By Charles Krauthammer
Thursday, January 03, 2013
The rout was complete, the retreat disorderly. President
Obama got his tax hikes — naked of spending cuts — passed by the ostensibly
Republican House of Representatives. After which, you might expect him to pivot
to his self-proclaimed “principle” of fiscal “balance” by taking the lead on
reducing spending. “Why,” asked the Washington Post on the eve of the final
“fiscal-cliff” agreement, “is the nation’s leader not embracing and then
explaining the balanced reforms the nation needs?”
Because he has no interest in them. He’s a visionary, not
an accountant. Sure, he’ll pretend to care about deficits, especially while
running for reelection. But now that he’s past the post, he’s free to be
himself — a committed big-government social democrat.
As he showed in his two speeches this week. After
perfunctory nods to debt-and-spending reduction, he waxed enthusiastic about
continued “investments” — i.e., spending — on education, research, roads and
bridges, green energy, etc.
Having promised more government, he then promised more
taxes — on “millionaires” and “companies with a lot of lobbyists,” of course.
It was a bold affirmation of pre-Clintonian tax-and-spend liberalism.
Why not? He had just won Round 1: raising rates. Round 2
is to raise yet more tax revenues by eliminating deductions. After all, didn’t
John Boehner offer him $800 billion of such loophole-closing revenues just a
few weeks ago?
To paraphrase Churchill on the British Empire, Barack
Obama did not become president of the United States to preside over the
liquidation of the welfare state. On the contrary, he is dedicated to its
expansion. He’s already created the largest new entitlement in half a century
(Obamacare). And he has increased federal spending to an astronomical 24.4
percent of GDP (the post-war norm is about 20 percent), a level not seen since
World War II.
But this level of spending requires a significantly
higher level of taxation. Hence his hardball fiscal-cliff strategy of issuing
an ultimatum to Republicans to raise tax rates — or be blamed for a massive
across-the-board tax increase and a subsequent recession.
I’ll get you the money by eliminating deductions, offered
Boehner. No, sir, replied the president. Rates it must be.
Why the insistence?
(1) Partisan advantage. As I wrote last month, the
ultimatum was designed to exploit and exacerbate internal Republican divisions.
It worked perfectly. Boehner’s attempted finesse (Plan B), which would have
raised rates but only for those making more than $1 million, collapsed amid an
open rebellion from a good quarter of the Republican caucus.
At which point, power passed from the House to the
Senate, where a deal was brokered. By the time the Senate bill reached the
House, there was no time or room for maneuver. Checkmate. Obama neutralized the
one body that had stymied him during the past two years.
(2) Ideological breakthrough. Obama’s ultimate ambition
is to break the nation’s 30-year thrall of low taxes — so powerful that those
who defied the Reaganite norm paid heavily for it. Walter Mondale’s acceptance
speech at the 1984 convention promising to raise taxes ended his campaign
before it began. President George H. W. Bush’s no-new-taxes reversal cost him a
second term.
On this, too, Obama is succeeding. He not only got his
tax increase passed. He did it with public opinion behind him.
Why are higher taxes so important to him?
First, as a means: A high-tax economy is liberalism’s
only hope for sustaining and enlarging the entitlement state. It provides the
funds for enlightened adventures in everything from algae to Obamacare.
Second, as an end in itself. Fundamentally, Obama is a
leveler. The community organizer seeks, above all, to reverse the growing
inequality that he dates and attributes to ruthless Reaganism. Now, however,
clothed in the immense powers of the presidency, he can actually engage in
unadorned redistributionism. As in Tuesday night’s $620 billion wealth
transfer.
Upon losing the House in 2010, the leveler took cover for
the next two years. He wasn’t going to advance his real agenda through the
Republican House anyway, and he needed to win reelection.
Now he’s won. The old Obama is back. He must not be
underestimated. He has deftly leveraged his class-war-themed election victory
(a) to secure a source of funding (albeit still small) for the bloated welfare
state, (b) to carry out an admirably candid bit of income redistribution, and
(c) to fracture the one remaining institutional obstacle to the rest of his
ideological agenda.
Not bad for two months’ work.
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