President Obama’s new budget proposal epitomizes the central conundrum in evaluating the man and his presidency: A man who is such a gifted politician at election time, who has said repeatedly that he believes “good policy is good politics” seems incapable of putting forth policies that are capable of galvanizing public support. A mish-mash of proposals, all with a huge price tag, and not a single compelling argument for the whole.
It is frustrating. President Obama is right to ask for millions of dollars in investment for new infrastructure projects. Too many bridges are crumbling, our mass transit system is a laughingstock, the highway trust fund is almost empty. But, instead of asking us all to pay for these new projects, with an increase in the gas tax, he opted instead for a one-time windfall by allowing foreign investment income to be repatriated at only a 14 percent rate on all past foreign and a new 19 percent rate on future foreign investment income. Of course, with plummeting gas prices, no would notice a rise in the gas tax. And, finding a way to tax foreign investment income is a good idea too. But, where is the connection?
The president proposes to increase defense spending by $585 billion. This might make sense, or it might not, but it is hard to square the increase with his continued search for applause lines by saying he wound down two wars. Surely the Pentagon needs more during wartime than in peacetime. Surely there will be costs involved in shifting, slowly, our Euro-centric defense posture to one that gives the Pacific nations their due. But, shouldn’t there be some savings from that shift too? Is there a reason we need so many new technological gizmos for the military when, in most conflicts, the final debate always comes down to whether or not we should put boots on the ground? I believe the country would gladly spend more money on the Pentagon if the nation had a coherent strategy for dealing with the rise of Islamicist terror, but we don’t.
President Obama proposes to reform the business side of the tax code, closing loopholes that benefit specific industries - $45.5 billion in loopholes over ten years for the oil and gas industry – in exchange for lowering corporate tax rates. Both ideas are sound. But, the growing inequality in the economy is not within the business world but between the very rich who live off investments and the rest of us who live off of wages. If the President really wanted to improve his legacy rights, and make it more difficult for Republicans in Congress to balk, why not overhaul the entire tax code, eliminating all tax breaks except those few which virtually everyone can access, such as home mortgage interest, state and local taxes, and gifts to charities, in exchange for reduced rates across the board for everyone? This does not need to be a flat tax, which is grossly regressive, but it would hugely simplify the tax code and make most investments conform to economic reality rather than trying to abuse the tax code in search of preferential treatment. The tax table is not confusing and could keep its current progressivity. Just eliminate all the exemptions for this, that and the other thing. Nah.
The other day, a group of political talking heads were discussing the different benefits of candidates who are brand new on the presidential debate stage versus those who have some experience under their belt. As evidence for the value of experience, they showed a clip of then-Sen. Joe Biden in a 2007 debate. He was asked about eliminating the cap on FICA taxes. Currently, FICA tax, which funds Social Security, applies only to the first $100,000 or so of income. Any additional income is tax-free. This made sense in the 1930s when Franklin Roosevelt was trying to present the plan as a kind of insurance, but does it make sense today? If we eliminated that cap, Social Security would be solvent for as far as the eye can see, and the out-year budget deficits would not look as grim as they do today. Did President Obama propose lifting the cap? No.
The paper says that the line item for the Census Bureau will be increased by 36%. Who knows why. Okay. At some point, a budget proposal must get down into the weeds of wonkdom. There may be good reason to increase the Census Bureau’s budget and it may not fit into any broader political narrative. But, overall, this administration seems incapable of asking themselves the most basic question of politics: How do we define and defend our policy?
This will be the second to the last budget President Obama proposes. It was a missed opportunity not to propose something that would cohere with a political narrative. “Fighting inequality” would work. “Shoring up the nation’s long-term finances” would work too. “Shrinking the federal deficit” or "Investing in a Shared Future" also would make sense. But, trying to make sense of this hodgepodge of proposals, the only slogan that comes to mind is “Budget Ghoulash for the 21st century.” There is no vision here, just numbers. Our tinkerer-in-chief still doesn’t understand politics.
