Abandon ship? Dick Durbin, Warren Buffett change tone on jobs plan
White House spokesman Jay Carney today downplayed statements by two political allies who are backing away from President Barack Obama’s top legislative priority, his $447 billion “American Jobs Act.
Obama ally and stock market billionaire Warren Buffett backed away from the “Buffet Rule” tax increase Friday. And one day before, top Senate Democrat Dick Durbin said his Democratic Senate majority doesn’t yet have the votes to pass the bill.
These top-level former endorsers put distance between themselves and the White House as wealthy Americans and many Democratic-leaning professionals recoil from what they see as President Obama’s anti-business attitude, and as the general public’s distrust of government reaches record levels. (RELATED: Obama implores trust in government as trust slides)
The Buffett and Durbin revelations reveal a major crack in Obama’s increasingly populist re-election campaign, which is characterized by his repeated calls on Congres to “pass the bill.” Durbin’s apparent differences with the White House come as Roll Call reports that communication has broken down between the Obama administration and Senate Democrats.
The bill ultimately aids his campaign by simultaneously offering massive government spending to left-wing special interests and a smaller deficit to swing-voting middle-income professionals and executives.
Sen. Durbin, an Illinois Democrat, said Thursday that the jobs bill doesn’t have enough support among Senate Democrats to reach the 60 votes needed to overcome Republican opposition. “Not at the moment, I don’t think we do but, uh, we can work on it,” he told an interviewer on WLS radio.
“The oil-producing [Democratic] senators don’t like eliminating or reducing the subsidy for oil companies … [and] there are some senators who are up for [re-]election who say ‘I’m never gonna vote for a tax increase while I’m up for election, even on the wealthiest people,’” said Durbin, a senior senator in the Democratic Caucus.
“So, we’re not gonna have 100 percent Democratic senators. That’s why it needs to be bipartisan and I hope we can find some Republicans who will join us to make it happen,” he said.
The public is not interested in “who’s sponsoring [the bill or] the legislative minutia of who supports it,” Carney responded when asked about Durbin’s statement. The bill “has broad Democratic support … it has broad public support, across the political spectrum,” he said, adding “we’re working on [passing] it, and we’re going to get it” passed.
“There is no higher priority for this president to continue to push Congress to take action on those measures,” Carney said.
For more than a month, White House officials have used Buffett’s support for a tax increase on wealthy Americans to press for a tax increase on people earning $200,000 or more, though officials have steadfastly refused to describe an income threshold for people covered by the “Buffett Rule.”
Obama has announced that his $447 billion, one-year stimulus plan will be offset by tax hikes worth $464 billion over 10 years. This tax increase would come on top of the administration’s call for $800 billion in taxes to be gained by not extending the tax-cuts won by George W. Bush in 2003, and extended by Obama in late 2010.
But Friday, Buffett announced he wants a very high threshold for activation of the rule. His high threshold would reduce calculations of future tax revenues and so pressure Obama to either curb his promises of spending or his promises of a smaller deficit.
“My program would be on the very high incomes that are taxed very low — not just high incomes,” Buffett told CNBC. “If you make 50 million appearing on television, that income won’t change, but if they make a lot of money and pay a low tax rate, like me, it would be changed by a minimum tax,” he added.
Carney also pushed back on the media’s reporting on Buffett’s statement. “There has been a lot of deliberate misrepresentation and misunderstanding,” he said.
The principle in the Buffett Rule, he said, is that “affluent Americans should pay at least the same tax rate as middle-income Americans.”
However, Carney repeatedly refused to say how that principle would be enacted.
One option would be to boost capital gains taxes up from 15 percent, closer to the 35 percent rate already in place for wages and salaries above $105,000 per year. Asked if that option would curb the creation of new companies, Carney punted by saying that “as a matter of principle, the president believes strongly that someone making millions of dollars in income should not be paying taxes at a lower rate” than someone earning $75,000.
Carney also declined to say how many people would be covered by the principle. “I’m not sure if we gathered figures … on the number of people who would be impacted by the principle,” he said
Buffett’s statement that he favored a very high threshold is a major change from his Aug. 14 op-ed in the New York Times, in which he called for a two-step tax increase on Americans earning more than $1 million, and more than $10 million per year.
“For those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate,” he wrote in the op-ed.
When pressed for the details of the administration’s tax plans, White House officials remain vague.
In a Sept. 27 speech in Denver, Colo., Obama declared that his tax plan “reforms our tax code based on a simple principle: Middle-class families shouldn’t pay higher tax rates than millionaires and billionaires. Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett. A teacher or nurse or construction worker making $50,000 a year shouldn’t pay higher tax rates than somebody making $50 million. That’s just common sense.”
On Sept. 28, White House spokesman Jay Carney repeatedly refused to set an income threshold for the “Buffett Rule.”
“The fact is that the burden [on high-income earners] should be proportionate and fair and balanced … It’s a principle about making sure that everyone is paying their fair share to create a situation where everyone can share in the prosperity that we are sure will continue to be the providence of this country.”
Asked again for a threshold number, Carney replied that “the answer is in the proposals the president has put forward. He’s stated some principles about the tax code, as well as specifics in terms of some loopholes that should be closed or changed … There’s a broader need for tax reform, and within that … the principle that the ‘Buffett Rule’ explains should be contained within it … I do not have a number.”
Buffett told CNBC’s Andrew Ross Sorkin on Friday that he does not know how the White House would implement his Aug. 14 proposal.
“Well, the precise program — I don’t know what their program will be,” he said. He let the White House put his name to their vague plan, Buffett said, after Obama economic chief “Gene Sperling called and said, ’Can we use your name?’ And I said, ‘yes.”