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Barack Obama: Tax Cutter?

Barack Obama wants to run for re-election by dividing the country along economic lines.

In what might be the most explicitly class-warfare oriented campaign since Truman’s 1948 come-from-behind win against Thomas E. Dewey, Obama clearly intends to pit rich against poor and Main Street against Wall Street in ways that allow him to play the role of the hero, standing up for the little guy.

It’s a trite if not exactly “tried and true” strategy that plays into the current cultural ethos and the media’s fascination with the 1 percent vs. the 99 percent, Occupy Wall Street, and, buzziest of buzz words, “income inequality." The GOP, involved as it is with choosing its next presidential nominee, has been slow to catch on.

In the current debate over extending the temporary cut in the employee portion of the payroll tax, Obama is presenting himself as being on the side of the working man, favoring tax cuts for those “who really need them” while the GOP, he says, only want them for the rich. It’s a populist argument that is politically powerful even if the economics are all wrong.

Reducing the flow of money into the Social Security Trust Fund, which is already on shaky ground, puts it that much closer to insolvency. Raising taxes on the people who are best positioned to get the U.S. economy up off its back and on its feet pushes an economic recovery that much farther down the road. And yet Obama, who is actually proposing to cut the rate even further down to 3.1 percent, seems to be winning the argument.

Part of this is the result of the general state of the economy. Joblessness, while apparently down according to the latest government figures, is actually up. The recent dip in unemployment, it is now acknowledged by most economists, came only because so many people gave up looking for work completely, not because they found jobs. In fact, according to a recent survey by pollster Scott Rasmussen, a heart-stopping 82 percent of the 1,000 U.S. adults surveyed “know someone who is out of work and looking for a job.”

People are frightened about the future, about their own personal future. Extending the payroll tax holiday only puts about $1,500 in the pockets of an average family of four but, to people who fear their job might disappear and who haven’t seen a raise in some time, that’s a tangible if not quite substantial addition to their annual income. Meanwhile Congress is at loggerheads over what to do, mired in a seemingly unending debate over how to pay for it.

The Democrats want to raise taxes on the wealthy to fill the gap a year-long extension of the holiday would create. The Republicans want to freeze the pay of federal workers and are pushing for the sale of government assets and measures they are calling “job creators” to make up the difference. The problem is that the GOP doesn’t seem to understand that, by acceding to the extension in the first place, they’ve lost the battle. There are those brave few like Illinois Sen. Mark Kirk who say the whole business should be scrapped, but, for the most part, the Republicans fear being on the wrong side of the issue politically. As such, Obama has them over a barrel.

It’s unlikely the measure has the votes to pass the Democrat-controlled Senate if it includes a tax increase -- as Majority Leader Harry Reid and his cohorts have been demanding. There are enough Democrats in vulnerable seats that a vote for a tax increase would be damaging come election time. But the president is not negotiating with the Democrats in the Senate or advising them on ways to tweak their proposal. No, Obama is only playing off the GOP plan in the House, which doesn’t include tax increases but does arguably have some spending restraint -- and he’s doing it in a way that plays into the hands of his campaign handlers who want to split the country by income levels in the next election.