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Vagueness Is The Way To Go On Tax Reform

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"Vagueness Is The Way To Go On Tax Reform"

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I think the tax reform elements of the State of the Union were among the speech’s finest moments, not so much as rhetoric but in terms of a practical intervention with the American political system. The reason, as Felix Salmon notes, is that the President was vague and evasive:

There were a lot of expectations, in the run-up to this SOTU, that Obama would present some really substantive proposals on the fiscal front. But it was not to be. There was a very vague hand-wave on the tax front — both corporate and individual taxes should be “simplified”, he said, without giving any details on the kind of loopholes that he wanted to eradicate. (Mortgage interest tax deduction? We can but hope.)

The implication here is that what the country needs from the president is some bold straight talk on taxes, and I think that’s just wrong. Look at what happened when the Bush administration kinda sorta went after the mortgage interest tax deduction—wonky bloggers praised him, Democrats slammed him, Republicans ran for the hills, he abandoned the idea, and everyone forgot the whole thing ever happened. If Obama had proposed a revenue-neutral phase out of the tax deduction, you’d just get the same thing in reverse.

The right way for the White House to engage with this issue is (a) vaguely, and then (b) in private. They need to try to credibly signal to reform-minded Republicans on the Hill that the President and his team won’t attack people who put technocratically sound proposals on the table. The point is precisely to avoid creating a partisan food fight over “Obama’s proposal to overhaul the tax code” while working constructively with people on the Hill to see what there might be support for. If you look back at the 1986 reform, the Reagan administration was definitely involved in the process, but it was overwhelmingly a behind-the-scenes thing that was about nudging good ideas forward rather than grandstanding for one day of good press.

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