Opinion: Rep. Ryan’s budget proposal walks GOP into another political trap

Here is Joel Benenson, President Obama’s top campaign
pollster, speaking to reporters last week about his view of the 2012 race for
the White House: “This election has fundamentally shaped up — and rightly so
— as a battle over contrasts of economic values and economic vision.”

Here is Sen. Marco Rubio (R-Fla.), a man high on the list of
Republican vice presidential possibilities, last week offering me, in a Fox
News Latino interview, a similar view of the heart of the fall campaign:

{mosads}“I think we Republicans have an opportunity to offer a very
clear contrast to the direction that Barack Obama has taken the … U.S.” In
Rubio’s opinion, President Obama is “undermining” the American free enterprise
system, which Rubio said is “the best system in the world for upward mobility
and economic empowerment.”

Absent some foreign policy crisis, Benenson and Rubio have
it exactly right — this fall’s presidential campaign will be another replay of
“It’s the Economy, Stupid.”

And the blueprint for campaigns can be found in the recent
budget proposal from Rep. Paul Ryan (R-Wis.), chairman of the House Budget
Committee.

David Plouffe, the president’s senior adviser, is already
calling the Ryan budget “the Romney-Ryan plan.” And Mitt Romney is cooperating
by endorsing Ryan’s proposal as “an excellent piece of work.”

The Republicans are falling into a trap.

The Ryan plan calls for reducing individual income tax rates
to 10 percent and 25 percent from the current top rate of 35 percent and he
also reduces the corporate tax rate from 35 percent to 25 percent.

The Wisconsin Republican claims his budget offsets the tax
dollars lost to the tax cuts for upper-income Americans by eliminating tax
loopholes, tax shelters and many tax deductions estimated at an incredible $4.6
trillion over 10 years. But while Ryan specifies the cuts in tax rates, he
never identifies these giant tax breaks he wants to kill.

And that one false move opens the door for President Obama’s
reelection campaign to paint Romney as secretly protecting the rich and a man
who is “not in touch with the lives of ordinary Americans and doesn’t really
care about the struggles they are facing …”

That is precisely Benenson’s description of Romney during a
roundtable last week hosted by Bill Schneider of Third Way, the center-left
think tank. “Romney didn’t just get to 50 percent unfavorability,” Benenson
said. “People are clearly picking up on something.”

And that something is that he is rich and looking out for
the rich.

So far, the GOP response to this line of attack from the White
House has been to cry foul against a campaign of class warfare. They point out
that the top 20 percent of taxpayers pay 75 percent of the total federal tax
burden and get only 10 percent of entitlement spending. And the Republicans are
right to point out that Americans in the bottom 40 percent of the income
distribution pay less than 1 percent of the tax burden and receive about 60
percent of the entitlement spending.

But the GOP argument that the rich are being ripped off by
the poor falls apart when the focus shifts to the mass of loopholes and
deductions that Ryan’s budget is bringing to everyone’s attention.

The government funds tax incentives for everyone from
homeowners who make their homes more energy efficient to corporations who offer
health benefits to their workers. Tax breaks to encourage charitable
contributions alone cost the government $39 billion. The nonpartisan Tax Policy
Center (TPC) estimates that these tax breaks add up to more than $1.1 trillion

By lowering the tax brackets, Ryan will have to find a
stunning $4 trillion in cuts to loopholes and deductions to avoid adding to
deficit spending. But he did not identify one such cut.

Leaving that much spending on the rich in place at a time
when the rest of the nation is still anxious about its economic future is a
fatal political stand. 

Already, according to TPC, a family earning more than $1
million before taxes receives an average of $447,259 from tax breaks. But a
family earning $10,000 — or less — gets an average of only $427. That puts a
different light on the entitlement spending that goes to seniors, the middle
class and the poor to keep them from falling out of the social safety net.

And in the years to come, the Ryan plan further shrinks the
middle class.

The TPC’s analysis of the Ryan budget in the year 2015 found
that those making $1 million or more would enjoy an average tax cut of $265,000
and their after-tax income would increase by 12.5 percent. By comparison, half
of those making between $20,000 and $30,000 would get no tax cut at all.

As William Gale, an economist with the Brookings
Institution, recently wrote, the Ryan budget is “essentially an effort to have
low- and middle-class households bear the entire burden of closing the fiscal
gap and to have them bear the costs of financing an additional tax cut for high
income households.”

On Friday in Vermont, the president described the GOP
approach to budgeting and taxes as, “You’re on your own economics.”

“If you are born into poverty, lift yourself up by your
bootstraps even if you don’t have boots,” he said in describing the Republican
attitude. “You are on your own.”

Get ready to hear more of that tune.