April 28th, 2012
01:00 PM ET

Zakaria: Buffett Rule is bad politics for Obama

Editor's Note: Tune in Sunday at 10a.m. or 1p.m. ET for Fareed Zakaria GPS on CNN.

By Fareed Zakaria, CNN

After months of meandering, it seems President Barack Obama's re-election campaign has settled on a theme. The problem is - it's the wrong one.

The "Buffett Rule" tax on millionaires has become Obama's bumper sticker. The proposal is reasonable - but it does not deserve the attention Obama is showering on it. It raises a trivial sum of money - $47 billion over the next 10 years - during which period the federal government will spend $45 trillion. It adds one more layer to a tax code that is already the most complex and corrupt in the industrialized world.

The focus on the Buffett Rule is also bad politics in the long run for Obama. While polls might momentarily show that it works, Americans are generally aspirational, not envious. Over the years voters tend to support a government that focuses on creating opportunity rather than one that tries to reduce inequality. Bill Clinton and Tony Blair's great feat was to position themselves as pro-market, pro-growth, pro-opportunity progressives. Obama should not fritter away that asset.

Ironically, Obama has been pivoting at the very moment events in the real world are providing him with the perfect campaign issue. We are four years into the financial crisis. In the United States, the government acted speedily and massively to stimulate the economy, using monetary and fiscal measures. In Europe, by contrast, governments quickly turned toward austerity programs, cutting spending across the board to reduce budget deficits.

Well, the results are in: The U.S. economy is expected to grow 2 to 3 percent this year. The euro zone is expected to contract by 0.3 percent this year; Spain and Britain have officially entered a double-dip recession, the first time major economies have done so in 40 years. IMF projections show that even Germany's average growth rate over the next five years will be only 40 percent of America's.

President Obama started the year speaking of "an economy built to last." He should return to this theme and frame this campaign as a choice between investments on the one hand and budget cuts on the other. And he has substance behind his rhetoric.

Obama has proposed several important investment initiatives: a $476 billion infrastructure plan; a 5% hike in research and development spending; a job-training program to help dislocated workers; incentives for manufacturing; funds to expand the pool of college graduates and to increase science and engineering students. So, he should ask Americans to choose between these investments to create long-term growth versus massive budget cuts.

In the midst of the economic crisis, Warren Buffet said that his strategy was to invest in America. That's the Buffett Rule Obama should follow.

Tune in Sunday at 10a.m. or 1p.m. ET for Fareed Zakaria GPS on CNN.

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Topics: 2012 Election • Economy • Jobs • President Obama

soundoff (400 Responses)
  1. Justin H.

    I do believe we need tax reform, but if Mr. Buffet is so willing to lend his name (and his secretary) to this cause he needs to put his money where his mouth is. Why wait for a law, when he could pay his "fair share," by taking no deductions today? Just get the bill and pay it.

    I have always admired Mr. Buffet, but I do think this endorsement is a little silly on his part.

    April 30, 2012 at 3:15 pm | Reply
    • vbscript2

      He doesn't even have to claim no deductions to do that. He can just write a check to the Treasury for however much he feels is his fair share whenever he wishes to do so. You can write a check to put towards the national debt whenever you want to. It's just that most of the people on the left aren't actually willing to put their money where their mouth is.

