Washington - Obama Will Not Extend Bush-Era Tax Cuts to Wealthy |
|
Washington - President Obama on Wednesday will rule out any compromise that would extend the Bush-era tax cuts for the wealthy beyond this year, officials said, adding a populist twist to an election-season economic package that is otherwise designed to entice support from big businesses and their Republican allies.
Mr. Obama’s opposition to allowing the high-end tax cuts to remain in place for even another year or two would be the signal many Congressional Democrats have been awaiting as they prepare for a showdown with Republicans on the issue and ends speculation that the White House might be open to an extension. Democrats say only the president can rally wavering lawmakers who, amid the party’s weakened poll numbers, feel increasingly vulnerable to Republican attacks if they let the top rates lapse at the end of this year as scheduled.
It is not clear that Mr. Obama can prevail given his own diminished popularity, the tepid economic recovery and the divisions within his party. But by proposing to extend the rates for the 98 percent of households with income below $250,000 for couples and $200,000 for individuals - and insisting that federal income tax rates in 2011 go back to their pre-2001 levels for income above those cutoffs - he intends to cast the issue as a choice between supporting the middle class or giving breaks to the wealthy.
In a speech in Cleveland on Wednesday, Mr. Obama will also make a case for the package of roughly $180 billion in expanded business tax cuts and infrastructure spending disclosed by the White House in bits and pieces over the past few days. He would offset the cost by closing other tax breaks for multinational corporations, oil and gas companies and others.
While the speech will be centrist in its policy prescriptions other than the Bush tax cuts, Mr. Obama’s language will be partisan as he seeks to sharpen the contrasts between Republicans’ record and efforts by Democrats to create more jobs, aides said.
White House officials have strenuously avoided labeling the proposal a second stimulus plan, a phrase that has taken on negative political connotations since the original roughly $800 billion recovery plan and subsequent additions have failed to push unemployment down substantially.
But it would provide his party with an agenda for the home stretch of the midterm campaign - though one with a small chance of being enacted quickly or helping the economy before Election Day if it were.
The two major pieces of the package - expanding and making permanent a popular credit for businesses’ research and experimentation expenses, and allowing them to write off the full value of new equipment purchases through 2011 - have longstanding Republican and corporate support.
The administration calculated that the package had to be attractive to Republicans and business groups if it has any chance of passage in the short time Congress will be in session before lawmakers go home to campaign.
Politically, however, the president is, in effect, daring Republicans to oppose the plan, in that way proving Democrats’ contention that they will block even their own ideas to deny Mr. Obama any victories. And by proposing business tax breaks that, according to nonpartisan analyses, would do more to stimulate the economy than extending the Bush tax rates for the wealthy, Mr. Obama hopes to buttress Democrats’ opposition to extending those rates.
With its tilt toward business tax cuts, the package that Mr. Obama is proposing risks discouraging liberals in his party who want more spending for projects that provide jobs, especially for a construction industry still staggered by the collapse of the housing boom.
They are not likely to be satisfied by another of the president’s proposals: to provide $50 billion immediately to build roads, air traffic control systems, waterways and more, and, for the long term, to create a national infrastructure bank. That is another bipartisan idea that would leverage federal money with state, local and private-sector investments to finance projects.
In any case, the administration acknowledges that its blueprint might not pass before Election Day, or even in the lame-duck Congress afterward.
“This is about long-term economic growth,” Robert Gibbs, the White House press secretary, said on Tuesday. “This isn’t about the next 60 days or the next 90 days. This is about how do we get our economy fully back on track, how do we get the millions that want to work back to work, and how do we repair the economic damage that’s been going on not just over the past two years but over the past 10 years.”
Republicans’ early reactions were hostile, especially to Mr. Obama’s proposals to close corporate tax loopholes to offset any costs.
“If the offsets for this new package are other tax increases, then it’s a nonstarter,” Senator Charles E. Grassley, a senior Republican of Iowa, said in a statement.
