In the fall of 2009, Obama’s chief congressional lobbyist, Phil Schiliro, touted a clever idea for dealing with the tax cuts: introduce a bill that would extend the middle-class cuts for two years while allowing the upper-income portions to expire. After two years, the middle-class cuts would also expire unless Congress paid for them with offsetting savings or tax increases.
Schiliro figured that, if the bill passed, the whole mess of tax cuts was likely to disappear when all was said and done, since there aren’t exactly trillions of dollars in easy-to-cut spending just lying around the federal budget, while raising other taxes was unlikely. And even if the bill didn’t pass, it would put Republicans on the defensive by shining a light on the huge budget costs of their most cherished accomplishment. …
[T]he administration’s chief wonk—Barack Obama—was intrigued. He asked a series of encouraging questions about how the proposal would work. According to two sources in the room, he was taken with both the political merits—that is, putting Republicans on the defensive—and the policy rationale of lopping trillions off the deficit. He gave no indication that he was troubled by the plan’s most explosive feature: that it would likely break a central campaign promise—not raising taxes on the middle class—one Republicans would surely wrap around his neck with populist glee.
It’s not entirely clear why the Schiliro plan never went further. But the sense of alarm that broke out among the noneconomists who attended the Oval Office conclave surely didn’t help. Vice President Joe Biden, for one, was so concerned about violating the 2008 tax pledge that he called one senior official right after the meeting to confess his anxieties. (A White House spokesperson confirmed the meeting but insisted that the president has never seriously considered phasing out the middle-class tax cuts.)
What is clear is that, having been tempted to end all of the Bush tax cuts in 2009, the president would only find the idea more attractive were he to win a second term. At that point, he will never again stand before the voters, at least not as a presidential candidate. There would be nothing to stop him from flouting a campaign promise, even one as sensitive as his tax pledge. Meanwhile, after four straight years of trillion-dollar deficits, the pressure to narrow the budget shortfall would be even more intense than it was during his first term.
Scheiber makes a strong case that the president is inclined to support a much larger tax increase than his public comments would suggest.