They’re both right (and wrong) on Buffett Rule

By Lanny Davis – 04/18/12

One of my favorite scenes from the classic musical comedy “Fiddler on the Roof” is when the lovable lead character in the Russian Jewish village of Anatevka, Tevye, is trying to referee an argument between two men.

When one of them finishes his point, Tevye turns to him and says, “You know, you are right.”

Both men are now furious. One says, angrily, “How can we both be right?”

And Tevye says, “You know, you’re right.”

So it goes for Obama and Romney debating the Buffett Rule — except they are both right and wrong at the same time. Here’s why:

The Buffett Rule (named after its originator, the famous sagely business billionaire, Warren Buffett), which is supported by President Obama and most Democrats, would require everyone earning more than $1 million per year should pay a minimum income tax rate of 30 percent.

Romney’s response is to mock this proposal as not seriously addressing our economic problems — and he is right. But he is also wrong when he attacks the Buffett Rule as divisive. “Let’s find the very most successful in our country and say they’re bad guys. Go after ’em. And let’s divide America.”

Oh, puh-leeze. Raising taxes on millionaires is no more divisive than the Ryan budget, which Romney supports and which gives wealthier people more tax breaks while cutting needed social and educational programs that help the poor.

But how much benefit does Obama’s proposed Buffett Rule really offer? Budget experts say it would affect only 217,000 households, even if the Bush tax cuts are allowed to expire, and would produce just $47 billion in revenue over 10 years.

That’s less than $5 billion per year — which is about three-ten-thousandths (.0003) of the current national debt.

Even Obama admitted, to his credit, that the proposal would do little to close the annual deficit. Then he added: “But the notion that it doesn’t solve the entire problem doesn’t mean that we should not do it at all.” He’s right about that, too.

Yet on Monday, I received a press release from a Democratic pro-Obama group called the Main Street Alliance, proclaiming that delay of passage of the Buffett Rule — called the Paying a Faire Share Act of 2012, would “hurt small business.”

Huh?

A tax increase leaving untouched the tax rates of more than 99 percent of the American people is about fairness and, if not enacted, would hurt small business?

So Romney is right to mock the Buffett Rule as more about politics than economic fairness, and Obama is right that even if it’s a drop in the bucket, it’s still worth doing.

Both are wrong to make a big deal about the Buffett Rule as having a serious economic effect one way or the other — and both must know that, nevertheless, that’s politics in today’s America.

One of my favorite economic analysts, Ezra Klein, recently pointed out in The Washington Post that Republicans and Democrats share a common hypocrisy on the issue of taxes and deficits.

Republican conservatives oppose all tax cuts, he wrote, while Obama supports increasing taxes only on those making over $250,000 per year — just 2 percent of the country.

“Republicans don’t want to raise taxes on anyone, and Democrats don’t want to raise taxes on almost anyone,” Klein wrote. “The argument between the two parties rages over that sliver of territory between ‘anyone’ and ‘almost anyone.’ ”

In other words, both Obama and Romney are right about criticizing the other’s overhyped position on the Buffett Rule, and both are wrong not to endorse the one bipartisan proposal that would honestly attack the national debt: the Simpson-Bowles commission’s proposal to cut spending, raise taxes by closing loopholes and reform and reduce future hemorrhaging of Social Security and Medicare.

You might ask, how can they both be right and wrong at the same time?

You know, you’re right.

Davis, the principal in the Washington law firm of Lanny J. Davis & Associates, which also specializes in legal crisis management, served as President Clinton’s special counsel from 1996-98 and as a member of President George W. Bush’s Privacy and Civil Liberties Oversight Board.  He is the author of the book Scandal: How ‘Gotcha’ Politics Is Destroying America.