Over at Wonkblog, Zachary Goldfarb says the president’s decision not to include a change to CPI for Social Security rate increases – a measure with little impact on the federal budget in the near-term, but modest benefit to America’s fiscal situation in the long-term – in his budget is the fault not of furious liberals, but Republicans.
Specifically, Goldfarb says the GOP didn’t agree to raise taxes, so the president is backing off of one of his few legitimate spending reforms:
In 2011, in 2012 and in 2013, Obama was willing to adopt a chained consumer price index, which would result in lower payouts of Social Security benefits over time. (He would have protected poor seniors.)
Republicans had long demanded it, citing the sustainability of the nation’s retirement entitlements. Obama was willing to do it as part of a “grand bargain.” His condition was to scale back tax breaks that benefit the wealthy. He made the case to House Speaker John Boehner (R-Ohio) in 2011 and 2012 and then — over and over — to Senate Republicans in 2013.
Nonetheless, Republicans didn’t bite. They decided that raising taxes on the wealthy by closing tax expenditures was too much to ask.
In all of the president’s budgets, he has pushed for major tax and spending increases. He has assumed unrealistic economic growth projections to lower deficit expectations, and declared we don’t have a deficit problem even as the Treasury Department reported last year that the nation is headed for enormous fiscal difficulties. The CPI change was one of the few good policies the president has ever included in any of his budget proposals.
Yet, somehow, it is the GOP’s fault for not wanting to raise taxes – taxes that are already extremely high on the wealthy. Furthermore, the Congressional Budget Office projects under its admittedly optimistic scenario that tax revenue as a share of the economy will rise significantly in the next several years.
Does the tax code need reforming? Absolutely. There should be few or no loopholes, rates should be low, and politicians and special interests should keep their grubby hands off the code. (Ideally, a national sales tax would be instituted even as the income tax was made illegal, but the flatter percentage tax described above would be a worthwhile compromise.)
And it’s true that many wealthy companies and individuals receive a great deal of help from the federal government’s tax policies. The fiscal cliff deal of January 2013 included $67 billion in special interest credits and loopholes for Goldman Sachs and NASCAR, to name but two. The White House, which had just won a re-election campaign on higher taxes on the wealthy, fully supported the loopholes on the argument that tax increases would hurt the economy. (Irony alert…)
However, Goldfarb misses the key difference between the President’s Social Security reform and his wish for higher taxes: The first is necessary, and the latter is merely class warfare.