Obama And The Politics Of Tax-Policy Debate Renee Montagne talks with NPR's Scott Horsley about President Obama's comments on overhauling the nation's tax policy. Obama is pushing to broaden the tax base and lower tax rates.
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Obama And The Politics Of Tax-Policy Debate

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Obama And The Politics Of Tax-Policy Debate

Obama And The Politics Of Tax-Policy Debate

Obama And The Politics Of Tax-Policy Debate

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Renee Montagne talks with NPR's Scott Horsley about President Obama's comments on overhauling the nation's tax policy. Obama is pushing to broaden the tax base and lower tax rates.

RENEE MONTAGNE, host:

Let's have a conversation now with NPR's Scott Horsley.

Good morning, Scott, and tell us who - besides the president - thinks a tax overhaul is a good idea.

SCOTT HORSLEY: Well, there's been a lot of support from tax policy experts -although, as the president said, it's a big challenge politically, Renee. The last time we tried this a quarter-century ago, it became known as "the Showdown at Gucci Gulch." That's because of all the high-priced lobbyists who got involved.

Remember, every one of those tax breaks has a constituency out there, so weeding them out is a whole lot easier said than done. But if you could do it, if you could broaden the tax base and lower tax rates, you could end up with a tax system that's both more progressive - something Democrats like - and also more efficient and pro-growth, which Republicans like. It would also bring in more money, which would address the deficit.

Now, unfortunately, it is difficult to have that kind of conversation. As Donald Marron, who directs the Tax Policy Center, said, it's all taken a backseat to this very narrow, very partisan fight over whether to extend the Bush-era tax cuts for a small sliver of the population, and that's because of this looming deadline at month's end.

Mr. DONALD MARRON (Director, Tax Policy Center): Congress is a little bit like, you know, a high school student or a college student with a paper due. They tend not to focus their mind until they see the deadline looming. And that's what we've had this year.

HORSLEY: What the president says he wants to do with this two-year extension of the tax-cut deal is to buy time for a more thorough review of the code. And Renee, if you thought the health-care battle was messy, watch out.

MONTAGNE: And so, buy time - how would that change the politics of the debate?

HORSLEY: Well, there are people on both sides of the aisle who favor this kind of broad tax overhaul. There were senators, both Democrats and Republicans, on the president's deficit commission who appeared to back it. As you heard the president say, it's not about asking the rich to pay less. Most of these tax breaks disproportionally benefit the rich.

But the political battle would play out on a different field. Instead of Democrats against Republicans, you'd see the fight break down to Realtors and home builders against nonprofit organizations, for example, or other beneficiaries. The biggest sacred cow is that mortgage-interest deduction, and you heard the president hesitate about touching that.

The other thing to keep in mind here is depending on their circumstances, some taxpayers, some middle-class taxpayers would end up paying less. Others might end up paying more. And so it would be a lot harder to measure whether the president had kept his campaign promise against raising taxes on the middle-class.

MONTAGNE: So that is the longer-term debate over the tax code. But Scott, there's a pile of other legislation the president wants to get through Congress in the next few weeks while it's still controlled by the Democrats. And let's just turn to that for a bit. Was the president in a hurry, first of all, to make this tax deal so he could move on to these other things?

HORSLEY: Well, there are always a lot of other things on the president's plate, and sometimes Congress has trouble dealing with even one thing at a time. For Mr. Obama, the biggest priority, in terms of foreign policy, during this lame-duck session has been ratification of that nuclear arms control deal with Russia, the START treaty. Yesterday, Steve Inskeep asked the president if he had a deal with Senate Republicans to bring that treaty to a vote in exchange for the tax-cut agreement.

President BARACK OBAMA: My understanding with them is that START is going to be called, and I am urging them to vote for the bill. And my expectation is vote for the treaty, rather. And my understanding is that we have a number of Republicans, starting with Richard Lugar - somebody who, by the way, on my first trip abroad, I accompanied to Russia to talk about nuclear proliferation issues. He's been a great champion of this treaty. We're going to keep on working the numbers and hopefully, we're going to be able to get it done.

MONTAGNE: And Scott, how likely do you think that is to happen?

HORSLEY: Well, I think it's safe to say that the odds of Senate ratification are a whole lot higher if this tax cut deal is approved, and approved quickly.

MONTAGNE: NPR's Scott Horsley, and as you just heard, President Obama speaking to NPR's Steve Inskeep - our own Steve - from the Oval Office. You can read the transcript of the interview at npr.org.

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