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Posted at 4:38 PM ET, 02/ 8/2011

The Obama administration has raised some taxes and cut many others. They should admit that.

By Ezra Klein

PolitiFact   Fact-checking Bill O Reilly s interview with President Barack Obama.png"I didn't raise taxes once," Barack Obama told Bill O'Reilly on Sunday. "I lowered taxes over the last two years." That's, well, half true. The Obama administration has raised taxes. The excise tax on high-value health-care insurance, for instance, is a tax. So is the tax on tanning salons, and the increase in cigarette taxes. These taxes -- or at least tax levels -- didn't exist before Obama signed them into law. They will raise taxes on certain people under certain circumstances. They will get bigger as the years tick by. PolitiFact rated this as "false," and rightly so.

On the other hand, Obama has lowered taxes repeatedly. He extended the Bush tax cuts. He passed a payroll tax holiday. He passed the Making Work Pay tax cut. Overall, he's been big on tax cuts and very reluctant to consider higher income or payroll taxes as a way to fund programs or close the deficit. As PolitiFact says, "most Americans have seen lower taxes."

But I'm not surprised to see Obama playing word games with taxes. Since the 2008 campaign, Obama and his team have shown themselves to be terrified of the tax issue. They swore never to raise taxes on anyone making less than $250,000 -- which tied their hands when deficits exploded. They initially fought the individual mandate, in large part because, like most taxes, it polls poorly. After they embraced it, they worked to call it a "penalty" rather than a "tax," which has contributed to the provision's legal difficulties. They argued for letting the Bush tax cuts expire for the rich, but they were never willing to say that the tax rates should reset to Clinton-era levels across the system, which was a tacit admission that most of the tax rates Bush put into place were -- and are -- appropriate.

In general, they've just not been willing to try to push the national conversation over taxes to a more rational place. Rather than disputing the GOP's contention that cutting taxes is almost always and everywhere a good thing, they've quietly agreed and attempted to defuse the issue by grabbing the mantle of tax cuts for themselves. That might be good politics, but in the long run, we're going to need to raise taxes in this country, and that's going to require some leader or group of leaders to talk about taxes with a bit more courage and honesty. So far, the Obama administration has left that job to someone else.

Photo credit: PolitiFact

By Ezra Klein  | February 8, 2011; 4:38 PM ET
Categories:  Taxes  
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Comments

"most of the tax rates Bush put into place were -- and are -- appropriate" - That's blasphemy for a liberal. You might want to stay away from your Jounolist friends for a while Ezra. They might cut your tongue off.

Posted by: cummije5 | February 8, 2011 4:57 PM | Report abuse

I had really hoped the administration would tackle deficit reduction this year--more from the perspective of changing the philosophical debate in this country than from an economic standpoint.

The only way to beat back the GOP tax-cut dogma is to take them head on and force them to put their cards on the table in terms of spending reductions. Absent that, you're left to dance around the tax issue the way Obama has.

Until that happens, the country is going to be ungovernable, since the Dems are unlikely to win back control of both the presidency and congress (including 60 votes in the Senate) again.

Posted by: edwardlahoa | February 8, 2011 5:23 PM | Report abuse

Sound criticism, Ezra. But . . .

First, this is not the time to talk about raising taxes, as the Obama administration well knows. This is the time for figuring out how to sneak economic stimulus, now a foul four-letter word, past Congress under the guise of some other term.

Second, the subject of raising taxes can only be discussed, in non-wonk circles, in the context of a budget-deficit-reduction plan that entails both spending restraints and tax increases. And that plan must be formulated beyond closed doors as a bi- or nonpartisan deal on the basis of nothing is agreed to until everything is agreed to.

Unfortunately, such a plan cannot even be discussed behind closed doors until the electorate speaks (with decisive clarity, if we are lucky) in 2012.

Meanwhile, wonks like you would be most helpful by trying to force the deficit discussion into the narrow channel where it belongs. That is, long-term budget deficits are all about the rate of rising health-care costs that have exceeded and continue to exceed the rate of GDP growth.

As much as anyone, Ezra, you understand this. I urge to you usher the head of Kaiser Permanente back on stage to talk about how other countries control health-care costs by the simple expedient of setting health-care prices.

Posted by: fredbrack | February 8, 2011 5:28 PM | Report abuse

Taxed enough already??? The tax rate we use today was set in 2000. The country, states and cities are broke. This obsession of not paying taxes will come back and bite us all. It is quite amazing that people think the Bush tax cuts worked.. LOl LOL My how soon people forget the shape this country was in. Vote Republican...I think this country needs to go through a depression. I really do think it is the only thing that will open the eyes of people.

Posted by: clr1390 | February 8, 2011 5:46 PM | Report abuse

They were partly a victim of timing, taking office with the bush tax cuts expiring at the same time the economy was crashing down.