      April 30, 2012 at 3:56 pm | Reply
  2. vbscript2

    This article's assertion that Obama has anything to brag about regarding the state of the economy is just as ridiculous as its assertion that the austerity measures are the cause of Europe's problems. The reason Europe's economy isn't expanding is because the Eurozone nations are *having to bail out members who are defaulting on their debts.* If it weren't for the austerity measures, the problem would be even worse, as the debts would be larger. Europe's problems were caused by 20+ years of heavy socialism leading to enormous debts on the parts of several member nations. When the recession came around, it compounded with their already high unemployment and high deficits, leading Iceland and Greece into default and Italy, Spain, and Portugal to the brink of it, while dragging down the entire Eurozone in a desperate attempt to bail them out to keep the Euro from collapsing. Meanwhile stateside, our "growth" is artificial. Yes, when borrow money and spend it, technically speaking, the economy grows... usually by less than the amount that the debt grows, as has been the case in the last few years. That "growth" isn't real though, it's just borrowed from future production. That's like a person making $50,000/yr claiming that their income grew by 20% for the year because they borrowed $10,000 and spent it. They may have spent like they made $60,000 in that year, but that's just borrowing from future years when that money will have to be repaid. It doesn't work any differently at the national level, other than that most people seem content to ignore it there, while they have a harder time ignoring calls from the collections agencies on their personal debt. We will have to repay what we're borrowing right now through future taxes and I can assure you that doing so will not lead to economic growth.

    April 30, 2012 at 4:10 pm | Reply
  3. Bill

    The fact that not one representative or senator in either the house or senate (including his own party members) voted for Obama's budget and his ideas goes to show you how savy he is economically.

    April 30, 2012 at 4:20 pm | Reply
    • TellItLikeItIs

      Abso-blooming-lutely!

      April 30, 2012 at 5:40 pm | Reply
  4. pawnyourhalo

    Sorry, if bringing tax rates for the obscenely wealthy up to 21st century levels loses Obama that 1% of the vote (and frankly, I doubt they'd be voting for him anyway) it's not going to matter one little bit.

    April 30, 2012 at 5:35 pm | Reply
  5. Sergio P.

    I disagree, I think it illustrate two very stark positions between the democrats and republicans. The republicans clearly favors the rich, the military and are willing to completely wipe out the social, regulatory and environmental programs. Worse, they are unwilling to compromise in terms of taxes.

    I aggree, it is pure politics but it is a good since Mitt Romney is one of the recipients of the said benefit.

    I am for smaller taxes, I also believe in a flat tax program with exemptions for the very poor. I think everyone should be treated the same under the law regardless of income. Remove most or all tax exemptions. So I am not in favor of higher taxes but I also believe in compromise, so if I have to pay higher taxes so be it for the good of the country.

    April 30, 2012 at 6:24 pm | Reply
    • CW

      Compromise means listening to the other side once in a while. Always raising taxes without any thought to lowering them or making the government more efficient, is not compromising. And it certainly isn't leadership.

      April 30, 2012 at 7:13 pm | Reply
  6. CW

    Obama is no Bill Clinton. And has no chance, unlike Bill, of getting this conservative's vote.

    April 30, 2012 at 7:11 pm | Reply
  7. CW

    I I just love the 'pay your fair share' types who want to have the smallest 'share' possible for themselves. Hypocrites just like Obama.

    April 30, 2012 at 7:15 pm | Reply
  8. gggg

    "trivial sum of money" is one of the stupidest statements bandied about by pundits and politicians that I've ever heard. If you are in hock up to your eyeballs or lose your job, what do you do? You get rid of cable, back off on the internet, cancel the newspaper, etc. Each of those is a "trivial sum of money". But when you add them together it's not so trivial anymore. Really? 4.7 Billion dollars a year is trivial? Where does trivial end? 10? 15? 20 billion dollars? Is that why we maintain oil and farm subsidies? Because the 50 billion dollars for those is "trivial"? I'm sorry, but someday I want someone to explain to me why the 60 bucks it costs to put a tank of gas in my car is not trivial, yet 4.7 BILLION dollars a year is? That is the kind of thinking that got this country into this predicament. It's time to stop this Moron Math for accounting.

    April 30, 2012 at 7:25 pm | Reply
    • RationalRose

      gggg,

      Your analogy would be more equivalent to eliminating the purchase of one stick of gum (or less) per year,

      May 1, 2012 at 12:26 pm | Reply
  9. nolimits3333

    The Bush tax cuts for the wealthiest five percent of Americans cost the U.S. Treasury $11.6 million every hour, according to the National Priorities Project. Between 2001 and the current projected end of the Bush tax cut extension, tax cuts for the wealthiest 5 percent will cost the U.S. Treasury $1.184 trillion. If extended through 2021 as gop lawmakers propose, the total cost will exceed $3.2 trillion.

