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Will Obama Reluctantly Buy Into Base-Broadening Tax Reforms That Also Lower the Rates?

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.

WASHINGTON - President Obama has been pleading with House Republican leaders lately to raise government revenues by overhauling the tax code to erase loopholes and other income exemptions.


It wasn't an idea he campaigned on last year, though the chairmen of his deficit reduction commission proposed doing just that in a report he shelved. But they also wanted to use the higher revenues to offset lowering the tax rates in order to boost economic growth, jobs and investment, which in turn would boost tax revenues and reduce the deficits.

But cutting tax rates doesn't play well with Democratic voters or with the White House, so Obama campaigned on raising taxes on the rich, won a second term and then ran into into a budget sequester fight of his own making and a wall of resistance from the Republicans in Congress.

Since it's now clear Obama isn't going to get any more tax revenue as long as the GOP controls the House, from where all revenue bills must originate, he is pursuing Plan B: Raise more tax revenues by ending billions of dollars in corporate welfare and other special tax preferences.

Well, it looks like House Republicans are going to give Obama at least half of what he wants in a bill to lower tax rates. In fact, they've been working on a tax reform bill that does just that for the past year in the tax-writing Ways and Means Committee. But throughout the sequester fight, the president has been acting as if House Speaker John Boehner and his deputies haven't moved one iota in that direction.


At the height of that bitter battle last week, the president charged that the Republicans couldn't come up with "one tax loophole" that they were willing to get rid of to bring in more revenue.

That charge, as with many of his hysterical accusations, was patently untrue.

House Republicans have held 20 separate hearings on comprehensive tax reform and they have circulated a draft of their goals for wider discussion. Last month, Ways and Means Chairman Dave Camp announced formation of 11 tax reform working groups to comb through the tax code with the aim of cleansing it of its worst provisions.

The committee's stated goal is "that comprehensive tax reform should include top corporate and individual tax rates of 25 percent. That goal is embedded in the House Republican Budget Resolution for fiscal years 2012 and 2013.

This would include lowering the corporate tax rate, which at 35 percent is the second highest in the world's largest economies. In a letter to Congress, a group of more than 20 top economists said that "such a move would likely lead to a more efficient allocation of resources, increased investment and employment in the United States, and higher wages."

Boehner is making tax reform his top priority this year and has reserved the coveted H.R. 1 slot for the reform bill. "I got a green light," Camp said last month, making it clear that he will move the bill out of committee in time to bring it to the House floor for for a vote later this year.


So the GOP's tax overhaul train is moving down the track, and the only remaining question now is how will the president deal with this issue in his second term?

It goes without saying that the president doesn't have a clue about what produces stronger economic growth, jobs and the level of venture capital needed for new business expansion.

His 2009 economic stimulus program, made up of big spending, shovel ready, public works projects and some temporary tax credits failed miserably.

In the fourth quarter of 2012, the Obama economy grew at a barely- breathing 0.1 percent annual rate. Economists say the real unemployment rate is now14.4 percent when discouraged, drop-out workers and others who can only find part-time jobs are folded into the numbers.

He's tried to put all of the blame on the Republicans for his failure, but voters aren't buying that or his scare tactics in the budget sequester battle.

Neither are some White House reporters. "It sounds like you're saying that this is a Republican problem and not one you bear any responsibility for," piped up White House AP reporter Julie Pace at his last news conference.

A flummoxed Obama testily replied, "Well, Julie, give me an example of what I might do." He then asked the rest of the assembled press corps, "So what more do you think I should do?"


It was a rather sad moment for a president who believes he has all the answers to the nation's economic troubles. In fact, he is running on empty.

So now, all of a sudden, he says he's for reforming the federal tax code and maybe lowering some rates, though his entire campaign was all about raising taxes to pay for his big spending plans.

He called for "comprehensive tax reform" last month in his State of the Union address. But instead of framing his proposal within the context of growing a dead-in-the-water economy, he said we needed to go after "billionaires with high powered accountants."

Instead of calling for across the board tax cut reforms in the uplifting rhetoric of John F. Kennedy's "a rising tide lifts all boats," Obama angrily characterized the issue in terms of going after "the well-off and well-connected."

Despite Wall Street's bull rally, the cold, hard economic reality is that America's depressed labor force is smaller now than it was when Obama took office four years ago.

Venture capital investments, the mother's milk of an expansionist, job creating economy, fell nationwide by 10 percent last year, according to a report by the National Venture Capital Association. And Obama has succeeded in raising taxes on the very people who invest the most in our economy.


Now, when it is obvious that none of his policies have reignited an economy that can do no better than a limp 2 percent annual growth rate, compared to Ronald Reagan's 6 percent growth rate as he began his second term, Obama is looking elsewhere for answers.

His latest, reluctant, 11th hour conversion to tax reform is a welcome change. But will he fully embrace the GOP's plans to broaden the tax base through loophole closings in order to lower the rates to trigger strong economic growth. Put me down as doubtful.

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