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Obama's Sporadic Populism


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."

By Dan Froomkin  |  May 5, 2009; 12:20 PM ET
 
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Comments

So let's see .. if you believe that tax evasion is wrong even for the very rich and the very privileged, you're a dangerous
far left" radical.

If you believe that tax evasion is perfectly reasonable for the well-connected, you get to call yourself a moderate.

Weird times.

Funny how the GOP deadenders come down against the rule of law. No wonder they're on the outs.

Posted by: chrisfox8 | May 5, 2009 1:06 PM | Report abuse

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 beholden to the same mediocre money people as Bush, he's dependent on the same failed Pentagon and CIA.

Add to that the uncertainty associated with any new job, the massiveness of a responsibility no one can ever know except for those few, and it's easy to see how a man can crack trying to find his way, trying to cope.

OTOH, Obama is smarter than Bush, capable of making independent choices, I hope he's up to the responsibility, becoming a strong President in terms of leading the US competently and successfully.

That might mean ditching a few of his "expert" advisers, who are anything BUT.

Ostensibly, Bill Clinton was of that sort, despite some of his choices.

Posted by: thegreatpotatospamof2003 | May 5, 2009 1:06 PM | Report abuse

Sadly, I think we (Obama supporters) were hoodwinked. In the big areas: financial bailouts, our wars, government secrecy - Obama is offering essentially no change.

This is really stupid. Obama is doing well because he's very charismatic and most of us despised Bush. But real soon now people are going to realize that the economy still really sucks, that nothing's changed for the banksters, the wars are still dragging on and Obama's getting a lot less charismatic.

He had an opportunity to really move this country in a better direction and he blew it.

Posted by: splamco | May 5, 2009 1:11 PM | Report abuse

It's time to start leaning on your folks in the Congress. Write them a letter, let them know you're watching. Remind them who they work for.

If you're serious about wanting lower taxes, if you are worried about the deficit, tax reform is something to put your shoulder behind. Loopholes like this off-shore thing and masses of tax subsidies are one reason why most of us pay through the nose on April 15. We're drowning in these sorts of tax freebies because Congress finds these little give-aways have relatively small blow-back from voters.

Posted by: fzdybel | May 5, 2009 1:28 PM | Report abuse

The bank bailout was clearly wrong, the bailout should have been from the bottom up, keeping people in their houses and in effect detoxifying the derivative assets. But Obama treated such as plan precisely as Bush would have, ignoring the plight of ordinary people in zeal to bail out the banks, the powerful and the privileged. This has been a vast disappointment. We are not out of the woods yet.

This isn't a "centrist" position, it's the wrong one.

The defeat of the bankruptcy plan is wrong too.

But closing tax havens for rich evaders is the right move; anytime the GOP dead-enders start screaming "socialism" you know Obama has done something right

Posted by: chrisfox8 | May 5, 2009 1:29 PM | Report abuse

slamco,

You sure expect alot in 100 days dont you? Me im very satisfied, my 401k is up 68% this year alone compared to down 63% last year...

Posted by: rharring | May 5, 2009 1:31 PM | Report abuse

As spokesman of the Dutch Embassy in DC, I just wanted to point out that The Netherlands is an attractive location for foreign investments, but not a 'low-tax' country.

Please check out http://www.netherlands-embassy.org/article.asp?articleref=AR00002933EN

Posted by: florisvanhovell | May 5, 2009 2:18 PM | Report abuse

Closing tax loopholes is another shot across Cheney's bow.

Halliburton has offices in such oil rich nations as the island nation of Vanuatu. Yes, the same one from Survivor. No oil there, just a few corporate offices.

Few large corporations have done more to evade corporate taxes than Cheney's former employer. I wonder if he'll chime in. Since HAL moved their entire hq to Dubai I guess they don't care so much about taxes here. I wonder why they did that...?

Posted by: farkdawg | May 5, 2009 3:05 PM | Report abuse

Splamco: your support for Obama sounds so weak. Are you sure that you're one of us (Obama supporters)?

What reality are you commenting on where the new policies resemble the old? Closing corporate loopholes and setting a date certain for getting out of Iraq are pretty new concepts coming from Pennsylvania Ave.

If you're going to bring up that we are required to be out of Iraq, remember that Bush faced that same deadline at the end of 2008, and what happened? He had our stay in Iraq extended. Funny. It's OK, sometimes the popular babble of the TV punditry is off base too.

Posted by: farkdawg | May 5, 2009 3:12 PM | Report abuse

Would a real populist pick Rahm Emanuel for his chief of staff and Geithner and Summers to head the economic team?

