Obama’s tax op­por­tu­nity

The Washington Post Sunday - - SUNDAY OPINION - DAVID S. BRODER david­broder@wash­post.com

While I was out ill for six weeks in De­cem­ber and Jan­uary, the world changed. Be­fore that, the White House had badly mis­judged the po­lit­i­cal cli­mate. When I went to Ohio with Vice Pres­i­dent Bi­den in Oc­to­ber, he did his best to ig­nore the ev­i­dence of eco­nomic pain, giv­ing a pep talk to skep­ti­cal fac­tory work­ers and telling me and other re­porters that he be­lieved Democrats would re­tain their ma­jori­ties in both the House and Se­nate.

The elec­tion rout came as a shock to Pres­i­dent Obama and his ad­min­is­tra­tion. But Obama took the les­son and acted promptly. The first step in mov­ing back to the cen­ter was to lib­er­ate him­self from his de­pen­dence on Nancy Pelosi and Harry Reid and cut his own deal with Mitch McCon­nell, the Repub­li­can mi­nor­ity leader of the Se­nate. In re­turn for a tem­po­rary ex­ten­sion of the Bush tax cuts, Obama got not only big pieces of his own eco­nomic agenda but also rat­i­fi­ca­tion of the arms treaty with Rus­sia and the ter­mi­na­tion of “don’t ask, don’t tell.”

Thus for­ti­fied, he be­gan to re­pair the White House, giv­ing it a dis­tinctly Clin­to­nian cast. He had al­ready hired Jack Lew, a skilled negotiator, as his bud­get chief. He brought in my friend Bill Da­ley, apo­lit­i­cally savvy op­er­a­tive with strong busi­ness and bank­ing ties, as chief of staff, and Clin­ton ad­min­is­tra­tion vet­eran Gene Sper­ling as his top eco­nomic ad­viser. Lib­eral Democrats fret­ted, but the vibes from Washington to Wall Street were good.

Then fate in­ter­vened. The Tuc­son mas­sacre pro­vided the kind of oc­ca­sion when all of the Amer­i­can peo­ple turn to the pres­i­dent to ex­press their horror and grief but also their de­ter­mi­na­tion to reach out to each other and re­cover. As Ron­ald Rea­gan and Bill Clin­ton had done be­fore him, Obama did not dis­ap­point. His ad­dress to the me­mo­rial gath­er­ing re­minded ev­ery­one why his voice had been cher­ished dur­ing the 2008 cam­paign — and why they might want to keep it in the White House.

Ev­ery­thing was cued up for the re­cov­ery process to cli­max at Tues­day’s State of the Union ad­dress. It played well with the pub­lic, with its in­vo­ca­tions of bi­par­ti­san­ship and its bursts of eco­nomic op­ti­mism. But it lacked a cen­ter­piece.

Obama called this a “Sput­nik moment” but of­fered no such am­bi­tious en­ter­prise. The one I had hoped he would choose is the over­haul of the tax code, which could pay mul­ti­ple div­i­dends.

I also hoped Obama would talk about clos­ing spe­cial-in­ter­est loop­holes, tech­ni­cally known as tax ex­pen­di­tures. Ersk­ine Bowles and Alan Simp­son, cochair­men of the pres­i­dent’s debt com­mis­sion, had spot­lighted the re­mark­able fact that $1 tril­lion a year dis­ap­pears from the Trea­sury be­cause of these loop­holes.

Re­cov­er­ing those funds ought to be at the top of the eco­nomic agenda. Big chunks of them are embed­ded in two pots that have broad pub­lic sup­port — the mort­gage-in­ter­est de­duc­tion and the tax ex­clu­sion for em­ployer-pro­vided health in­surance.

But at least half of that $1 tril­lion is steered to fa­vored spe­cial in­ter­ests.

Think what re­cov­er­ing $500 bil­lion a year would mean. If you used half of it to re­duce in­di­vid­ual and cor­po­rate tax rates, as Repub­li­cans would like, you would give a huge shot in the arm to eco­nomic re­cov­ery and job growth. If you used much of the rest to bol­ster ed­u­ca­tion and al­ter­na­tive en­ergy, and re­pair in­fra­struc­ture, as Democrats wish, you could ac­tu­ally do those things with­out deep­en­ing the deficit. And you could even set aside $100 bil­lion to re­duce the na­tional debt. What a great mes­sage that would send abroad— that the United States is se­ri­ous about end­ing its eco­nomic tail­spin.

I wanted to hear Obama urge Paul Ryan, the new Repub­li­can chair­man of the House Bud­get Com­mit­tee whose in­tel­lec­tu­ally am­bi­tious ideas have en­listed bi­par­ti­san in­ter­est, to meet soon with Kent Con­rad, the re­tir­ing Demo­cratic chair­man of the Se­nate Bud­get Com­mit­tee who well knows the ar­cane re­cesses of the tax code. To­gether, those two could pro­vide an agenda and a strong nudge to the re­spec­tive tax-writ­ing com­mit­tees. And I have to be­lieve the big fresh­man class of leg­is­la­tors would wel­come the op­por­tu­nity to do what no pre­de­ces­sors since an­other po­lit­i­cally di­vided Congress, prompted by Ron­ald Rea­gan, James Baker and the late Dick Dar­man, and Demo­cratic Sen. Bill Bradley, had done in 1986: clean up and sim­plify the tax code.

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