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Obama's Sporadic Populism

By Dan Froomkin
12:20 PM ET, 05/ 5/2009


Obama announces his new tax plans yesterday (AP/Charles Dharapak).

President Obama seems to have a love-hate relationship with fat cats.

One day, he's a full-throated populist, calling for a wholesale rewriting of the economic rules that favor the wealthy. And the next day, he's committing hundreds of billions of taxpayer dollars into bailing out the very people whose obscene appetite for mega-profits trashed the economy in the first place.

Last week he let the bank lobby win by remaining silent as the Senate killed a proposal to let bankruptcy judges modify troubled mortgages. This week he's vowing to close loopholes that multinational corporations are using to avoid paying their fair share of taxes.

One day he's glad-handing corporate CEOs and Wall Street bigwigs; the next, labor leaders.

First, he underreacted to the AIG bonus scandal. Then he tried to redirect the public's fury into outrage over the irresponsibility he's trying to redress with his hugely ambitious budget plan.

How to explain all this? There's been more than a little speculation that the populists on Obama's political staff are locked in a constant and mostly losing battle with Obama's top economics advisers, who some see as beholden to Wall Street. But that's just speculation.

Obama is so consistent on so many other issues, but so inconsistent on this one, it really raises a lot of questions. How does he reconcile these views? Or, if the inconsistency reflects a battle of wills among his advisers, what does that say about his management style -- and his choice of advisers? I remain intensely curious about his decision-making process in these circumstances.

And is there any chance of changing his mind? I would really love to know, for instance, whether his dinner with Paul Krugman and Joseph Stiglitz last week changed his mind about anything.

The latest episode in this drama unfolded yesterday at the White House as Obama called on Congress to curb offshore tax havens and corporate tax breaks that multinational companies and wealthy individuals are using to avoid billions in taxes. It was Obama the populist on full display.

Most American accept their responsibility to pay their taxes, he said, "because they understand that it's an obligation of citizenship, necessary to pay the costs of our common defense and our mutual well-being.

"And yet, even as most American citizens and businesses meet these responsibilities, there are others who are shirking theirs. And many are aided and abetted by a broken tax system, written by well-connected lobbyists on behalf of well-heeled interests and individuals. It's a tax code full of corporate loopholes that makes it perfectly legal for companies to avoid paying their fair share. It's a tax code that makes it all too easy for a number -- a small number of individuals and companies to abuse overseas tax havens to avoid paying any taxes at all. And it's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York....

"The way to make American businesses competitive is not to let some citizens and businesses dodge their responsibilities while ordinary Americans pick up the slack."

The White House provided some background:

"* In 2004, the most recent year for which data is available, U.S. multinational corporations paid about $16 billion of U.S. tax on approximately $700 billion of foreign active earnings – an effective U.S. tax rate of about 2.3%.

"*A January 2009 GAO report found that of the 100 largest U.S. corporations, 83 have subsidiaries in tax havens.

"* In the Cayman Islands, one address alone houses 18,857 corporations, very few of which have a physical presence in the islands.

"* Nearly one-third of all foreign profits reported by U.S. corporations in 2003 came from just three small, low-tax countries: Bermuda, the Netherlands, and Ireland."

Jackie Calmes and Edmund L. Andrews write in the New York Times: "The move would appeal to growing populist anger among taxpayers but is likely to open an epic battle with some major powers in American commerce.

"With the proposals he outlined at the White House, the president sought to make good on his campaign promise to end tax breaks 'for companies that ship jobs overseas.'

"He estimated the changes would raise $210 billion over the next decade and help offset tax cuts for middle-income taxpayers as well as a permanent tax credit for companies' research and development costs.

"The changes, if enacted, would take effect in 2011, when administration officials presume the economy will have recovered from the recession. But business groups were quick to condemn the White House for proposing tax increases amid a global downturn."

The corporations that would be affected, as Calmes and Andrews point out, "have some of the mightiest lobbying armies in Washington, as well as influential patrons in Congress. That combination will test Mr. Obama's ability to stand up to powerful interests and marshal support among lawmakers at the same time that he is trying to win passage of major health and energy measures."

Stephen Ohlemacher writes for the Associated Press: "Obama's proposal to close tax loopholes was a reliable applause line during the presidential campaign, but it got a lukewarm response Monday from Capitol Hill."

Lori Montgomery and Scott Wilson write in The Washington Post: "Key Democrats were cool to the plan, and said Obama's ideas should be considered as part of a broader effort to streamline the nation's complex corporate tax code.

