Obama Frames the Economic Debate

It has been clear for some time that the presidential election would be about economics. The killing of Osama bin Laden, the withdrawal of troops from Iraq, and the fall of Muammar Qaddafi were all obviously significant events, but with unemployment still at 8.5% national security issues will nevertheless loom less large in the election than the anemic economy.

Last night’s State of the Union Address was a chance for President Obama to frame the upcoming economic debate. As Kris Broughton wrote on Big Think, Obama threw everything but the kitchen sink—reminders of his national security successes, tough talk on trade with China, promises to open up offshore oil fields, and so on—into one of the longest State of the Union speeches ever given. But his central message concerned equality of economic opportunity:

We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules. What’s at stake are not Democratic values or Republican values, but American values. We have to reclaim them.

In particular, Obama called for implementation of the so-called “Buffett Rule”—named after billionaire investor Warren Buffett, who argues that the wealthy should pay more in taxes—which would require people making more $1 million a year to pay at least 30% of their income in taxes. That message seemed to resonate with both Republicans and Democrats watching the speech, although the dial-tested groups were understandable skeptical about the president’s ability to deliver on his promises.

In the Republican response to the speech, Indiana Governor Mitch Daniels held Obama accountable for his failure to fix a broken economy. But while voters may well be inclined to hold Obama responsible for the economy, Daniels’ proposals—lower taxes, cut spending, and reduce regulation—were really the same proposals Republicans have made throughout the Obama administration. As bad as the economy has been during his term, Obama is betting that the debate over what do about it is still one he can win.

Mitt Romney made a similar case against Obama in a “pre-buttal” delivered ten hours before Obama’s speech from a shut-down drywall factory in Tampa. The problem for Romney is that he is in many ways the living embodiment of economic inequality. Romney also chose yesterday to release two years of federal tax returns showing that he will pay an effective rate of less than 14% on an income of $22.5 million a year over the period. That means that Romney pays less than many Americans who make less than $100,000 a year because he earned his income through investments and by managing other people’s money, rather than working for a regular salary.

Romney hasn’t done anything besides take advantage of the law the way it is written. But for that reason he shows just why it will be so difficult for Republicans to make their case. The fact that the law allows Romney—who has a quarter of a billion dollars and makes some 450 times what the average American makes—to pay lower rates than middle class Americans makes him a walking argument for the Buffett rule. As Greg Sargent says, Romney “personally embodies, and personally benefits from, everything that Obama and the Dems will allege is unfair about our current tax system and the ways the economy is rigged for the rich, and against the middle class.” As Obama put it in his speech, “asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.”

Photo credit: Pete Souza