Taxes

Is Obama Heading for "Read My Lips II"?

Is a campaign promise to avoid raising taxes going to sink this president? It wouldn't be the first time.As a candidate, Obama made the now-famous pledge that married couples making less than $250,000 and single filers making less than $200,000 won't see their taxes go up on his watch.

Is a campaign promise to avoid raising taxes going to sink this president? It wouldn't be the first time.

As a candidate, Obama made the now-famous pledge that married couples making less than $250,000 and single filers making less than $200,000 won't see their taxes go up on his watch. Lately there has been talk -- even from a couple of top officials in his own administration -- that Obama won't be able to keep that promise.

Hearing the talk, it's impossible not to think back to the mother of all anti-tax pledges, at the 1988 Republican National Convention, when then-candidate George H.W. Bush thundered, "Read my lips: No new taxes." By shoring up the conservative wing of his party, that phrase may have helped Bush get elected. But that choice of words was also blamed for Bush's political downfall after he agreed, less than two years into his presidency, to raise taxes as part of a deficit reduction pact with congressional Democrats.

Could this be Read My Lips II? Is Obama headed for the same fate as the one-term 41st president?

You could argue that Obama has a bit more wiggle room than his predecessor did. A fuller reading of Bush's statement that night back in 1988 shows him as boxed in as a candidate could be: "I'm the one who will not raise taxes...My opponent won't rule out raising taxes. But I will. And the Congress will push me to raise taxes and I'll say no. And they'll push, and I'll say no, and they'll push again, and I'll say to them: 'Read my lips...'" and you know the rest. At the time, Bush needed to pass an anti-tax litmus test in order to win over the GOP's ultra-conservative right wing, which then never forgave him for the 1990 budget agreement, and deserted him in droves in 1992 when Ross Perot ran as a fiscal conservative.

Obama, of course, has left himself plenty of wiggle room to raise taxes. Anyone over the $200,000/$250,000 trigger points is fair game. And he doesn't have to worry about a nuclear war with Congress over a tax hike since, unlike the first President Bush, Obama's party controls both houses of Congress.

But minefields abound for Obama nonetheless. Those two income trigger points appear to be taking on a life of their own, becoming his own arbitrary litmus test for whether he can support any given tax-increase proposal. We're seeing early signs of this problem for him in the health care debate. For example, he blessed the income surtax proposed in the House as a way to foot the bill for health care reform, because it was clear that the levy wouldn't apply to the middle class taxpayers below the Obama income thresholds. So far so good. But far thornier is the proposal now being floated to tax insurance companies on the value of so-called gold plated health coverage plans -- a tax that insurance companies are sure to pass on to policy holders. That kind of tax might sound like it meets the Obama criteria -- but unions contend that plenty of those "Cadillac" policies are owned by middle class folks such as police officers and firefighters, who undoubtedly make less than $200,000/$250,000.

Obama is in danger of painting himself into a political corner just as surely as Bush Sr. did 21 years ago. Obama had two main themes on taxes during the 2008 campaign: He wanted to raise taxes on the wealthy and to offer tax cuts to the middle class. As president, his road would have been so much easier if he had stopped right there. Within those parameters, across-the-board tax increases that might be needed to, say, cut the deficit or accomplish some other policy goal could conceivably squeak through without too much fuss. But by pledging to protect millions of Americans below a certain arbitrary income level from tax hikes, Obama has given himself a big political headache that he didn't need and that could have been avoided.

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