President Obama Positions His Party as "Defender of the Middle Class" with New Tax Proposal

by Cyryl Ryzak

President Barack Obama Delivering the 2013 State of the Union / The White House

Obama has a reputation on the Left as a hopelessly pragmatic bungler. His inherent centrism, his moribund DLC-style neoliberalism, was made even more insufferable by constant attempts to “reach across the aisle” to a Republican Party which equated his administration with the Bolshevik Sovnarkom. If there is one thing Obama has not been, that is a fighter. Socialists of a more cynical bent (a quite large demographic) say they saw his faults from the beginning. Indeed, the conclusion many on the Left have taken from the past six years is that the Democrats are not to be trusted even when they spout progressive rhetoric, as Obama did.

Yet right now Obama seems to be returning to the image some had of him in 2008, a progressive in tune with mass sentiment. In his State of the Union address [note: this was written before the State of the Union speech was broadcast], he will propose a tax plan which will close the trust-fund loophole, raise the capital gains tax, and institute a punitive fee to discourage financial firms from excessive borrowing, all while providing a series of tax credits for the middle and working classes. This tax plan, In addition to his free community college plan, is one of the boldest actions Obama has taken, alongside his executive action on immigration.

Compared to his other attempt at progressive policy-making, the contemptibly limp Affordable Care Act, the tax plan is populist in thrust, as evidenced by White House released fact sheet which borrows language about the 1% popularized by Occupy and directly attacks the tax-phobia of the wealthy. Unlike the ACA, which was pathetically watered down so as not to resemble anything close to a single-payer system, this tax plan has a very concrete purpose: make the rich pay more and everyone else pay less. Or as Michael Hiltzik of the LA Times puts it, “The beauty of this proposal is that it’s aimed surgically at the wealthiest taxpayer.”

And yet, it is a fundamentally limited and flawed proposal. While it undoes Clinton and Bush era cuts in the capital gains tax, it fails to restore them to their highest level in the Ford era. Marginal tax rates for the wealthy, the bedrock of progressive taxation, will still be low. The era when top earners paid 70%, let alone 91% as they did in the 40s and 50s, seems now like an egalitarian fantasy.

More glaringly problematic is the part of plan dealing with direct benefits. While working people will undoubtedly benefit, they do so entirely through changes in the tax code. This leaves two key problems unsolved. First, the welfare state is left to continue fending for itself in the face of neoliberal assaults from both parties. A real solution, as proposed by Bhaskar Sunkara and Peter Frase, would involve moving the burden of welfare from local and state budgets, where it is constantly threatened, to the federal level, where it can be properly expanded.

Second, wage stagnation is addressed through the panacea of tax cuts, when a real solution must correct the imbalance of power between labor and capital. While this is a task that demands mass action from below, Obama could call for legislation modeled on the Employee Free Choice Act in order to prevent employers from using draconian policies against labor organizing initiatives. Active labor market policies designed to eliminate unemployment, as well as movement to lengthen the period of unemployment insurance eligibility would both help the unemployed and improve the position of labor generally by preventing a reserve army of labor from pulling wages down.

Despite these concessions, Obama’s tax plan is still too far to the left of the Republican-controlled Congress to have any hope of passing unscathed. As political commentators have pointed out, this tax plan’s real purpose is to present Obama as “a defender of the middle class” and to shape the Democratic party’s message in 2016. The political opportunism inherent in such a ploy is irksome, but the fact that a move to the left is seen in Washington as politically expedient should be well received by the left.

We cannot allow ourselves to be lulled into a false sense of victory by the leftward lurch of the Democratic Party. Obama’s public return to his progressive roots was only made possible by Occupy Wall Street and similar mass movements of recent years. Truly radical reform always comes from the bottom up. Therefore, stay active in your communities and on your streets; take comfort in the fact that, despite the flaws inherent in the President’s tax proposal, we are making progress.

Cyryl is a student from Reed College in Portland, OR. He spent his 2014-15 winter break volunteering at DSA headquarters in New York.

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