It may be too soon to speculate about the parameters over which the general election campaign will be fought. The Republicans have not yet chosen a nominee. The state of the economy, while improving, is uncertain. There are any number of unknown events that could change the the contours of the campaign on a dime. That being said, events to date have provided a general outline of what the voters can expect. President Obama’s recent speeches aid in providing context. So does the primary election battle between former Massachusetts Gov. Mitt Romney his remaining competitors. With all that in mind, considering the most likely scenario presented below, the Republican nominee (most likely Romney) will have found himself by autumn in an untenable political position on a major issue.
The issue is taxes. Mitt Romney has staked out a position in compliance with the Republican fundamental ideology: taxes must never be raised on anybody, ever, under any circumstances except perhaps the poor. Rather, Romney has adopted the position that taxes are too high and must be lowered, especially for the wealthy. Romney has opposed closing the carried-interest loophole:
With regard to carried interest associated with venture capital, real estate, private equity, I do not believe in raising taxes. And it is a capital gain because those individuals do make an investment, it’s a small investment, but they make an investment of their own capital and I would treat capital gains as capital gains instead of trying to re-categorize them as normal income.
Now consider President Obama’s position. The president has staked out territory that defines the tax issue in terms of fairness. His position is that the tax system is unfair and favors the wealthy. He proposes raising taxes on the rich, closing the carried-interest loophole, while keeping middle and working class taxes at current levels.
Public opinion on this matter is strikingly clear. A December CBS News poll indicated 60 percent of the general public favors raising taxes on the rich. An older Gallup Poll indicated 66 percent agree with raising taxes on the wealthy. An even older CNN poll notes that 63 percent agree with this position. Read as many polls as you like from any time period over the past three years and you will always see the same result: Better than 60 percent of Americans favor raising taxes on the wealthy.
This puts a person like Mitt Romney in a very, very difficult position in the general election. Taxes are one of the fundamental issues over which elections are fought. Traditionally, Republican nominees have argued that lowering taxes on the rich will produce robust economic growth and job creation, and they have won elections on that message. But Mitt Romney has a problem: Unlike previous Republican nominees, he himself will be a significant, almost outrageous beneficiary of his own tax policy. Additionally, Romney cannot point to any jobs directly created as result of his 2010 tax return. Because Romney does not earn money through work of any sort, he faces the prospect of having to convince better than 60 percent of the public that they are wrong on taxes. He’s also going to have to convince them that he has no personal interest in being right. He will offer a rather striking contrast to President Obama, who agrees with better than 60 percent of the public and consistently offers to pay more without complaint. It will be a political miracle of the first order if Mitt Romney can bring that better than 60 percent number down to 49 percent, considering how solid and consistent it has been over the past three years. Furthermore, recent polling shows that number is firming up, with a clear majority of Americans feeling the wealthy are not paying their fair share. This is particularly true of the carried-interest loophole, which even Rupert Murdoch believes is politically indefensible. Mitt Romney acquired almost all his vast wealth from carried-interest, which means he was taxed on investments other people made as if he had made them himself. This is a very hard place for someone like Mitt Romney, who pays a 14 percent rate of taxation despite millions of dollars in unearned income, to be.
Usually, a major party nominee faced with such a solid wall of public opinion will seek to “move to the center” by moderating his positions and moving closer to the general consensus. The problem for Mitt Romney is the he is unable to do it. Because he already has a serious problem with the base of the Republican Party on issues like abortion, health care, climate change, and general conservatism, there are two issues where he simply cannot move away from his hard-right positions. The first is immigration, and the other is taxes. For Mitt Romney to hold together enough of a coalition to win the general election, he simply cannot move on the issue of taxes by advocating more taxes on the wealthy. Any such attempt would ruin what little credibility he has with the conservative base. Because he has taken both sides of so many fundamental Republican beliefs, there is almost no leeway the conservative base will allow him. Mitt Romney has to stick with his position on an issue where he is on the wrong side of better than 60 percent of the public. But he’s up against a rock in the form of a Republican Party that doesn’t trust him.
This is why President Obama has made tax fairness the very center of his campaign. It is an issue where a clear majority agree with him. Romney can’t do anything about it because he’s caught between a rock and a very hard place.