President Obama placed an unusual degree of emphasis Tuesday during his State of the Union address on tax reform, and while there appears to be more bipartisan spirit in Congress in the wake of the tragic shootings in Tucson, the prospects for getting an agreement are murky at best.
The agreement last month on extending the Bush-era tax rates for another two years could provide an encouraging precedent for forging an agreement between the two parties. However, the politics of taxation in Washington have become ever more divisive in recent years. They aren’t helped by the ever present demands of corporate lobbyists pushing for more tax breaks for their clients.
Add to that the growing demands for deficit reduction and spending cuts, reflected in the speeches of not only the president, but also the Republican responses from Paul Ryan of Wisconsin and Michele Bachmann of Minnesota (see Obama Calls for Tax Reform).
Trying to reform both spending and taxes simultaneously is not going to be an easy lift for Obama or Congress. While Obama has succeeded in getting some major legislation passed during his first two years in office, he is likely to be hobbled by the loss of a Democratic majority in the House. He will need to find that bipartisan majority by moving more to the center and embracing positions traditionally advocated by Republicans, while risking the scorn of those in his own party who have already chastised him for the compromises he made on the estate tax and tax cuts for the wealthy in the agreement he struck last month with Republican congressional leaders.
Still, it was heartening to watch on TV as both Republicans and Democrats sat side by side in the chamber. It is to be hoped that will set a precedent for future State of the Union addresses, not only those after traumatizing events like the shooting of Rep. Gabrielle Giffords, D-Ariz., and the other victims in Tucson.
Despite elections and battles over policies related to financial regulation, health care, economic stimulus and a host of other issues, the two parties will need to work together in the year ahead if they want to get anything done. Whether or not that includes real reform of either the corporate tax system or individual taxes is up to them. Whatever happens, expect to hear a lot of talk about taxes between now and 2012.
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