President Obama on Wednesday declared himself “honest about what’s causing our deficit” and ready to face “tough choices.” Yet he insisted on “protecting” his administration’s “investments in the future.” Billed as a speech about cutting the deficit, Obama instead delivered a speech about why not to cut spending and why to preserve all of his programs. “We do not have to sacrifice the America I believe in,” he said, in one of his many uses of the first-person singular.
Attempting to position himself as the grown-up in the room, Obama instead made it clear that nearly everything that he “believe[s] in” should remain untouched. Anything else would reflect a lack of “patriotism,” the president implied.
For instance, the president’s definition of “tax reform” is an odd one. Usually, the term implies eliminating tax deductions and credits (“broadening the base”) and lowering rates. For Obama, there are no rate cuts — in fact, there are rate increases. But more revealing, the only “loopholes” he wants to kill are those with which he disagrees.
Obama has created dozens of tax credits and tax deductions aimed at shaping the economy in his image. Obama’s supposedly “serious” talk about the deficit never proposed to eliminate his own tax credits. He also never touches other tax credits that reward the behaviors he likes, even at the expense of the economy and tax revenue — like the ethanol-blending credit.
Obama clearly sees the tax code not simply as a way to collect revenue, but as a way to modify behavior. The only “loophole closing” he has proposed in recent months is even more discriminatory than the loophole itself: Obama doesn’t want to end the “production tax credit” that applies to coal mining, manufacturing, forestry, and oil and gas drilling — he just wants to kick oil companies out of the club that benefits from this tax credit.
He certainly isn’t proposing an end to tax credits for wind and solar energy or electric cars. These are the “investments” that will help us “win the future.”
Maintaining and expanding such favoritism in the tax code — and he’s certain to insist on new and extended tax credits next year — is the opposite of “reform.” But using words to mean something they’ve never meant before is standard fare for this administration.
On that score, Obama deliberately conflated spending and tax breaks Wednesday. He called for us to “reduce spending in the tax code.”
While “spending in the tax code” might sound odd, it actually exists. For instance, the “Investment Tax Credit” for renewable energy is available to corporations even if they owe no taxes, and is often paid in the form of a check from the U.S. Treasury to those companies that are doing what Obama wants them to do. The Earned Income Tax Credit is the poor-man’s version of this — a welfare payment from the Internal Revenue Service.
But Obama wasn’t talking about eliminating these “tax expenditures.” When he spoke of lowering “spending in the tax code,” it was in the context of his desire to raise rates for upper-income Americans. Under Bill Clinton, the top tax rate was 39.6 percent, but today it’s 35 percent. That extra 4.6 percent of income that a successful American gets to keep — to Obama that counts as “spending” by the government.
The only way to make sense of this way of speaking is to read Thomas Hobbes’ “Leviathan,” in which it is explained that all wealth belongs to the state, except at the pleasure of the sovereign.
The only place Obama showed a willingness to give ground on his own policies involved one particularly generous favor that Obamacare granted to Big Pharma: 12-year exclusivity on biotech drugs. Shortening that government-granted monopoly to seven years would produce a modest cut in Medicare spending.
Otherwise, the speech was a defense of his own policies and an attack on Republicans. He rightly dinged the GOP for refusal to cut military spending, even though Defense Secretary Robert Gates (first appointed by President Bush) sees hundreds of billions in potential savings from military waste.
Obama also attacked Republicans for opposing tax increases as “an article of faith.” The phrase was meant to put down an unbending dogma at a time when “tough choices” are needed.
But Obama has repeatedly shown steadfastness on Democratic “articles of faith” — consider his willingness to shut down government over Planned Parenthood funding last week, and his adherence to his own tax credits.
Obama believes in sacrifices, but not by him.
Timothy P.Carney, The Examiner’s senior political columnist, can be contacted at [email protected]. His column appears Monday and Thursday, and his stories and blog posts appear on ExaminerPolitics.com.