"'Further study is needed to assess the impact of this plan on U.S. businesses,' Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, which has jurisdiction over U.S. tax law, said in a written statement. 'I want to make certain that our tax policies are fair and support the global competitiveness of U.S. businesses.'"

Christi Parsons and Peter Nicholas write in the Los Angeles Times: "President Obama's plan to crack down on what he called abuse of overseas tax loopholes was met Monday with quick and unusually sharp opposition from big business, threatening to produce the administration's first major confrontation with a broad segment of corporate America.

"The fiercely negative reaction to the plan, much of which requires congressional approval, contrasted strongly with the business community's muted criticism, at most, of the president's sweeping government intervention in the banking and automobile industries....

"The administration's plan was unveiled just after Obama marked his first 100 days in office, a period in which he and the Federal Reserve embraced a series of massive bailouts for Wall Street and other corporate interests. Obama's first major order of business, for example, was to push through a nearly $800-billion economic stimulus bill. It was followed by almost unprecedented government infusions of cash and credit to shore up major banks and stimulate lending."

Another problem Obama faces is that the world of global finance has gotten so complicated that, as the New York Times editorial board writes, "with few exceptions, there are no easy fixes to tax problems posed by global profits. The Obama proposals oversimplify the challenge, both technically and politically."

But John D. McKinnon writes in the Wall Street Journal that, "even if the proposal doesn't advance rapidly, policy makers said a broader corporate-tax overhaul is becoming increasingly likely over the next two years."

And Robert Reich, writing in Salon, sees two strategic reasons Obama made this move yesterday: "The President needs the cooperation of many big corporations if he's going to get universal health insurance enacted this year. Many of these companies would benefit from lower health costs but they're reluctant to take on Big Pharma, big health insurance companies, and major health providers, all of whom are dead set against a provision in the emerging health insurance proposal that would allow the public to opt for a government health plan. How does it help for him to take on corporate tax havens? Because the President needs as many bargaining chips with the rest of corporate America as possible. The proposed crackdown on foreign tax avoidance is one such chip. He might be willing to take it off the table if big corporations lend him active support on health insurance.

"The second reason has to do with revenues. Originally the White House had planned to pay for universal health insurance by limiting tax deductions for wealthier Americans. But the Democratic leadership nixed that source. The rich Americans who take the deductions, and the groups benefiting from the wealthy's tax-deductible expenditures on them, had enough political leverage to make it a non-starter. That means the White House has to find other sources of money."

Quick Takes

By Dan Froomkin
11:19 AM ET, 05/ 5/2009

David Espo writes for the Associated Press: "After weeks of concentrating their attacks against President Barack Obama on the economy, Republicans are branching out. They're taking aim at his anti-terrorism policy. 'Just what is the administration's overarching plan to take on the terrorist threat and to keep America safe?' asks House Republican leader John Boehner in a new Web video featuring ominous music, unsettling images and less than flattering photos of the president. The production by the National Republican Congressional Committee is the latest part of a barrage in which former Vice President Dick Cheney, potential 2012 presidential contenders, GOP lawmakers and others seek to raise doubts about Obama's early performance as commander in chief." Here's the video:


John Dickerson writes for Slate: A video, put together by Politico's Patrick Gavin, is making the rounds showing two presidential visits to the White House briefing room. In one, George Bush arrives for a press conference in February 2008, and the press remains seated. In the second, from last Friday, Barack Obama surprises the press by appearing in the midst of the daily briefing. They stand to greet him....The discrepancy in treatment is all the proof a Republican needs to show that the press shows special deference to the new Democratic president."

But as Mark Knoller blogs for CBS News, while it's been "long-standing practice for reporters to rise when the president enters the East Room for a news conference...that hasn't been the case in the briefing room." The principal reason "was not to block the shot of TV cameramen and still photographers in the back of the room who were trying to make a picture of the president's walk-in." Knoller concludes: "When some reporters stood up for President Obama last Friday, they forgot about the needs of their colleagues in the back of the room as well as the less formal atmosphere of the briefing room. Certainly it was a sign of respect for the president, but not one of disrespect for his predecessor."

David Alexander writes for Reuters: "President Barack Obama presents his strategy for defeating al Qaeda to the leaders of Afghanistan and Pakistan on Wednesday amid growing U.S. concern that it is losing the war and neither is a reliable ally. The White House meetings with Pakistani President Asif Ali Zardari and Afghan President Hamid Karzai are likely to be cagey affairs -- both visitors have been heavily criticized by Obama's administration and are also wary of each other."

