The Buffett Rule: Sound Policy Or Just Politics?

In politics, sometimes the narrative trumps the substance.

As November's U.S. presidential election draws closer, President Barack Obama has forcefully shown he plans to make economic inequality a focus of his re-election bid, one in which financial constraints on the government and American families play a leading role.

In a rousing speech in Kansas last December that drew the contours of his campaign for a second term, Obama decried a system that favors the rich while middle-class salaries stagnate. He denounced you're-on-your-own economics.

While stumping for a jobs bill that would have eliminated tax cuts for the rich to pay for new teachers and more infrastructure projects, the president suggested that Republicans who have been working pretty hard to keep tax breaks for the wealthiest Americans should fight even harder for middle-class families.

In recent months Obama has emphasized his goal of achieving fairness for Americans through an overhaul of the nation's Brobdingnagian tax code -- an effort that included his ultimately unsuccessful bid to get Congress to repeal tax breaks for oil companies. But the so-called Buffett Rule, a proposal to raise taxes on millionaires and billionaires, has emerged as the most potent symbol of the president's push to ensure that everyone pays his or her fair share.

Billionaire investor Warren Buffett got the conversation going with an opinion essay in the New York Times headlined Stop Coddling the Rich, in which he called for our government to get serious about shared sacrifice. Obama, in his most recent State of the Union address in January, invoked the now-famous observation by Buffett that that billionaire pays taxes at a lower rate than his secretary.

Now, you can call this class warfare all you want, the president said. But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.

Obama has taken the debate on the campaign trail, using it to contrast his message with that of Mitt Romney, who has advocated slashing tax rates for corporations and wealthy individuals. Romney made news in January when he released his tax returns under pressure, revealing that for 2010 he paid an effective tax rate of under 13.9 percent on $21 million in income. That prompted White House spokesman Jay Carney to say it was inherently not fair that millionaires and billionaires pay at a lower rate than average Americans who are struggling to get by.

The president reiterated his support for the Buffett Rule during a campaign stop in Florida on Tuesday. In a conference call beforehand, the president's campaign continued to hammer Romney.

This is about common sense. Romney's a beneficiary of a broken tax system and he wants to keep it that way, Obama campaign manager Jim Messina was quoted by the Associated Press as saying. He wants a system in which firefighters, cops, teachers and middle-class Americans all pay a higher tax rate than he does. We think that's wrong.

When it comes to the revenue the Buffett Rule would generate, Republicans have accused Obama of seeking to gain political points rather than meaningful policy. A statement from the Republican National Committee pointed to an analysis by Congress's Joint Committee on Taxation that found the Buffett Rule would produce about $46 billion over the next decade.

That amount is nothing to scoff at, but $46 billion is minuscule compared to a federal deficit the Congressional Budget Office pegged at $780 billion for the first half of 2012. The RNC called the Buffett Rule a distraction, not a solution and noted a September speech in which Obama said the basic principle of fairness of the rich paying a higher tax rate than secretaries or firefighters could stabilize our debt and deficits for the next decade.

The RNC's statement is a bit disingenuous in asserting that Obama claimed the Buffett Rule itself would achieve that aim. The president was speaking about a broader budgetary philosophy that Buffett's proposal crystallizes, something Carney underscored when he told reporters on Monday that the rule fits into a broader discussion about tax reform.

In any case, Congress isn't likely to incorporate the Buffett Rule into tax legislation anytime soon. But as Obama amplifies his election-year economic populism, Warren Buffett's secretary is likely to keep popping up on the campaign trail.