Posted by: bdunn1 | May 5, 2009 3:25 PM | Report abuse

The real problem is the Senate and the lobbyists who own them. We can't get any real reform until the lobbyists stop writing the laws.

It helps if citizens write their Senators. If they are toeing the lobbyist line then give them hell. Let them know they have not earned your vote.

Posted by: troyd2009 | May 5, 2009 3:41 PM | Report abuse

I think Froomkin is asking the wrong question of Pres Obama. He doesn't seem to be populist, or socialist, or whatever ideology you want to stick with. I think he uses pragmatism. Whatever ideology or mix of ideologies provides the best solution to a particular problem. That would explain the difficulty in pinning his Washington ideology down.

Posted by: stephen8 | May 5, 2009 4:52 PM | Report abuse

I would like to bet my 201(k) that this never happens. Presidents have been counting the money from closing these loopholes for literally 50 years. The same Democrats who voted with the banks in the bankruptcy bill will vote to keep the loopholes, plus, of course, all of the Republicans, who don't want anyone who makes $200,000 or more to ever pay any taxes.

Posted by: dickdata | May 5, 2009 5:08 PM | Report abuse

@farkdawg, @rharring: Obama inherited 2 big debacles: the financial crisis and thriving remnants of the global war on terror. In both cases Obama has failed – he picked the side of the bankers (the same guys who got us into this mess) by giving Wall Street absurd amounts of money rather than Main Street and it's not working. In the case of the GWOT, Obama hasn’t taken any more troops out of Iraq than Bush would have, has escalated Afghanistan which Bush probably wouldn’t have and what happened to restoring our moral/legal standing? Obama won’t prosecute torture war crimes nor illegal spying on Americans – these are clear crimes that Obama is simply ignoring.

Posted by: splamco | May 5, 2009 5:11 PM | Report abuse

Maybe Obama is sometimes a populist because sometimes the populists are right and sometimes they are wrong, or at least politically you have to settle for half a loaf, or prioritize which issues you will go to the mat for.

Posted by: awmarch1 | May 5, 2009 5:58 PM | Report abuse

Obama has drawn a line in the sand.
On one side are the powerful corporations and their well paid lobbyists. Then there's the rest of us. I sincerely hope that these corporations will be taken to the task beholden upon all Americans to fill our public treasury through the auspices of our democratic-constitutional-republic. We pruchase this civilization known as America through representative taxation!

Posted by: drum_sing | May 5, 2009 7:18 PM | Report abuse


"beholden to Wall Street".....if THAT isn't an understatement, I don't know what is. Clearly, with the money Obama raked in during the campaign from Wall Street, BIG corporations, etc, and WHO KNOWS WHO else!!??? there are MANY this president is beholden to. How to explain everything since he took office! Fooled by GWB, fooled by Obama.....THREE elections now bought and paid for.
Obama is picking the wrong side EVERY time!!
Duh!

Posted by: librairie | May 5, 2009 8:18 PM | Report abuse

In case anyone has a short memory, most Americans in 2001 gave President Bush a "pass" after 9/11 in the interest of "patriotism", justified with the wishful thinking that the US could repair the figurative and literal damage done to this nation by Al Queda, by suspending or suppressing criticism of Bush administration initiatives that were supposedly aimed at crippling the extremist Muslim Jihadists by whatever means that appeared, at the time, to be advantageous to "US interests".

These efforts at the time of invasion, were touted as a "no pain' economic initiative, since Iraq's oil profits would undoubtably pay for our military intervention. Yet, we continue to be mired in these expensive overseas adventures with still no end in sight. Our domestic economic problems are symptomatic of our foreign policy decisions of the last eight years.

Given the endlessly articulated "patriotic" inclinations of the Republican party, I am puzzled as to why these self styled patriots are resistive to taxes that would help ameliorate the economic crisis of the nation and internally stabilize the country.

With internal economic stability, it would seem that the continued struggle against instability in Iraq, and aid to the countries that were ignored in a strategically and intelligence sense by the Bush administration during the Iraq conflict - namely, Pakistan and Afghanistan, would be improved.

After six years, It appears that the Republican Party didn't acquire economic and fiscal "Religion" until the Democrats gained numerical superiority in Congress, and ultimately, the presidency.

Republicans: show your patriotism (and insist that your money be directed where it counts) - support both the domestic stimulus and the antiterrorism efforts in the places that matter - namely in the middle eastern countries that are the true hotbeds of radical Islam - Afghanistan and Pakistan. Iraq was a digression that soothed the souls of neo-consevatives at the expense of treasure and lives (both American and Iraqi).

Otherwise, absence of introspection, consider yourselves hypocrites.

