?

at 06:02 AM ET, 12/07/2012


(OLIVIER DOULIERY/POOL/EPA)

“The proposal calls for $1.6 trillion in new tax revenue, twice the amount you supported during the campaign.”

Dec. 3, 2012 letter signed by House Speaker John A. Boehner (R-Ohio) and other House leaders to President Obama

During the negotiations over the “fiscal cliff,” President Obama has proposed $1.6 trillion in higher taxes over 10 years. House Republicans have countered with $800 billion in new revenue, which in a letter to Obama they said was his proposal in the just-concluded presidential campaign.

From the White House perspective, all Obama did was dust off his tax plans contained in the 2013 budget, submitted earlier this year. That plan contained about $1.9 trillion in tax increases, with about $300 billion in tax cuts, for a net tax increase of nearly $1.6 trillion. The net figure is actually the administration’s goal in these talks.

Republicans argue they hit the target set by Obama during the campaign, while the administration says Republicans are only halfway there. Both sides have good evidence for their case, and we’ve spent several days reviewing campaign speeches, ads and the presidential debates in an effort to come to a conclusion on this matter.

The Facts

Obama’s 2013 budget plan, with its $1.6 trillion in tax increases, was dead on arrival. The core of the tax provisions was restoring the pre-Bush margin tax rates on the top 2 percent of tax filers, but that would raise just $442 billion over 10 years. But the proposal also would have eliminated other Bush-era tax cuts for the wealthy, totaling $165 billion, and revamped estate and gift taxes to add $143 billion. It also boosted capital gains and dividend taxes on the wealthy — that added another $243 billion.

But there were other taxes too, such as reducing the value of certain tax preferences for high-income taxpayers, which would yield $584 billion. That idea has been in every Obama budget — and never found much support in Congress.

The Obama budget was so quickly forgotten that it appears to have generated just one news release from the Mitt Romney campaign, on April 17 (tax day). The news release declared that Obama planned more than $1.5 trillion in higher taxes, “one of the biggest tax increases in history,” if he earned a second term.

If Obama had planned to stick to that plan, he certainly did not call much attention to it in the hard-fought months leading up to the election. Oddly, neither did the Romney campaign.

Over the summer, the Democratic-led Senate made a show of passing a bill that for two years would have extended the Bush tax cuts for taxpayers making less than $250,000. In effect, the bill was the equivalent of just part of Obama’s 2013 plan — the part that would have yielded just $600 billion over 10 years. But the Senate bill went nowhere in the GOP-controlled House.

In the presidential debates, Obama kept referring to the tax rates — not the other taxes in his budget.

Here is Obama in the first debate:

“But I have said that for incomes over $250,000 a year, that we should go back to the rates that we had when Bill Clinton was president, when we created 23 million new jobs, went from deficit to surplus, and created a whole lot of millionaires to boot.”

In the second debate, Obama even appears to reference the stalled Senate bill:

“So what I’ve said is, your first $250,000 worth of income, no change. And that means 98 percent of American families, 97 percent of small businesses, they will not see a tax increase. I’m ready to sign that bill right now. The only reason it’s not happening is because Governor Romney’s allies in Congress have held the 98 percent hostage because they want tax breaks for the top 2 percent.”

Vice President Biden, in the vice presidential debate, even used an $800 billion figure — while mischaracterizing the plan as only affecting people making more than $1 million:

“The middle class will pay less and people making $1 million or more will begin to contribute slightly more. Let me give you one concrete example. The continuation of the Bush tax cuts — we are arguing that the Bush tax cuts for the wealthy should be allowed to expire. Of the Bush tax cuts for the wealthy, $800 billion of that goes to people making a minimum of $1 million.”

Boehner spokesman Brendan Buck argued that given this language, it made sense for Republicans to believe that Obama had scaled back his tax plan. Here’s how he put it in an e-mail:

“Our point is he ran around the country talking about a tax plan that only raises 800B. What Americans who voted for the President heard was a tax plan that extended most rates but let the top expire. They never heard anything more than that. The fact you’ve been looking around for days and are forced to reference something Romney said, should make very clear that no reasonable person could say the president ‘ran on’ anything more than top rates — 800B. I’ve played this game with a dozen reporters who cover the president and none of them could recall any time he talked about going any further than top rates.”

On the other hand, on the campaign trail and in ads, Obama also frequently referred to his plan to cut the deficit by $4 trillion, which is essentially his rejected 2013 budget. And that by implication included nearly $1.6 trillion in tax increases. “The president not only put forward a specific proposal to the super committee last September but laid out an entire budget in February,” a White House official noted.

Indeed, the nonpartisan Tax Policy Center listed all of those taxes when in October it produced a side-by-side comparison of the Obama and Romney tax plans.

“I don’t think that the Obama campaign ever explicitly proposed limiting the value of itemized deductions and selected exclusions during the election,” said Roberton Williams of the Tax Policy Center. “We simply assumed that his tax policy would mirror what he has proposed in each of his budgets, particularly the most recent.”

“My memory of the campaign is that Obama never got down into the tax weeds but instead continually called more broadly for letting the Bush tax cuts expire for the richest 2 percent,” Williams added. “But anyone who says that adding the limit on itemized deductions represents a change in Obama’s tax policy simply hasn’t been paying attention to what Obama has been saying through policy proposals over the past four years.”

Obama, obviously, was under no obligation to highlight all of his planned tax increases. But that was certainly the job of the media or Obama’s opponents.

The Associated Press, in a fact check of Obama’s $4 trillion claim after the first presidential debate, noted about the 2013 budget plan: “Of that deficit reduction, tax increases accounted for $1.6 trillion.” And anti-tax advocate Grover Norquist tried to raise the alarm in a mailer to Virginia voters in September.

But such examples are few and far between. (Mea culpa: The Fact Checker was often critical of the Obama budget, detailing gimmicks on the spending side, but we did not highlight the full range of tax increases except when the 2013 budget plan was unveiled in February.)

The Pinocchio Test

We find ourselves at an impasse. The president is obviously trying to highball his opening bid while Republicans are lowballing theirs.

The White House can certainly point to Obama’s 2013 budget as a logical starting point because he never withdrew his tax plans and referred to his $4 trillion deficit-reduction plan during the campaign. But he did not emphasize those other tax increases, instead focusing almost exclusively on repealing Bush-era tax cuts for the wealthy.

Republicans are correct that those provisions amount to about $800 billion.

Given Obama’s rhetoric in the second presidential debate, House Republicans in theory could pass the Senate plan and in effect call his bluff — especially since there seems little appetite even in Democratic ranks to pass the full smorgasbord of Obama’s proposed tax increases.

The line in Boehner’s letter does not quite qualify for a Geppetto Checkmark, but neither does it seem right to award a Pinocchio. Obama’s campaign rhetoric certainly kept the focus on the rate hikes, not his other tax increases.

The failure here was by the media and to some extent the Romney campaign. Reporters did not directly ask Obama whether he still wanted $1.6 trillion in tax increases or if he would now settle for $800 billion. With the apparent exception of that one news release, Romney also did not highlight Obama’s litany of planned tax increases.

The failure to pin Obama down before the election has now led to the current confusion over his ultimate goal afterwards.

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