For the long term fiscal future, this administration tied its hands by committing to not raising taxes on anyone making less than $250,000, but if he did not do that, he may not have ever gotten voted into office in 2008.

He is trying to maintain support by being a populist President. Polls consistently show majority opposition to both tax increases and spending cuts. If you follow majority opinion, the deficit is what suffers, and that is why we have the deficit we do today.

The administration needs to work to educate people and let them know that since 1970 we have spent 20.8% of GDP on average each year and have collected 18.0% of GDP in revenues. (Because of the recession, since obama has taken office those numbers are 25.1% in spending and 14.8% in taxes.)

We have consistently spent more than we collected in taxes and we should be paying at least 20-21% of GDP in taxes. It is the government's responsibility to lower spending back to that range, but it is our responsibility to pay more in taxes to cover the same level of spending we have supported the last fourty years.

Here is the data:
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2011/assets/hist01z2.xls

Posted by: DeanofProgress | February 8, 2011 5:54 PM | Report abuse

One can make a fair case that raising taxes is good for reducing employment, and good for the economy.

Take Jimmy Carter, the GOP candidate for the Worst President Ever.
His economy and employment numbers are MUCH better than the Dems candidate for the Worst President Ever, W.

Posted by: grat_is | February 8, 2011 7:10 PM | Report abuse

This country is a bunch of babies when it comes to taxes. Massachusetts tax rates have been below the national average for 10 out of the last 11 years, and people here complain about "Taxachusetts" anyway (except here in Cambridge, where property taxes are vastly lower than surrounding communities).

Nationally our taxes are low by historic standards (as Dean pointed out above, currently less than 15% of GDP), low by international standards (lower than any other developed country except Mexico and Turkey and slightly higher than South Korea), and most of all low in comparison to what we spend (we could eliminate the entire federal government except for Social Security, Medicare/Medicaid, defense and interest on the debt and it would only cut the deficit in half).

The longer we put off raising taxes the more we'll have to raise them in the future.

Posted by: DavidinCambridge | February 8, 2011 7:10 PM | Report abuse

"Take Jimmy Carter, the GOP candidate for the Worst President Ever.
His economy and employment numbers are MUCH better than the Dems candidate for the Worst President Ever, W."

It's true. The budget deficit as a fraction of GDP was LOWER in Carter's last budget (FY81) than his first (FY78). How did GW Bush do in that regard? Went from a surplus to a 9% of GDP deficit.

Carter left office with the economy growing, but slowly and a year away from a severe recession. Bush left office at the absolute nadir of a much WORSE recession.

Over the course of Carter's term, unemployment was virtually unchanged at around 7.5%. Bush entered with unemployment at around 4.5% and left with it at around 7.5% and rising fast.

I'll take Carter's performance over Bush any day.

Bush left office with unemployment

Posted by: DavidinCambridge | February 8, 2011 9:09 PM | Report abuse

I'm surprised you left out one of the bigger tax increases (at least in the near term)...the increase and expansion of the HI tax in ACA. Pathetically, that's about the only tax I can think of that Obama has specifically raised on income above $250,000

Posted by: rosenberga | February 8, 2011 9:24 PM | Report abuse

Starting this year your child (or children) cannot be denied coverage simply because they have a pre-existing health condition. If you don't have insurance for you and your children search "Wise Health Insurance" online they are the best.

Posted by: martyqick | February 9, 2011 3:25 AM | Report abuse

I am shocked to see that Ezra Klein of journolist infamy actually called Obama on his less than truthful statement.
I would remind everyone that when the government raises taxes on corporations, the corporations pass those increased taxes onto the consumers aka the public.

Posted by: gfafblifr | February 9, 2011 7:12 AM | Report abuse

They are proposing to raise taxes on the oil industry, although they are misrepresenting the nature of the increase. The largest single "big oil subsidy" is the domestic production tax credit, which in fact applies to all domestic manufacturing, broadly enough defined to include video game manufacturers and Hollywood film makers, as well as people building SUVs in Detroit.

I'd be interested in hearing the policy justification for giving video game producers a tax preference over an oil refinery in Louisiana.

The other big ticket "big oil subsidy" is percentage depletion. Guess what? Major integrated oil companies are already ineligible for that. It only applies to independent producers. Oh, goodie, a special tax increase for small domestic producers.

Posted by: tl_houston | February 9, 2011 9:43 AM | Report abuse

Read the fine print!!!!!

They kept the same tax rate, BUT... they change the tax calculation TABLES, so net effect is a 6% tax increase!!!

Just another bait and switch! More smoke & mirrors. Did you expect the truth?

Why can I, who is on the bottom end of the food chain, can figure this out, yet the so called smart economist or whom ever, are clueless? Good Grief!!!!!!!

Posted by: skipole1 | February 13, 2011 9:34 PM | Report abuse

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