Like the GOP's Ryan plan, Obama's budget is about electoral positioning not real economic policy, but he looks better-placed
Probably the most important thing to remember about both the budget presented Monday by the White House and the one passed last year by House Republicans is that neither are really intended or expected to become law. The legislative process demands too much compromise to expect line-by-line adaptation of either. They are, instead, documents imbued by party leaders with dense and repetitive prose intended to serve as heavy (if not lethal) weapons against the opposing parties. The similarities end there.
Obama's budget is both superficially the drier of the two – the GOP's budget appears to have been crafted by an office assistant still giddy about the debut of Microsoft Office 2011 – and politically safer, at least from the standpoint of policies that are actually supported by the American people. Remember, the GOP budget called specifically for reducing taxes on high-income Americans, and for closing the revenue gap by cutting popular support programs such as Medicare.
Obama's budget reintroduces proposals that are both familiar and commonsensical. It enshrines the by-now-cliched "Buffet rule", which raises taxes on wealthy individuals and reverses previous policy that taxed the investment income of wealthy families more lightly than "ordinary" income (many of us might think of that as "earned" income): the top rate on income from dividends would skyrocket from 15 to 39.6%.
Should it pass, accountants for Mitt Romney (who earned – again, using the term loosely! – $21.7m in interest last year) may need to clear their schedules. Compared to previous tax policies, the new framework raises over $1tn from high-income taxpayers alone.
The new plan would also tax private equity managers' compensation as income and rein in tax breaks for corporate jets and oil and gas companies. Companies would face limits in their abilities to defer overseas income.
Under the banner of "prosperity" and "defending capitalism", Republicans have opposed these types of measures in the past. They have pointed to the weak economy as proof that, at the very least, the administration's ideas about how to fix it aren't to be trusted.
But now, the economy is getting better – though Americans are still, understandably, nervous about their prospects. Rather suddenly, Romney's insistence that his business background makes him uniquely qualified to run the government not only rings hollow as a selling point – he has argued that the government should be run like a business, but for the moment, government seems to be doing OK being run like a government.
Further, the problem Romney proposes himself as the solution to isn't quite as pressing. This may explain why social issues – and Rick Santorum – have leapfrogged to the front pages in the past few days.
Republicans tried to sell austerity measures as bitter but necessary medicine, a political calculation that actually bet on a worsening economy in the short term. Obama's team has grasped upon the incremental improvement and is betting on, in his words Monday, "a comeback".
In a sense, both political calculations are cynical; and neither really grapples with the conflicting arguments of economists – but Americans don't want to grapple with those, either. To the extent that either party is asking the public to weigh in on any kind of philosophical debate, it is over spending on stimulus policies and setting one's teeth on long-term deficit reduction.
The Occupy Wall Street protests of the fall, in the context of the low-res, high-speed American political memory seem a long way away, but voters' choice here mirrors the argument the protesters both spotlighted and tried to settle. Do we care about the principle of a short-term balanced budget – which tugs at the notion that governments work like households where we all sit around a giant kitchen table with a checkbook and shopping list – or do we care about another sort of balance, like the well-being of the middle class versus the lifestyle of the very rich?
As a country whose self-image depends upon the dream of self-betterment, it is difficult to ask Americans to limit their aspirations, but I suspect that Republicans have made a mistake in thinking that a struggling populace needs to believe in maintaining the luxuries available to them if only they could somehow join the ranks of the obscenely well-off. Rather, most Americans just need to believe that they'll get to just "well-off".
They don't need to dream; they just need a break.