Obama Talks Tax-Cut Strategy With Congressional Democrats
July 11 (Bloomberg) --President Barack Obama and top congressional Democrats met today at the White House as they seek a unified approach for their fight with Republicans on tax cuts and promoting job creation.
The closed-door session was held after Senate Majority Leader Harry Reid, a Nevada Democrat, blocked a vote today on Obama’s proposal for a yearlong extension of Bush-era tax cuts for families with incomes of up to $250,000 a year. Democrats also blocked a vote on a Republican alternative Obama has said he would veto that would also extend expiring tax cuts for top earners.
Senator Richard Durbin of Illinois, the Senate’s No. 2 Democrat, said the party’s lawmakers would back Obama’s stance on the tax cuts, even if that meant letting all the tax cuts expire at the end of the year as a last resort.
“That’s the whole idea behind this: Dec. 31 is a day of reckoning, and the president’s made it clear that if they send an extension of the Bush tax cuts in total to him, he will veto it -- period,” Durbin said after returning to the Capitol.
With the November presidential election approaching, Obama is focusing on taxes as the encouraging job gains at the start of the year have stalled. June ended the worst quarter for private-sector hiring in more than two years, and last month’s 8.2 percent unemployment rate was no better than in March.
Reid, seeking to build unity among Democrats for the president’s plan, has pledged to schedule a vote soon. Obama campaign strategist David Axelrod and Treasury Secretary Timothy Geithner met with Senate Democrats at the Capitol yesterday to make the case for Obama’s proposal, which would let rates rise for married couples with an adjusted gross income of more than $250,000 and individuals earning more than $200,000.
Any opposition by Democratic lawmakers, including those from states such as New York and New Jersey where a greater share of taxpayers would be affected by Obama’s threshold, may complicate the party’s efforts to emphasize differences with congressional Republicans and Republican presidential candidate Mitt Romney before the Nov. 6 election.
“Generally, everybody agrees that we should do everything we can to protect the 98 percent and recognize that this, what we’re doing, will help greatly toward the debt that we have, the deficits that have,” Reid told reporters yesterday.
Obama is arguing that extending the tax cuts for top earners, as advocated by Romney and Republicans in Congress, would add to the deficit without giving a boost to the economy. Republicans counter that Obama’s plan would raise rates for small businesses.
“I don’t believe that there will be many, if any, Democratic senators voting to extend the Bush tax cuts,” Durbin said.
Both extensions were proposed as amendments to legislation providing tax credits for small businesses. Reid said the extensions should be debated at another time, while Republicans are saying Democrats in tight re-election contests are afraid to go on record opposing any tax-cut extensions.
“There is great public support for the president’s positions,” White House press secretary Jay Carney said. “I can’t predict to you how individuals will vote, but I know that Democrats, to a person, support extending middle-class tax cuts.”
Besides Reid and Durbin, the White House said Obama met with Senators Charles Schumer of New York and Patty Murray of Washington, as well as House Minority Leader Nancy Pelosi of California, and Representatives Steny Hoyer of Maryland, Jim Clyburn of South Carolina, Steve Israel of New York and Chris Van Hollen of Maryland.
If Congress doesn’t extend the current law, all the tax cuts passed during former President George W. Bush’s first term and extended by Obama and Congress in 2010 would expire at the end of the year. The top tax rate for ordinary income will increase to 39.6 percent from 35 percent. The top tax rate on capital gains will increase to 23.8 percent from 15 percent, and dividends would be taxed as ordinary income.
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