It’s been nearly seven months since President Obama introduced the Buffett Rule. He first described it at the White House last September, shortly after the GOP’s persistent refusal to take any new tax revenue from wealthy Americans sank his bid to pass major deficit-reduction legislation and nearly turned the standoff over raising the debt ceiling into a full-blown economic calamity.
At the time the “rule” was only a principle: People who make over $1 million a year should pay at least as high an effective tax rate as middle-class Americans. In context, it served a clear purpose: With the parties poised for a major, unavoidable conflict over the budget and national priorities, Republicans needed to be broken of their anti-tax orthodoxy. The Buffett Rule was a politically bulletproof cudgel, and popular with President Obama’s base to boot. It wouldn’t on its own solve the country’s long-run budget problems, but that wasn’t the point — this was a small piece of a broader package of fiscal policies Obama had introduced. But it served a huge symbolic purpose. The real point was to pull back the veil on the GOP’s true vision for the country, force them to deal sensibly on key national priorities. And if Democrats reaped a political bounty in the process, all the better.
Fast forward to this week. Americans are paying their taxes, Mitt Romney — a poster child for tax inequity — has all but cinched the GOP presidential nomination, Obama has renewed his push for the Buffett Rule and the Senate will hold a vote on a Buffett Rule bill next week. The synergy is clear, and intentional — part of a careful political strategy. But the upshot thus far isn’t that Republicans are retreating from their anti-tax absolutism (they’re not) but that high-profile members of the commentariat have forgotten all of this history.“It’s total gimmickry,” said Politico Executive Editor Jim Vandehei on MSNBC Thursday. “It’s 1 percent of what you need to take care of the deficit. There’s a big danger for President Obama in that they become so insanely political in an insanely political culture.”
“Obama’s claim that the Buffett Rule ‘is something that will get us moving in the right direction toward fairness’ would be more convincing if he took other steps in that direction, too,” wrote Washington Post columnist Dana Milbank in a piece that also dubbed the rule “gimmicky.” “Three years into his presidency, Obama has not introduced a plan for comprehensive tax reform — arguably the most important vehicle for fixing the nation’s finances and boosting long-term economic growth.”
This is exactly how Republicans want the media to treat the Buffett Rule, and, indeed, how they treat it themselves. But it’s an exceptionally obtuse and decontextualized treatment that pretends the parties aren’t at a complete impasse on tax reform, gets some of the facts wrong and misses the symbolic significance entirely.
Substantively, the most common Buffett Rule critique is that, according to the Joint Committee on Taxation, it would raise only $47 billion over 10 years — a thimble in the nation’s ocean of debt. Set aside for now the fact that nobody in the administration claims the Buffett Rule is where tax reform should start and end. This figure emerges from the critical assumption that the Bush tax cuts expire on schedule at the end of 2012. If that were to happen, high-income earners would see their effective tax rates rise, and, thus, many fewer millionaires would become ensnared by the Buffett Rule in the first place. But it also means the $47 billion would come on top of a flood of new revenue that would swiftly fill the country’s budget hole, mooting Vandehei’s objection.
It cuts the opposite direction in a world where the Bush tax cuts, and all of their perks for the wealthy, are extended indefinitely. Under this scenario, many more millionaires would be required to pay the Buffett Rule’s 30 percent minimum tax, and, thus, it would raise significantly more revenue. There are no official government estimates, but outside experts say it would have raised $50 billion if it had been in effect this year alone. Sen. Chuck Schumer (D-NY) says it would raise about $160 billion over 10 years. That’s not a huge figure. But if Republicans win big in November and make the Bush tax cuts permanent, a Buffett Rule could in theory serve as a bulwark to both preserve a measure of fairness in the tax code and hold on to a small but significant source of revenue for important but cash-starved federal priorities.
And yet all of this is largely beside the point. All Buffett Rule critics knock Obama for not pursuing more comprehensive tax reforms. If they’d paid even passing attention to the events of 2011, they’d know that the only tax reforms Republicans back either raise no revenue, or are conditioned on the idea of locking in the Bush tax cuts permanently. They imply future cuts to government programs that neither Democrats nor most Americans are prepared to accept, but are at the root of the GOP’s tax strategy. The Buffett Rule is designed to make those demands politically noxious — and perhaps clear the way toward a more reasonable approach to balancing the country’s priorities.