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November 09, 2012

Obama Calls for Freeze on Tax Rates Under $250,000

Posted in: Uncategorized

Previous Presidents re-elected to a second term took questions from the press shortly thereafter. President Obama made a statement in the East Room that looked more like a rally than a press conference, taking no questions thereafter.

The statement itself was somewhat vague. The President plans to invite leaders of both parties to the White House for negotiations beginning next week, on how to best avoid the fiscal slope (or bluff, or berm, or whatever you want to call it). But the remarks really encompassed one set of the expiring fiscal measures: the Bush-era tax rates. The sequester, the payroll tax cut, extended unemployment benefits, the doc fix, and the alternative minimum tax patch didn’t come up and were referred to in only glancing ways.

On taxes, Obama called for the tax cuts on the first $250,000 of income to be extended for every American worker.

“This was a central question during the election. It was debated over and over again. On Tuesday night the majority of Americans agreed with my approach,” Obama said against a backdrop of ordinary Americans standing behind him.

“I’m open to compromise. I’m open to new ideas. I’m committed to solving our fiscal challenges,” Obama said. But he held the line on raising taxes on the wealthy.

“We can’t just cut our way to prosperity,” Obama said. “If we’re serious about reducing the deficit we have to combine spending cuts with revenue and that means asking the wealthiest Americans to pay a little more in taxes.”

Brad Dayspring, Eric Cantor’s press aide, noted immediately that “There is certainly room for agreement between what Speaker Boehner said and President Obama said without increasing rates.” Indeed, Obama never used the word “rates.” He said that the rich have to pay more in taxes; that could be accomplished through capping or limiting or eliminating deductions. The rates could stay the same, or as Boehner wants, go down.

Obama focused on the need to extend the tax rates for the first $250,000 of income rather than the rates on the wealthy. “I’ve got the pen. I’m ready to sign the bill right away,” Obama said.

Previously, the President, through aides, vowed to veto any fiscal slope actions that did not accompany an increase in those top-end tax rates. This was a substantially softer approach.

However, the backdrop of a rally-like atmosphere signals the expected barnstorming tour that would result if Republicans don’t agree to de-couple the rates.

White House officials insist that they’re confident that a deal will be struck. One top Obama adviser, however, told ABC News that if the House GOP refuses to cut a deal with the president that includes some tax increases on the wealthy, the tax cuts will expire. One scenario the official discussed included the president barn-storming the country, telling the public that Democrats will put forward a bill to restore middle class tax cuts as soon as Congress convenes, and calling on them to pressure Republican congressional leaders to stop holding those tax cuts hostage in exchange for tax cuts for wealthier Americans.

The choice would be up to Republicans, then, to de-couple the tax cuts or face the wrath of a President newly willing to involve the public in policymaking. However, the softer tone on tax rates above $250,000 should cause some alarm bells to go off.

UPDATE: Just one more key paragraph here, from the transcript:

Our work is made that much more urgent because at the end of this year, we face a series of deadlines that require us to make major decisions about how to pay our deficit down — decisions that will have a huge impact on the economy and the middle class, both now and in the future.  Last year, I worked with Democrats and Republicans to cut a trillion dollars’ worth of spending that we just couldn’t afford.  I intend to work with both parties to do more — and that includes making reforms that will bring down the cost of health care so we can strengthen programs like Medicaid and Medicare for the long haul.

The President sees the fiscal slope as a forcing event for a grand bargain. He always has. He approves of the spending cap that will bring discretionary funding to its lowest level in 60 years. And he supports more cuts to the funding of health care programs – pointedly, Social Security didn’t get mentioned – which is the long-term budgetary challenge, but which neglects the work already done in the Affordable Care Act on this subject.

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