For now, at least, top Democrats are sending signals that they’re united behind President Obama’s call to end the Bush-era tax rates on income over $250,000, and a new poll seems to back up their posture.
Forty-four percent of voters, according to a Pew survey released Monday, believe raising rates on such income would help the economy, with another 24 percent saying it would make no difference. In other words, nearly 70 percent of voters believe Obama’s plan would either have a positive or neutral effect on the economy, while only 22 percent think it would have a negative impact. Among independents, just 18 percent say it would hurt the economy, with 71 percent saying it would have a positive or neutral impact.
The findings are important because the Republican case against reverting to Clinton-era rates for the top 2 percent of income earners revolves around the supposedly job-killing effect this would have. The case for raising rates, on the other hand, involves the deficit and the country’s longer-term fiscal health. Obama and other proponents don’t claim that hiking rates would magically revive the economy; they simply argue that it’s a fair way to cut into the deficit and that the example of the 1990s proves it won’t by itself hinder the economy.
This is not the first piece of evidence that Obama is on solid political ground with his plan. The idea of asking the wealthy to contribute more revenue consistently polls very well and has for years. Which raises a logical question: If it’s so popular, why is raising taxes on the rich so hard to achieve politically?
Several explanations come to mind, but one that jumps out involves the Republican Party’s prioritization of low tax rates for high earners and the distortive effect that their efforts to protect those rates can have on public opinion. The key here is that the GOP doesn’t market itself as a party that favors preferential treatment for the wealthy; it pitches itself as the protector of all taxpayers, even (or especially) those in the middle class. Thus, when Democrats seek to raise rates on the rich, Republicans respond by stoking fears of the non-rich that they're the ones who are really getting robbed.
The best demonstration of this came nearly 20 years ago, when Bill Clinton enacted the higher rates (36 and 39.6 percent) for upper-income earners that Obama now wants to return to. Clinton had campaigned in 1992 on the idea of asking the rich to pay more, and the idea had seemed popular with the public. But when he put his budget together, Republicans lined up against it unanimously and railed against “the largest tax increase in history.” And the same voters who told pollsters they favored higher rates on the rich sided with them, convinced by all of the noise that Clinton was going after more than just the top 2 percent. Just consider this 1994 story from Newsday’s Glenn Kessler, who visited Kentucky and found blue collars voters furious about a nonexistent tax hike:
Many people appeared to have only a distant grasp of how decisions made in Washington affected their lives. In fact, most repeated the same myths. Virtually everyone said that Clinton and the Democrats in Congress raised their taxes as part of the deficit-reduction package passed last year, even though few here make enough money to have qualified for higher tax rates. In fact, the same tax law greatly expanded the Earned Income Tax Credit for low-income workers, resulting in a tax cut for many workers in this relatively poor region.
"I used to be a die-hard Democrat, but not anymore," said Don Samples, 53, an air-conditioner repairman, as he shopped at the Piggly Wiggly supermarket in Hopkinsville. "Raising taxes isn't the answer to everything."
The Clinton story shows that just because a president does what voters tell pollsters they want him to do on taxes doesn’t guarantee voters will understand it that way – especially if one of the two major parties is loudly and unanimously arguing that the president has done something completely and totally different from what he says he did.
The same thing has happened during Obama’s presidency. A provision to cut taxes for virtually all working families was included in the 2009 Recovery Act, but less than 10 percent of voters said they knew about it. You can fault Obama for not more forcefully telling people about his tax cuts (although he did mention them, a lot), but whatever noise he could have made was no match for the white hot excoriations of the “failed” stimulus coming from every member of the opposition party. When the New York Times’ Michael Cooper visited North Carolina just before the 2010 midterms, he encountered the same phenomenon Kessler had witnessed 16 years earlier:
What if a president cut Americans’ income taxes by $116 billion and nobody noticed?
It is not a rhetorical question. At Pig Pickin’ and Politickin’, a barbecue-fed rally organized here last week by a Republican women’s club, a half-dozen guests were asked by a reporter what had happened to their taxes since President Obama took office.
“Federal and state have both gone up,” said Bob Paratore, 59, from nearby Charlotte, echoing the comments of others.
Then there’s what happened when Obama signed off a two-year extension of the Bush rates in December ’10. In theory, this should have been unpopular, since Obama was caving to GOP demands that the rich be included in the extension. But the deal ended up polling well. This was probably because, for one of the few times in his presidency, Obama received public praise from Republicans, encouraging a sense among voters that he’d acted reasonably.
This doesn’t mean that Obama isn’t smart to make a stand on the Bush tax cuts this year. As a campaign issue, taxing the rich seems to be a winner. Clinton ran on it in ’92 and Obama himself did in 2008. And in terms of dealing with the GOP House, Obama should have real leverage as the Dec. 31 expiration date nears this year. It may be that if Obama really forces the issue (in the way he didn’t two years ago), the public will have his back. But there’s no guarantee this will be the case.