    April 30, 2012 at 7:53 pm | Reply
  10. what1ever

    2% is really not that bad for an economy of our size. The fact that people actually believe that cutting the capital gains can generate revenue is just proof that people can be talked into literally anything.

    April 30, 2012 at 10:02 pm | Reply
  11. KTWinATL

    Lower taxes just means more jobs overseas and doesn't help revenue or the economy.

    April 30, 2012 at 10:50 pm | Reply
  12. Mike H

    Waiting for daddy to die, then putting his money into the stock market that cruelly benefits from outsourcing middle-class jobs overseas, and then collecting the dividends on the investments and paying a very modest tax rate...none of that is indicative of hard work, as today's Republican party folks like to argue. The "Buffett Rule" is not a cure, but it is a good first step toward fairness in our country.

    May 1, 2012 at 12:29 am | Reply
  13. twentw

    Fareed, you have misused the word "corrupt". Show me a law (any law of the United States) that is inherently "corrupt." Even a law that most people might agree is a bad law can't be "corrupt". A law might be used by corrupt people for corrupt purposes, but a law in and of itself can't be corrupt – it is, after all, a law passed legally by representatives of the American people.

    May 1, 2012 at 12:33 am | Reply
  14. David Marriott

    Fareed has quoted Clinton's so called re-election successes with an oportunistic economy and society, which was a far cry from reality after witnesssing the .com bubble bust and his fanni and freddi fiasco that eventually led to the housing bubble! Noone has forgotten that Clinton ratified NAFTA on Dec. 8th ,1993 with a totally controlled Democratic congress that resulted in the closing of more factories and outsourcing more jobs than all other U.S. presidents combined. Obama literally can not win on the issues and he knows it! It really makes no difference which way he goes as far as a stratedgy is concerned! The race card approach is as good as any options that are available to the president! ...ABO

    May 1, 2012 at 2:10 am | Reply
  15. MG.

    It sounds as if the liberals are already making excuses for Obama's demise. The president fumbled the ball on the economy and persued a health care plan instead that nobody wanted. ...need I say more!

    May 1, 2012 at 2:48 am | Reply
  16. smldg

    Fareed,

    Totally agreed. As a person of Russian descent, I know where the envy and calls for "equiality" trapped Russians during the Red Revolution. People like Buffett did support the Revolution on the onset, but then there fell victims of envious and angry crowd. When I see a successful person, my impulse is to find out how he got to where he is, and if I am able to reach the heights he did. To give all people an opportunity instead of cutting it from ones who has become successful, is they key to a prosperous nation. Although, I am very appreciative of what President Obama did in the most difficult four years for this country and I voted for him in the last election, this battle against rich make me feel eirrie and uneasy, if this is what his next fours years are about, I will bail out and vote for Romney. I still hope though that Obama will change the course and will run on a positive note.

    May 1, 2012 at 3:08 am | Reply
    • smldg

      I apologize for the typos above.

      May 1, 2012 at 3:11 am | Reply
  17. Scott

    Wouldn't it be nice if people actually cited their sources? I mean, if you wanted to prove your point, why not do it factually? But instead, you all criticize each others opinions and say google it. Why should I prove your point? Man up and cite so we can follow your train of thought!