Douglas Holtz-Eakin, a former director of the Congressional Budget Office and an adviser to Republicans, predicted in an interview that “nothing is going to happen between now and the election,” except perhaps for passage of a separate administration package of tax cuts and lending for small businesses. Senate Republicans had been blocking that legislation.
Nigel Gault, chief economist for IHS/Global Insight, an economics consulting firm, said he liked both the infrastructure and R&D proposals but “they’re not going to kick-start the economy.”
Mr. Gault and other economists questioned why the administration was not proposing a major payroll tax cut to spur hiring. The White House considered the idea, officials said, but dismissed it in part because it would reduce revenues to Social Security and Medicare.
Martin Feldstein, who was economic adviser to President Ronald Reagan, said all the Bush tax cuts should be extended for two years because even letting those for the wealthy lapse would be “a blow to a very fragile economy.”
To the chagrin of the White House, Mr. Obama’s recently departed budget director, Peter R. Orszag, took the same stance on Wednesday in a column in The New York Times.
More of today's headlines
“New York, NY - We’ve always thought exercising your brain is just as important as exercising your body, but new research shows in some cases it may actually be...”
New York, NY - New Alzheimer’s Study Uncovers Exercising May Be Harmful
New York - Study: Some Low-Carb Diets Up Cancer, Death Risk




Total17
Read Comments (17) — Post Yours »
1
Sep 07, 2010 at 10:26 PM Anonymous Says:Report as Inappropriate
Of course not he's a socialist, and he doesn't want to help the economy recover. Vote all dems/liberals out Nov.
2
Sep 07, 2010 at 10:42 PM cynic Says:Report as Inappropriate
Can everyone please recall that these "tax cuts" were.. set to expire when President Bush signed the original legislation? In other words, _he's_ the person who endorsed that paper that's raising taxes this (or next) year.
Might be fair to call these... the Bush Tax Increases. Duh.
3
Sep 08, 2010 at 12:29 AM Paskunyak Says:Report as Inappropriate
To # 2: You are Babbling. Can you please clarify your statement so that it makes some sense? Di rets vi a shoitah!
4
Sep 08, 2010 at 02:21 AM LiberalismIsADisease Says:Report as Inappropriate
2, The tax cuts were temporary tax cuts to stimulate the economy WHICH THEY DID!
Do you hear that Mr Obama? Tax cuts to the people who HIRE other people, means there is more money for them to hire people with. Oh, I forgot, that goes the opposite of your socialist agenda.
Vote DEM out!
5
Sep 08, 2010 at 07:09 AM charliehall Says:Report as Inappropriate
#3,
It is very simple: The original Bush tax increases were to be temporary and the law he signed caused them to expire after nine years. Those nine years are up at the end of this year. Given that they did not help the economy it is time to try something else.
6
Sep 08, 2010 at 09:48 AM yudel Says:Report as Inappropriate
To extend the response to #3 -- the Bush tax cuts passed in 2001 were based on Congressional Budget Office analyses on the impact on the deficit. In order to keep the cost of the tax cuts within acceptable limits, the tax cuts were scheduled to expire in 2012. Of course, many of us felt that this was not serious, and that the Republicans would make an effort to extend the cuts. Surprise -- that is just what is happening now. The Republican strategy is to extend cuts to those that need them least, and pay for it on the backs of working-class Americans.
No real surprises here.
7
Sep 08, 2010 at 09:54 AM hugo chavez Says:Report as Inappropriate
using simple people to try to enslave them
trying to make argument were sticking it to the big business and saving small people to use it as populist message
is socialism trying to be anti-business and for government is breaking on the economy
using small minds to try to esnare the rest of america its not fair
8
Sep 08, 2010 at 09:56 AM Anonymous Says:Report as Inappropriate
#5
they didn't help the economy? what planet are you on?
