President Obama has been riding a wave of immense good will and popularity. His poll numbers have been very high, though they have declined in recent weeks. Some of this is fairly typical for a new president. Some of it is unique to the incredible popularity that this new president has enjoyed. He is a remarkable campaigner and a unique communicator. It is hard not to like him unless you are disposed that way in the first place. His relaxed, good-natured way of engaging with people combined with his obvious brilliance make him a most appealing leader on the national and world stage. Unless you are deeply partisan you give him every benefit of the doubt because he is our president. I often disagree with him but then I disagree with most presidents. There was a lot to disagree with during the last eight years so I wanted to give Obama a chance to become a new leader with new ideals and ideas.
During the 2008 campaign the issue was economics. Let’s face it, Obama and McCain were neck-and-neck in the polls until the economy fell apart. I know there were other factors in the race but this one plainly overshadowed them all. I am not sure why this is so often the case but American voters turn on politicians when the economy takes a serious down turn and respond with a ho-hum when things are good. Every present poll says that Americans are watching the health care debate with more interest than any other issue (by far) on the present docket. Why? They want solutions to real health insurance problems but they are very deeply concerned about the economy and the future of the economy as it relates to a massive new spending bill on health care reform.
The Associated Press reported yesterday that President Obama’s treasury secretary, Timothy Geithner, said the White House cannot rule out higher taxes to help bring under control the exploding budget deficit. No surprise there. But the next lines surprised me. Geithner said that a tax hike on the middle class could not be ruled out as part of a health care overhaul. I read this sentence four times to make sure I got it. I did. Obama has not said it but you can be sure that he knew Geithner would. He seems to be floating a huge balloon to see how the public will respond. Yesterday, the president was quick to say that he would not raise taxes. I think the trial balloon idea may be close to reality. Press Secretary Robert Gibbs covered the White House response to the controversy.
Both Geithner and National Economic Council Director Larry Summers sidestepped questions about Obama’s intentions regarding tax increases but Geithner made it very clear that a middle class tax increase is possible. Geithner said, “If we want an economy that’s going to grow in the future, people have to understand we have to bring those deficits down. And it’s going to be difficult . . . And the path to that is through health care reform.” I have two responses.
First, I am not really surprised that we have reached this place only a little more than six months into Obama’s term. I am not a macro-economist but I do understand what creates federal deficits. Major spending on government health care will do it every time. This is not that complicated. The president promised that he could deliver a new massive spending program and not raise taxes on the middle class. Pure myth! Political snake oil. Voters should have known it but when did voters refuse this rhetoric of promise with simple facts? And remember, candidate Obama promised all this major new spending in the middle of the deepest recession since the 1930s. You cannot grow money. You have to create revenue streams or cut spending, or better yet, both. There are several ways to do this. At some point Joe the Plumber will be proved right if this president gets his way.
Second, during the campaign this president said over and over, “You will not see any of your taxes increase one single dime.” He said this so often that independent voters believed him and provided his margin for his victory. His margin was not huge at all. These same independent voters will be back in 2010 and 2012. In 2012 they will be reminded of his promise about taxes for sure. If the president raises taxes on the middle class his popularity will plunge and my guess is that he will be another one term president. The first President Bush, riding a wave of immense popularity, dramatically promised: “Read my lips. No new taxes!” He later raised taxes and Bill Clinton became the next president. This only happened, however, after Ross Perot used Bush’s words to undo him politically. I am not a political prophet but I tell you this: If President Obama raises middle class taxes people will remember and it will be his political undoing.
I believe raising middle classes taxes is inevitable if Congress continues to spend and Obama continues to promote this spending and sign the bills Congress passed. I also believe the president will try every way that he can to use his considerable skills to assure us that he did not break his campaign promise. I also believe that millions of voters in the middle will not buy it. Many will defend him because they like him and/or believe in his ideas. But millions who voted for him do not embrace these ideas about spending and taxes. They wanted a new president. They still like this man. I do.
I didn’t expect to say this but the tax and spend issue will undo this president if he goes down this path. His popularity will plunge and it will be very hard to re-elect him if a decent candidate surfaces to challenge him on the tax and spend issue. Remember, as they say in politics "a few months can be an eternity." The next few months are huge for this president. His ideology will finish him unless he adapts and then moves away from some of the radical spending plans that require the new revenue of taxes that he promised not to raise. Even if Geithner spoke only for himself on Sunday then one wonders just how long this president can raise government spending and simply keep telling us that only the rich will pay for all these programs. The truth is this: taxes of various sorts impact us all since taxes come through many means other than income taxes. Somehow this is almost never mentioned.