It turns out I shouldn't have blogged that I was even briefed about the SOTU. I thought I just had to keep the contents to myself. One thing you learn pretty quickly about this White House: transparency is a theory, not a reality. Just watch it tonight, as I will (I don't have the text), and make your own mind up, as I will, in real time.
As I said, I think tax reform should be at the center of the president's re-election push. The Romney tax business is an almost perfect backdrop. And tax reform – as I wrote above – helps Obama not only do the right thing, but also regain stature with independents, whom he desperately needs. That's my yardstick this year for this SOTU, as it was last: is he serious about long-term debt as well as short-term recovery? He totally dropped the ball last year, and I gave him hell. If he does it again, I think it reveals that he really isn't prepared to tackle tax reform or long-term debt in any serious way – and blame it all on the GOP. I mean: how can you enforce the Buffett rule without tax reform?
But the president strongly disagrees with this interpretation. Here's his defense of punting on Bowles-Simpson, made aggressively in his recent interview with Fareed. It's worth reading in full:
The basic premise of Simpson-Bowles was, we have to take a balanced approach in which we have spending cuts and we have revenues, increased revenues, in order to close our deficits and deal with our debt. And although I did not agree with every particular that was proposed in Simpson-Bowles — which, by the way, if you asked most of the folks who were on Simpson-Bowles, did they agree with every provision in there?, they’d say no as well.
What I did do is to take that framework and present a balanced plan of entitlement changes, discretionary cuts, defense cuts, health care cuts as well as revenues and said, We’re ready to make a deal. And I presented that three times to Congress. So the core of Simpson-Bowles, the idea of a balanced deficit-reduction plan, I have consistently argued for, presented to the American people, presented to Congress.
There wasn’t any magic in Simpson-Bowles. They didn’t have some special sauce or formula that avoided us making these tough choices. They’re the same choices that I’ve said I’m prepared to make. And the only reason it hasn’t happened is the Republicans were unwilling to do anything on revenue. Zero. Zip. Nada.
The revenues that we were seeking were far less than what was in Simpson-Bowles. We’ve done more discretionary cuts than was called for in Simpson-Bowles. The things that supposedly would be harder for my side to embrace we’ve said we’d be willing to do. The whole half of Simpson-Bowles that was hard ideologically for the Republicans to embrace they’ve said they’re not going to do any of them.
So this notion that the reason that it hasn’t happened is we didn’t embrace Simpson-Bowles is just nonsense. And by the way, if you talk to some of these same business leaders who say, Well, he shouldn’t have walked away from Simpson-Bowles, and you said, Well, are you prepared to kick capital gains and dividends taxation up to ordinary income, which is what Simpson-Bowles called for, they would gag. There’s not one of those business leaders who would accept a bet. They’d say, Well, we embrace Simpson-Bowles except for that part that would cause us to pay a lot more.
And in terms of the defense cuts that were called for in Simpson-Bowles, they were far deeper than even what would have been required if the sequester goes through, and so would have not been a responsible pathway for us to reduce our deficit spending. Now, that’s not the fault of Simpson-Bowles. What they were trying to do was provide us a basic framework, and we took that framework, and we have pushed it forward.
What he ignores is that if he had openly embraced Bowles-Simpson, his own commission, and forced the GOP to oppose him, he could have changed the dynamic. Because there is some magic in a Republican and Democrat and their colleagues offering a candid way out of our fiscal hole. And there is more magic in a president backing them. Instead we hear him saying that the GOP ran away from it, so why should he embrace it? That kind of logic was one I thought we voted against when we backed Obama in 2008. It's so so so Washington.
As it is, Obama really doesn't want the steep defense cuts that Republican Alan Simpson wants. And in a sane world, conservatives would be attacking him for this overweening bloat. But my real suspicion is that Obama does not believe he can defeat the special interests that would attack Bowles-Simpson. Look at how he cites business leaders whining about taxing income and dividends at the same level. He doesn't want to take them on. But why not? Fighting for a level playing field in taxation is a good thing – as policy and politics.
In Obama's defense, he says he proposed a similar budget last September, and it's true that it is not far off Simpson-Bowles. It's also true that Obama may want to do it, but thinks it's hopeless till after the election. It's also true that Republican resistance to any increase in revenues makes Bowles-Simpson a dead letter. But why not reveal that by backing the proposal and calling their bluff? Instead of ignoring it, proposing a document in September that no one even noticed, and then drifting on.
Let's hope that tonight is a bang, not a whimper. And let's see if tax simplification or reform are anywhere on the agenda.
The Dish 