by Keith Laing, The Hill Newspaper
President Obama is taking a populist turn with his assault on tax breaks for corporate jet owners.
Obama is pressing Republicans to sacrifice part of a $3 billion tax credit in a deal to raise the federal debt ceiling. He proposes changing the break so that private corporate jets can only be written off as a business expense for five years, rather than seven, as currently allowed under the law.
Like his previous attempts to take on a populist tone, the proposal has drawn the ire of the business community, which Obama has courted assiduously since the Democrats’ defeat in midterm elections.
Democratic strategist Jamal Simmons said that for Obama, the rewards for going populist might outweigh the risks of another brushfire with business.
“Democrats are happy,” Simmons, a principal at the Washington-based consulting firm The Raben Group, told The Hill in an interview.
“People may argue with his tone, but I’m sure the president is frustrated,” Simmons continued. “The business community is frankly doing OK. It’s working people in this country who are really catching it. The stock market is up, the auto industry is coming back, but we haven’t seen job growth.”
Republicans disagreed, and said the president is simply showing his tax-and-spend colors.
“Quite frankly, I am both disappointed for our country and shocked at some of the rhetoric,” freshman Sen. Marco Rubio (R-Fla.) said in an interview with the conservative National Review. “It was rhetoric, I thought, that was more appropriate for some left-wing strong man than for the president of the United States.”
Rubio, who many conservative activists hope will be the Republican Party’s vice presidential nominee next year, said Obama was playing class warfare.
“After seeing the press conference, I would swear our president was from Texas,” Rep. Marlin Stutzman (R-Ind.) said in a statement released by his office. “That was quite the two-step.”
Stutzman said he expected Obama to “offer a clear message that would resonate with the American people.” Instead, he said, the president “continued to hide behind jargon and campaign rhetoric.”
“When asked a very simple question on whether he would raise taxes on the American people in the midst of a recession as part of a debt ceiling deal, he dodged it,” Stutzman said. “I think that the American people understand that this is just a chapter and verse from the tax and spend playbook he’s followed since day one.”
The president, hardly known for being a podium-pounding populist, has tried to cast Republicans as more interested in trying to protect wealthy jet-setters than working Americans in negotiations over the debt ceiling. In his roughly one-hour news conference this week, he invoked the tax breaks for corporate jet owners six times
“There’s been a lot of discussion about revenues and raising taxes in recent weeks, so I want to be clear about what we’re proposing here,” Obama said at the opening of the news conference. “I spent the last two years cutting taxes for ordinary Americans, and I want to extend those middle-class tax cuts. The tax cuts I’m proposing we get rid of are tax breaks for millionaires and billionaires; tax breaks for oil companies and hedge fund managers and corporate jet owners.”
Critics pointed out that Obama used to be in favor of similar credit.
“Nine months ago, this president extolled the virtues of shortening depreciation schedules to stimulate jobs,” National Business Aviation Association President Ed Bolen said in a statement. “Now he seems to want to reverse course and push ahead with punitive treatment for general aviation, an industry that creates jobs, helps companies succeed and serves communities all around America.”
It’s easy to see why Obama might see an advantage in targeting corporate jets, which conjure images of Wall Street billionaires at a time when the country is still suffering from high unemployment.
Obama has taken aim at the well-heeled in the past, most notoriously when he called Wall Street executives “fat cats” — a statement that still stings in the financial world.
The dust-up over planes brought back to mind Obama’s repeated run-ins with the tourism industry in Nevada after he evoked trips to Las Vegas as examples of excess among Wall Street bankers.
“You can’t go take that trip to Las Vegas or go down to the Super Bowl on taxpayers’ dime,” he said during a 2009 town hall, drawing the ire of even friendly Democrats like Senate Majority Harry Reid (Nev.).
Obama characterized the corporate jet tax breaks the same way this week.
“It would be nice if we could keep every tax break there is, but we’ve got to make some tough choices here if we want to reduce our deficit,” he said Wednesday.
“And if we choose to keep those tax breaks for millionaires and billionaires, if we choose to keep a tax break for corporate jet owners, if we choose to keep tax breaks for oil-and-gas companies that are making hundreds of billions of dollars, then that means we’ve got to cut some kids off from getting a college scholarship,” he continued.
“That means we’ve got to stop funding certain grants for medical research. That means that food safety may be compromised. That means that Medicare has to bear a greater part of the burden. Those are the choices we have to make,” he said.
The aviation industry said Obama’s comments were “disparaging.”
“General aviation plays an important role in our economy and took a substantial hit in the recent recession,” Aerospace Industries Association President Marion Blakey said in a statement. “We feel that disparaging comments from the president regarding business jet users are not conducive to promoting jobs, investment and economic growth.”
But Simmons, the Democratic strategist, said that if Obama ever wanted to have a discussion about taxes on favorable terms, he has to point out things like the corporate planes.
“I don’t that’s think the totality of what he’s talking about. It’s a provocative example,” Simmons said. “If he doesn’t get taxes on the table now, it’s going to be hard to go back and put them on the table later.”
And it is hard to envision a scenario where the debt ceiling is raised without them, Simmons added.
“Every bipartisan plan has them,” he said.
Obama might also find comfort in that the fact that donations from the aviation industry seem to lean slightly Republican, so his own 2012 fundraising might not take much of a hit from the fight. The campaign finance watchdog group MapLight pointed out this week that two groups in favor of keeping the tax breaks for corporate jets, the General Aviation Manufacturers Association and the National Business Aviation Association, have given generously to lawmakers in both parties, but donated more to Republicans.
Between 2001 and 2010, the organizations donated $225,060 to Democrats and $245,500 to Republicans, MapLight said. In the same 10 years, aircraft parts and equipment companies had given $1,286,906 to Democrats and $1,702,497 to Republicans, while airplane manufacturers had donated $1,010,638 and $1,434,510, respectively.
Airports and other aviation service facilities had given $575,932 to the GOP and $644,005 to Democrats, MapLight added.