Taxes, deficit loom as key issues in 2012 race

President Obama on Tuesday signaled that he’s eager for an election-year debate on taxes. And that’s just fine with some Republicans.

Included in the president’s State of the Union address was his call for a new “Buffett Rule” that would impose a mandatory 30% tax rate on any income of $1 million or more.

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

Ostensibly that’s a proposal the president wants lawmakers to take up this year, part of a broader push for tax reform. But few have any real hope of breaking the stalemate in Congress on taxes in this year of all years. And so it would seem the issue is destined to be litigated on the campaign trail this year.

In his 2008 campaign Obama successfully made his case on taxes with a vow not to raise rates for the middle class while allowing the higher-end rates signed into law by President George W. Bush to expire.

John McCain tried to portray Obama as a typical tax-and-spend liberal. But on election day, exit polls showed that most voters thought taxes would go up no matter who was elected. And so far, Obama has kept his promise -- at least as far as the middle class is concerned.

His party’s left flank liked what it heard Tuesday night.

“I think that’s where the American people are, and we would be foolish not to run where the president’s running,” Rep. Raul Grijalva of Arizona, a leader of the House Progressive Caucus, said after the president’s speech.

Obama got an unintended boost for his argument from Mitt Romney, who released his tax returns the same morning. Though Romney’s no longer the inevitable nominee he once seemed to be, Obama’s campaign is especially eager to take the fight to him.

Chief strategist David Axelrod tweeted today that the former Massachusetts governor “helped make [the] case for [the] ‘Buffett Rule.’”

The formal Republican response did not directly address Obama’s proposal. Instead, Indiana Gov. Mitch Daniels talked about the unacceptable growth of the national debt, and called for a “dramatically simpler tax system of fewer loopholes and lower rates.”

It’s a message that was cheered Wednesday by another leading GOP budget hawk, Rep. Paul Ryan of Wisconsin.

“[Obama] talked about the deficit for maybe two sentences yesterday and advanced all these new spending proposals,” he said at a forum organized by the Atlantic and National Journal in Washington. “The lack of seriousness shows me we have to have a new president and a new Senate if we’re going to save this country from a debt crisis.

“What we want to do is real structural debt reform, so we can actually fix this problem once and for all and get back on to growth. And you’re not going to grow this economy in a real way if we have not convincingly dealt with this debt crisis.”

In Miami today, Newt Gingrich called Obama’s tax proposal “very clever,” but potentially devastating to the economy.

“It’s the most anti-jobs step you can take,” he said, adding that it’s possible he “didn’t understand what he was saying.” “If in fact he meant what he said, I think it’s an enormous problem for the American economy.”

How the argument might play out on the campaign trail is far from certain. At the height of the debt-ceiling fight last summer, polling showed that Americans were somewhat more supportive of the president’s call for a “balanced approach” that would include more revenues from higher taxes.

But the nation’s debt and deficits are also a top concern for voters. A Pew Research Center survey this week found that 69% of respondents said reducing the budget deficit was a “top priority” for the president and Congress. Sixty-one percent said the same about making the tax system more fair.

A new Gallup poll finds that the public is split on the question of whether the U.S. economic system is fair or unfair.

Seema Mehta contributed to this report.