OBAMA TO STICK TO HIS GUNS ON BUSH-ERA TAX RATES…. The question has been lingering for weeks: would President Obama cave and keep Bush-era tax rates for the wealthiest Americans at current levels? It’s congressional Republicans’ top priority, and plenty of Democrats on the Hill are hedging.
Today, the president intends to settle the dispute. No, he isn’t going to cave.
President Obama on Wednesday will make clear that he opposes 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.
Good for him. The White House plan will be identical to the one he promised to pursue during the campaign — rates for households making less than $250,000 a year (98% of the country) would stay at the lower rate, while the top 2% would go back to the Clinton-era rates.
I don’t doubt that Republicans will be apoplectic — fighting for tax breaks for the wealthy is just part of their DNA — but they should keep a few things in mind. The first is that the Republican approach isn’t exactly popular — the latest Newsweek poll found only 38% of the country wants to extend all of the Bush-era tax rates. A recent CBS News poll put the figure even lower, at 36%.
Second, remember that Obama is basically just following the plan as set by Republicans themselves. When Bush and the congressional GOP passed these cuts, Republicans set them to expire at the end of 2010. The president will go along with keeping the lower rates on the middle class, but in light of deficit concerns, can’t justify the lower rates for the rich.
Third, if Republicans were serious about their own fiscal priorities, they’d try to find a way to pay for the $680 billion cost of keeping these breaks for the wealthy. So far, they’ve refused to even try.
Fourth, the number one talking point today will be that this tax policy will hurt small businesses. It’s not true.
As for the bigger picture, I’m glad to see a more assertive president stepping up on this. Obama’s prepared to let Republicans fight for the wealthy with tax cuts the country can’t afford, while he makes his case for the middle class.
It’s good policy and good politics.