By Jan. 15, 1993, however, the newly elected President Bill Clinton told The New York Times that because of worsening deficit projections he was forced to renege on his campaign promises for a middle-class tax cut:
“Mr. Clinton spoke throughout the campaign of the need to redress declining middle-class incomes during the 1980s. He proposed a tax cut for the middle class nearly a year ago, in New Hampshire, and repeated the pledge frequently. But in the weeks since his election … the new team of Clinton economic advisers has apparently made new calculations and concluded that the tax cut idea is not tenable if Mr. Clinton wants to reduce the deficit and also move ahead with an ‘investment’ program to revive the economy. Growing deficit estimates require a president to shift gears, he said, adding: ‘I think that it would be irresponsible for any president of the United States ever not to respond to changing circumstances.’ ”
Cynics have suggested that once President-elect Barack Obama confronts a frightening 2009 deficit of at least $1 trillion, he, too, will renege on his “middle-class tax cuts.” When asked about the Clinton precedent, though, Obama said he would have made different choices. He implied that redistribution through the tax code is his first priority.
Shortly before the election I wrote, “The most troublesome tax increases in Barack Obama’s plan are not those we can already see but those sure to be announced later, after the election is over and budget realities rear their ugly head.”
A 20% tax rate on the dividends and capital gains of high-bracket taxpayers would raise little or no revenue, but it is nothing to get terribly agitated about. Raising top tax rate to 39.6% would discourage some effort and investment, but many professionals and small businesses could avoid that by sheltering more income under the lower corporate tax. Obama’s plan to phase out deductions and personal exemptions for those same taxpayers would be brutally unfair to large families and those living in high-tax “blue” states, so it might even prove to be foolish politics.