By Josh Barro
President Barack Obama's call yesterday for Congress to extend most of the Bush tax cuts was widely received as non-news. The president was reiterating a position he has long held, and one that he returns to when he thinks it is politically advantageous -- just as House Republicans do when they vote, over and over, to repeal Obamacare.
But there was an important shift in the president's call for tax relief. Historically, he has said that the "middle class" portion of the Bush tax cuts (about 80 percent of the total) should be made "permanent." That was his position during the 2008 campaign and during his fight with Republicans over the extension of the taxes in 2010.
But yesterday, all he said was that the tax cuts for those making below $250,000 threshold should be extended "for another year." As for what to do after 2013, he said this:
And then next year, once the election is over, things have calmed down a little bit, based on what the American people have said and how they’ve spoken during that election, we’ll be in a good position to decide how to reform our entire tax code in a simple way that lowers rates and helps our economy grow, and brings down our deficit -- because that’s something that we’re going to have to do for the long term.
That certainly sounds to me like the president is leaving the door open to a reform that raises taxes on filers with incomes below $250,000, so long as it does so through mechanisms other than rate increases.
If this is a purposeful shift, it's a good one. The Bush tax cuts are unaffordable, and in the medium term, we need a substantial federal tax increase -- one that spreads across most Americans, and that comes with base broadening so that higher marginal rates do not harm the economy.
Not raising taxes on people earning less than $250,000 was, as Matt Yglesias points out, Obama's worst campaign promise. Yesterday's remarks are a hopeful sign that the president is preparing to break it.
(Josh Barro is lead writer for the Ticker. Follow him on Twitter.)
Read more breaking commentary from Josh Barro and other Bloomberg View columnists and editors at the Ticker.
-0- Jul/10/2012 21:01 GMT