Posted by: Joshua Green on February 13, 2012
President Obama’s budget, released this morning, is being cast —- correctly —- as a “political document.” That was the term of disparagement Paul Ryan used in a conference call with reporters this afternoon. The charge is grounded in the unlikelihood that anything resembling this package of cuts and tax increases is likely to pass and get signed into law. But that’s true of every budget, from every president.
The Obama budget is “political” because it carves out a liberal ideal of what future government spending and taxation might look like, especially in comparison to the Republican alternative that Ryan and his House colleagues are expected to unveil in the next few weeks. But it’s also political in the sense that it casts into sharp relief many of the issues Democrats believe will be most harmful to Mitt Romney, the likely GOP presidential nominee.
For one thing, the Obama budget takes aim at the “carried interest deduction” that allows private equity barons to pay extremely low tax rates, such as Romney’s 13.9 percent rate in 2010. Obama would tax dividends —- the source of much of Romney’s recent income —- at the same rate as ordinary income. And the Obama budget would also enshrine the “Buffett rule,” ensuring that millionaires such as Romney would pay a minimum tax rate of 30 percent.
Each of these provisions will be opposed by the overwhelming majority of Republicans, if not all of them. But opposing them will be especially tricky for Romney, since each of them would directly affect his tax burden. That effectively puts him in the position of having to argue that others —- not he —- should have to bear this burden. And that’s a political argument the White House is eager to have.