    May 1, 2012 at 8:07 am | Reply
  18. chris

    Americans know Obama's attack on the 'rich' will soon be an attack on anyone with a decent paying job and some investments. The Buffet Rule won't make a dent in the deficit. Taxing the 1% won't be enough. A war between the 99% and 1% won't work. It's going to be a war between the bottom 80% and the top 20%. The top 20% are the people who are going to see Social Security become a tax and not a pension fund. The top 20% are going to see cap gains go thru the roof because the tax takers are jealous of anyone with investment income. The Buffett Rule is code for income distribution. CNN can harp on and on about this or that minority vote but the 2012 vote is going to come down to tax payers vs tax takers. See how the Dems can handle retirees freaking out that Obama is coming for 40% of their dividend checks.

    May 1, 2012 at 8:07 am | Reply
  19. John Deatherage

    The "Buffet Rule" is a case of Nero fiddling while Rome burned. Pass or don't pass it. It doesn't make a hill of beans to the real problems in the long run.

    We need new political leaders, all 535 plus of them. We need term limits and a line item veto for the President.

    May 1, 2012 at 8:32 am | Reply
  20. Moby49

    Disagree. It is about fairness and having skin in the game not a piddle of money. As long as the 0.01% can lower their tax rates by manipulating the politician, they will and ignor the real economic problems. Once they see the jig is up, they will either come to the party and help or leave the country for the Caymans. Either way the other 99.99% of us will be better off. The longer we let them use the US economy as their private piggy bank the more they will drive up the deficit to fill their off-shore accounts.

    May 1, 2012 at 8:39 am | Reply
  21. iceload9

    Politically this is exactly where Obama wants to be. Knowing this will never get traction he won't offend the rest of the 1%. It doesn't touch the corporations where he has shown zero interest in affecting any change even though GE pays zero in taxes. He has authored no changes in taxes that would generate jobs beyond window dressing 10 cents on a dollar.

    May 1, 2012 at 8:59 am | Reply
  22. Alabama John

    Fairness. The Buffet Rule is about perceived fairness. Many Americans have come to believe that the system is "stacked" against them, in favor of the privileged 1% (whoever they may be). Generally, most Americans are willing to sacrifice if they believe the system is fair, and that everyone is "pulling a fair share".

    In his article, Fareed did not mention the word fairness, a word that resonates in all cultures and is central to the "Buffet Rule" debate. I am surprised. I did not think that his handlers could make such a mistake.

    May 1, 2012 at 9:12 am | Reply
    • Ben

      I agree with Fareed, i don't know much about politics... In order to build a house... we need to start with basement etc. Main concern for people is Economy and Jobs. As you mentioned, Buffet Rule talking more on fairness and inequality. That's not concern for people right now. if you see from house perspective, furniture in a built house (= Fairness and inequality). We need to look and support a person who has interests build and strong economy and job market. Considering comparison between 47 billion vs 45 trillion... i feel that McCain slogan is good for america which "cut expenses". I don't have voting right, not belong to any political party, came from Asian country.

      May 2, 2012 at 1:44 pm | Reply
  23. Coop

    Fareed, Fareed,
    Obama says he doesn't want you anymore and to please stop calling :)

    May 1, 2012 at 9:14 am | Reply
  24. Megan Grawe

    "Zakaria: Buffett Rule is bad politics for Obama" ...especially when Buffet owes almost a billion dollars in back taxes!

    May 2, 2012 at 5:17 am | Reply
  25. Paul C. Cooper

    Fareed – You were correct; the Buffett rule will raise only a trivial amount of money relative to the huge debt. You were wrong, however, to trivialize it as just a political issue. It is not now and has never been just an issue of either money or fairness. it is a moral issue of great importance to the future of this nation. The tax systems in place now and being argued over are nothing but subsidies for the rich, many of whom are now contributing millions of dollars not only to keep these susidies in place but are demanding even more tax breaks for themselves; and they refuse to identify themselves. This is not just a money issue or a fairness issue; it is a morality issue that needs to be discussed as a serious problem for the future of democracy in this country. A nation ruled by a few with all the money is not a democracy, it is an oligarchy.

    May 2, 2012 at 4:11 pm | Reply
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    August 16, 2012 at 3:55 pm | Reply
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