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A tax Obama should have cut

Posted: October 22, 2010 10:58 a.m.
Updated: October 25, 2010 5:00 a.m.

   Never waste time playing the woulda-shoulda-coulda game, a wise man once told me. But I can't help but add my two cents to what everyone says President Barack Obama woulda, shoulda or coulda done better in his first two years -- especially when one of those people is President Obama.

Obama concedes that he let himself look too much like "the same old tax-and-spend liberal Democrat," he said in a remarkably candid New York Times Magazine interview.

"Given how much stuff was coming at us, we probably spent much more time trying to get the policy right than trying to get the politics right," he said. "There is probably a perverse pride in my administration ... that we were going to do the right thing, even if short-term it was unpopular.

"And I think anybody who's occupied this office has to remember that success is determined by an intersection in policy and politics and that you can't be neglecting of marketing and P.R. and public opinion."

Indeed. One of the oldest rules in politics is that politics is 90 percent perceptions. Who would have guessed, after his amazing long-shot election victory, that President Obama would so quickly underestimate the importance of public opinion?

You can have the most wonderfully thought-out policies, programs and achievements, but it won't do your approval ratings an ounce of good if nobody knows about them.

Obama, by comparison, has soft-pedaled his own achievements. Instead, he has gone on attack against Republicans' "tax cuts for the rich" and any other available targets. That's understandable as Election Day nears and Democratic Party desperation grows, but a lot of the attack rhetoric might not have been necessary if Obama and other Democrats had acted sooner in an upbeat manner to sell their own achievements.

Yes, achievements. Tax cuts probably offers the best, measurable example of how far public perceptions can drift from reality -- at Obama's expense.

If you asked a sampling of people on the street whether Obama has reduced taxes on most Americans or not, regardless of party, most probably would say no or that they don't know. In fact, a September CBS News/ New York Times poll found fewer than one respondent in 10 knew that the Obama administration had lowered taxes for most Americans.

In fact, about 40 percent of the stimulus bill conservatives love to bash was tax cuts, affecting 95 percent of working families -- up to $400 a year for individuals and $800 for married couples -- as a result of changed withholding rates.

Yet about half of those polled thought their taxes had stayed the same, a third thought that their taxes had gone up, and about a tenth said they did not know.

Why? Ironically, Team Obama takes part of the blame for this misperception, the Times reports. In the administration's view, if we taxpayers received our tax cuts in the form of, say, a nice check in the mail, we might be tempted to be prudent, put in a bank and save it. That was NOT what the administration wanted us to do. They wanted us to go right out and spend it, producing a bottoms-up stimulus for the economy.

To encourage us to be spendthrifts, the administration decided to spread out our tax cuts over time in the form of small reductions in our payroll taxes.

That worked, according to the best estimates, in getting more money back into the economy. But amid other rising costs, state and local taxes -- and rising economic jitters -- most of us didn't notice the difference.

From a political standpoint, the administration shoulda ballyhooed their tax cut in a way that would have shown working-class and middle-class taxpayers that the administration was on their side.

Instead, Democrats like former Labor Secretary Robert Reich proposed "an emergency payroll tax cut," eliminating payroll taxes on the first $20,000 of income and making up the revenue loss with tax increases on incomes above $250,000.

Sure, Republican leaders would howl, but that's the sort of debate Democrats should welcome. For many Republicans, it would be an unnatural act to oppose a tax cut, even if it left out the rich.

Imagine how much the tax-cutting momentum of the tea party conservatives could have been undercut if Democrats had made tax relief for working families their motto. That's one way to give politics and policy a happy marriage.

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