9
Sep 08, 2010 at 10:06 AM Barry521 Says:Report as Inappropriate
To extend anything from Bush is to admit to his own abject failure ass a make believe, wannabe President.
Obama is an inept, inane dithering, whining incompetence buffoon who can not find his way out of a paper bag with two open ends using a flashlite, a czar and a commission.
10
Sep 08, 2010 at 11:49 AM Anonymous Says:Report as Inappropriate
“ #3,
It is very simple: The original Bush tax increases were to be temporary and the law he signed caused them to expire after nine years. Those nine years are up at the end of this year. Given that they did not help the economy it is time to try something else. ”
They didbt work, where were you all thoae years. You are a fool like all liberals
11
Sep 08, 2010 at 12:06 PM charliehall Says:Report as Inappropriate
#5,
The full impact of the tax cuts hit just this year. Do you really think that the economy is in better shape than in 2001?
#6,
So you are saying that the Republicans were deceitful when they enacted the tax cuts?
12
Sep 08, 2010 at 12:56 PM PMOinFL Says:Report as Inappropriate
“ 2, The tax cuts were temporary tax cuts to stimulate the economy WHICH THEY DID!
Do you hear that Mr Obama? Tax cuts to the people who HIRE other people, means there is more money for them to hire people with. Oh, I forgot, that goes the opposite of your socialist agenda.
Vote DEM out! ”
#4: One could make the argument that artificially inflating the amount of cash available in the economy is part of what caused the collapse of our economy.
The fact is that we need to be making INVESTMENT in business, not just handing out welfare to rich people. COMPANIES (not individuals) should be given massive tax breaks for hiring and increasing production... especially in areas where we EXPORT.
The fools who keep yelling "CUT TAXES" or "DON'T CUT TAXES" show how ignorant they are of this subject.
The rich don't need tax cuts... and neither do the middle class.... or the poor for that matter. We need JOBS and PRODUCTIVITY.
We need to focus our tax cuts on those ares of our economy that will bring the biggest return. Padding the savings accounts of millionaires has NEVER stimulated anything. Reagan understood that better than anyone, but his successor sadly did not follow his lead. I don't understand why we just can't play from Reagan's playbook for a change. He taught us all how it should be done.
13
Sep 08, 2010 at 01:08 PM Crusty Says:Report as Inappropriate
I don't understand why middle class people are so determined to give money to the rich while insisting that programs for the middle class- like health insurance- are too expensive.
14
Sep 08, 2010 at 02:08 PM Anonymous Says:Report as Inappropriate
#11
even though you're obviously wrong,did you put your money where your mouth is and continue paying the higher rates?
16
Sep 08, 2010 at 04:51 PM Anonymous Says:Report as Inappropriate
“ #5
they didn't help the economy? what planet are you on? ”
Reply to #14 ---- maybe you're a multi-millionaire, but most of us pay taxes at a higher rate.
The genius of the right-wing propaganda machine is that they twist facts to make gullible middle-class people fight against their own self-interest.
17
Sep 11, 2010 at 10:20 PM BarryLS1 Says:Report as Inappropriate
The only way Pres. Bush was able to get his tax cut passed by getting some Dem. support, was to have an expiration date. There was always the intent to make it permanent.
The bottom line is that the rich, who pay most of the taxes anyway, invest their money in the economy when it is feasible to do so. The poor never created a single job. We always had a substantial middle class because of the rich and their investments. Show me one socialist country that has a thriving middle class? It doesn't exist.
18
Sep 11, 2010 at 11:19 PM Anonymous Says:Report as Inappropriate
To #17
The extremely wealthy have been investing, but not in jobs. The tax cuts would benefit middle and upper middle class businessmen, who create most of the jobs in this country.
Also, when you say that the poor never created a single job---what about the money that they spend, however meager, that support businesses? How about the jobs that they have that create wealth for their employers?
As far as socialist countries that have a thriving middle class---what about the Scandinavian countries? By every measure, they rank higher than the US in just about everything, except per-capita military expenditure.