Posted by: MillPond2 | May 5, 2009 9:49 PM | Report abuse

Slamco, you said Obama (in just 100 odd days in office) missed an opportunity to change the country. Can you explain what that opportunity was? I strongly don't believe you voted for Obama by the way; you sound like a typical hysterical conspiracy minded Republican. And that's just putting it mildly. I voted for him and I'm thrilled with his performance to date. I believe he's very right on the off shore tax haven issue.

Posted by: ATLGuy | May 5, 2009 11:54 PM | Report abuse

Well, there are probably more DINOSs out there than the RINOs that Rush & Co. have complained about lo these many years.

With the likes of Max Baucus and Ben Nelson in the Senate, undermining everything Obama is proposing, and Milton Friedmanite Larry (Sleepy) Summers running Obama's economic team, no wonder that Arlen Specter will feel at home as he returns to this original political party.

Obama is playing big-time politics, buddying up with the entrenched powers that be, including the so-called "moderate" Democrats when he thinks he can get something worthwhile accomplished, no matter how incremental; then sounding off like Walter Reuther or a young Hubert Humphrey when he knows he's in an area where he's up against a stone wall.

That may be smart, but it betrays a cynicism that we hoped he didn't possess. But, no one ever accused Obama of being a slow learner.

One wish: that if Obama is sincere about where he wants to take the country, that he exposes the RINOs so that they can be challenged in Democratic primaries (first and foremost: Arlen Specter)in the next election cycle, win the general election, and give Obama the support in the Congress that might enable him to go forward with the change that he promised and that the country needs.

Posted by: bfieldk | May 6, 2009 1:34 AM | Report abuse

Sporadic is the wrong word to use. The proper word to use is selective. Sporadic implies some inner struggle and discomfort with using populist political strategies and arguments. However, it is simply not the case that President Obama is uncomfortable with using populist mechanisms to advance his vision. If you look carefully, you will find that President Obama has been selective in using populist strategies and arguments to advance his agenda as opposed to advancing the agenda of Congress. Whenever he meets strong opposition to his policies and ideas, he pushes the populist button, which he specifically said he would do during the campaign.

Too many pundits and readers have a short memory about how candidate Obama described how he would overcome entrenched special interests and recalcitrant politicos in Washington. He said again and again that he would use the power of the people to advance his policies whenever it became necessary. Thus, he used this strategy to advance his stimulus bill and his ambitious budget. He seems prepared to use populist strategies and arguments to advance his policy to eliminate foreign tax havens for corporations and to win his most important policy for health care reform.

Posted by: bleon2000 | May 6, 2009 2:23 AM | Report abuse

This is what happens when (as the nasty right pointed out) you aren't ready to lead.

The agenda changes from day to day. Much like you would see with an immature teenager.

It's also unnerving to see that he stills needs a teleprompter. Shouldn't the messages be coming from the heart? It would mean so much more to know that he really believes in what he says. Not what he reads.

Posted by: tjmlrc | May 6, 2009 6:49 AM | Report abuse

So we are starting to see the real Obama. He is the great divider. He plays the class warfare card at all turns so he can deflect on other issues, like not really closing Gitmo, the defict, etc. I mean this tax loophole thing is a sham. If you read up on it, you will find it is almost impossible for him to get this changed. It has too much Dem and Rep opposition, in both houses for him to do anything with it. Obama knows this. And do you really think Obama wants to punish the rich? Newsflash.... there are as many rich Dems as there are Reps and the vast majority of them don't want to pay a lot more in taxes. The folks/companies that put their money legally in offshore entities, etc. have as much money from Dems as they do Rep. Obama is hoodwinking all of us and those that don't see this are foolish.

Posted by: mmourges | May 6, 2009 9:18 AM | Report abuse

Obama's rhetoric has been fairly consistent and populist, saying that there must be big changes in the finance industry and that there must be an end to the revolving door. The actions of his appointees, who entered through the revolving door, have been equally consistent, propping up that industry as is with taxpayer money.

"Obama's top economics advisers, who some see as beholden to Wall Street". By now the evidence of their solidarity with Wall Street is massive - "some see" is a weasel term. A reference to the many articles in the Post and elsewhere on their connections would have been appropriate. Generally news articles are not described as "some see".

Posted by: skeptonomist | May 6, 2009 9:47 AM | Report abuse

HELLO! Of course the banks get anything they want. Just exactly who did you think funded his campaign for the White House? He didn't follow the public financing laws when running for president? He had to get his funds from somewhere(the banks) and so he won't do anything about their greed/graft/criminal manipulation of the finance laws to make these crooks even richer. Oh they can't be questioned about the taxpayer's bailout of the banks. What is wrong with this picture?

Posted by: sailorflat | May 6, 2009 1:01 PM | Report abuse

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