Obama Calls Progress on Economy 'Painfully Slow'
(Bloomberg) — President Barack Obama said Republicans are advocating the same "flawed policies" that contributed to the worst recession since the 1930s and said the nation can't afford extending tax cuts for the wealthiest Americans.
Obama said he recognizes that the recovery has been "painfully slow," and he called on Congress to enact measures to cut taxes for businesses and middle-income Americans while letting rates rise for the richest taxpayers. He accused his opponents of playing politics instead of working on solutions for the country.
"People are frustrated and angry and anxious about the future," Obama said today at Cuyahoga Community College West Campus in Parma, Ohio, outside Cleveland. "I understand that. I also understand that in a political campaign, the easiest thing for the other side to do is ride this fear and anger all the way to Election Day."
The president's insistence on letting the top tax rates expire at the end of this year sets up an election-year confrontation with Republicans, who are seeking to take control of the House and Senate with campaigns focused on the economy and the federal budget deficit.
House Republican Leader John Boehner said today that lawmakers should freeze government spending at 2008 levels and extend the Bush-era tax cuts for everyone for two years.
"You can't have a strong economy if you're raising taxes on the very people you expect to invest in our economy to begin hiring people again," Boehner, of Ohio, said in an interview on ABC's "Good Morning America."
Obama repeatedly made reference to the coming election and singled out Boehner for criticism. Boehner, who likely would become House speaker if Republicans take over that chamber, delivered a speech on the economy in Cleveland Aug. 24.
"There were no new policies from Mr. Boehner," Obama said. Boehner offered "the same philosophy that led to this mess in the first place: cut more taxes for millionaires and cut more rules for corporations."
Those policies "gave us the illusion of prosperity" Obama said. Republicans, he said, have refused to work with Democrats "to tackle our problems in a practical way."
Tax Cut Debate
Obama has endorsed extending tax cuts passed under former President George W. Bush for those earning less than $200,000 per individual or $250,000 per couple while letting rates for those who make more rise after the end of the year.
"We should not hold middle class tax cuts hostage any longer," Obama said. "We are ready, this week if they want, to give tax cuts to every American making $250,000 or less."
Obama is also asking Congress to take up proposals to spend $50 billion to repair and rebuild the U.S. transportation infrastructure, permanently extend a research and development tax credit and let businesses deduct the full cost of capital investments in the year the expenditures are made, instead of writing them off over periods of as long as 20 years.
Another administration initiative to give $12 billion in tax breaks to small businesses and provide $30 billion to help free up credit to such companies is pending in the Senate.
Obama said "budgetary pressures" argue against extending tax cuts for the wealthiest. The administration forecasts this year's deficit will hit a record $1.47 trillion and $1.41 trillion next year.
Keeping the lower rates for the top tax brackets "would have us borrow $700 billion over the next 10 years to give a tax cut of about $100,000 to folks who are already millionaires," he said.
The 3.8 million filers who fall in the $200,000 to $500,000 income range would pay $2 billion more in 2011 taxes, or an average of $532, according to a study by the nonpartisan congressional Joint Committee on Taxation.
The biggest burden would fall on the 608,000 taxpayers who make between $500,000 and $1 million and the 315,000 who earn more than $1 million; the first group would pay $6.5 billion more, or an average of almost $10,000, and the second group would owe $31 billion more, or almost $100,000 on average, the analysis said.
Obama's plan to extend the tax cuts only for individuals making less than $200,000 annually and families earning less than $250,000 — about 98 percent of all taxpayers — would cost the federal treasury $2.2 trillion in forgone revenue over the next decade, according to an analysis of government data released Sept. 2 by the Pew Economic Group. Extending all the tax rates would cost about $3.3 trillion, according to Pew.
The president today also referred to his six-year infrastructure plan that would spend $50 billion in the first year. The administration hasn't said how much should be spent after that.
The new spending would be on top of the economic stimulus package approved last year that allocated $38.6 billion for the Transportation Department. So far, $18.5 billion has been paid out, according to a government website that tracks the spending.
The president repeated what he says is the theme of the midterm congressional elections. "It's still a choice between sliding backward and moving forward," he said. "That's the choice you'll face in November."
No More Initiatives
Obama isn't planning any other economic initiatives before the November election, according to an administration official who briefed reporters on condition of anonymity to preview the president's remarks.
Obama's proposals, many of which he has introduced before, will run up against a tight congressional calendar and election-year politics. The Senate is scheduled to return to Washington Sept. 13, and the House reconvenes the next day. Lawmakers will be at work for about three weeks before leaving again to campaign for the Nov. 2 elections.
Analyst Charlie Cook, publisher of the Cook Political Report, projects that Republicans will gain at least 40 seats and take control of the 435-member House. Cook projects a net Republican gain of seven to nine seats in the 100-member Senate, where there are currently 41 Republican senators.