David Lightman writes for McClatchy Newspapers: "The Obama administration's bid for $50 million to move prisoners from the Guantanamo Bay detention facility was left out of the Democratic-authored emergency war-spending bill unveiled Monday. Even so, most Democrats remain committed to closing down the military prison, and the issue is likely to be attached to other legislation later this year."

James Rowley and Brian Faler write for Bloomberg: "Republican Senator Orrin Hatch said President Barack Obama told him he won't nominate a 'radical or an extremist' to replace retiring Justice David Souter on the U.S. Supreme Court. Hatch, of Utah, also said he expected the president to make his choice in a matter of days."

Glenn Kessler and Michael D. Shear write in The Washington Post: "The Obama administration has backed away from overt expressions of support for human rights and democracy in favor of a more subtle approach, worrying advocates who say that the issues are being given short shrift as President Obama seeks to rebuild relations with allies and reach out to adversaries....Administration officials acknowledge they have approached the issue of human rights differently but deny that there has been a reduction in commitment. Instead, they say, they are first seeking to restore U.S. credibility on the issue by acknowledging U.S. failings and then pushing for progress on human rights and democracy."

Robert Mackey blogs for the New York Times about privacy advocates' big concern about the White House's move into social networking: "People might friend the White House on MySpace, for example, to indicate support for the president or to get messages about what the administration is doing. In doing so, however, they are agreeing that every party photo, love poem, and wisecrack from a friends that appears on their profiles will be visible to White House Web masters. And so far there are no guidelines that say whether those Webmasters might keep copies of any of personal information they see or send it to the government officials who could use it to get authorization to audit people's taxes, keep them from boarding an airplane, tap their telephones or even arrest them.

The Associated Press reports: "The Obama book bump has struck again. President Obama told The New York Times during a recent interview that he has been reading Joseph O'Neill's 'Netherland,' a highly praised novel about cricket, marriage and living in a post 9/11 world." The paperback release has now been moved up.

Ben Smith writes for Politico about yesterday's much-anticipated debate between Obama and Bush political gurus David Plouffe and Karl Rove at the Panetta Institute in Monterey, California: "Rove has been pressing his argument that Obama is failing to fulfill his bipartisan promise in Congress and in the polls. 'This is like getting interview lessons from Sarah Palin,' Plouffe shot back. One thing they agreed on: They both deplore the media, with Plouffe seeing too much conflict and Rove concerned with a lack of substance."

Paul Kane writes in The Washington Post: "Senate Republicans yesterday took the first steps in preparing to challenge President Obama's eventual nominee for the Supreme Court, selecting as their point man for confirmation hearings a backbench Alabama conservative whose own 1986 nomination to the federal courts turned into a racially tinged firestorm."

Amy Chozick profiles White House social secretary Desirée Rogers for the Wall Street Journal.

Jeremy Olshan writes for the New York Post: "The $328,835 snapshots of an Air Force One backup plane buzzing lower Manhattan last week will not be shown to the public, the White House said yesterday. 'We have no plans to release them,' an aide to President Obama told The Post, refusing to comment further."

Let's Talk White House

By Dan Froomkin
10:01 AM ET, 05/ 5/2009

I'll be Live Online tomorrow at 1 p.m. ET, responding to your questions and comments about all things White House. You can send in your questions and comments anytime.

Late Night Humor

By Dan Froomkin
9:54 AM ET, 05/ 5/2009

Stephen Colbert tries to crack the code word Obama used when describing his criteria for picking a new Supreme Court Justice.

"Now I was puzzled by the word 'empathy' -- because I'd never heard it before," Colbert says. He even tries to rearrange the letters -- and play Obama's announcement backwards.

The Colbert ReportMon - Thurs 11:30pm / 10:30c
Code Word Empathy
colbertnation.com

Also, via U.S. News, Jay Leno says: "Just a day after saying he wouldn't go anywhere in confined places like an aircraft or a subway because of the swine flu, Vice President Biden rode a train from Washington to Delaware. You know what that means? Not even Joe Biden listens to Joe Biden."

Cartoon Watch

By Dan Froomkin
9:49 AM ET, 05/ 5/2009

Randy Bish, Ann Telnaes and Pat Bagley on Obama's Supreme Court pick, Dan Wasserman and Jeff Parker on Obama's tax plan, and Mike Lester on Obama and the press.

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