As President Obama prepares to deliver tonight’s State of the Union Address, it is a safe bet that he will be comfortable in the delivery. For six years in a row, Obama has used an address to a joint session of Congress to call for tax increases, and based on the early leaks, he intends to make it seven for seven later today.
Obama’s appetite for more of Americans’ hard-earned income may indeed be insatiable, but his demand for more revenue can be mostly written off as part of a cynical Washington game. Obama knows that any tax hike is dead on arrival in the new Republican Congress. From a fiscal perspective, he will have to make do with the two significant tax increases he has already signed into law — the one contained in Obamacare, and the one obtained as part of the midnight deal of the January 2013 fiscal cliff.
On top of those, this year’s demand seems extravagant. But this is not so much about changing tax policy — which Obama can no longer do — but about reasserting his relevance as a political leader. He is laying the groundwork for a populist 2016 campaign for Democrats at the presidential and congressional level.
Obama’s proposed tax hikes go hand-in-hand with his recent demands for taxpayer-funded college and taxpayer-funded Internet access. After all, in order to provide such items — which, by the way, go well beyond any reasonable definition of a “safety net” — he must find a way to tease an extra $300 billion out of Americans who work long hours and run successful businesses for a living.
Obama hopes to tap into resentment toward the wealthy and somehow translate that into Democratic victories next year. Otherwise, his party’s future leaders are sure to look back upon him as a long-term political failure.
The problem is that “Tax Man” is the oldest song in the Democratic Party hymnal. Generally speaking, Americans do not believe they are undertaxed, nor are they, in fact. According to the Tax Foundation, the average American spent the first 74 days of 2014 just working to pay various federal taxes.
And the top one percent of U.S. earners — the chief target of Obama’s tax-hiking plans — already paid a share of federal taxes (24 percent) much higher than their share of the nation’s income (14.6 percent) in 2011, according to the non-partisan Congressional Budget Office. That’s even before Obama’s 2013 tax hike raised their effective tax rate by about 15 percent.
The irony of Obama giving this old Democratic pitch for higher taxes and more entitlements is that he has done so much in office to undermine it. With his 2009 stimulus package, Obama proved that government could burn through more than a trillion dollars without improving the economy. With Obamacare, he demonstrated that government involvement could cause a common, easily obtained product to become more expensive and harder to use.
After six years of Obama, there is less evidence than ever before that government is a good handler of Americans’ wealth. That’s why he faces a Congress today that won’t give him what he’s asking for.
