Obama presses Congress to extend middle-class tax cuts
Rehashing a political battle from 2010, President Barack Obama once again called on Congress to extend the Bush-era tax cuts for middle-class families but allow them to expire for the wealthy.
Read more: CBO warns of approaching ‘fiscal cliff’
The Bush tax cuts are set to expire for everyone by the end of the year. Seeking to avoid the approaching “fiscal cliff” of expiring tax breaks and steep budget cuts, Obama yesterday pressed Republican lawmakers to extend tax cuts for families earning less than $250,000 a year. If approved, each middle-class family can save an average of $2,200 next year.
“My message to Congress is this: Pass a bill extending the tax cuts for the middle class; I will sign it tomorrow. Pass it next week; I’ll sign it next week,” said Obama. “Right now, our top priority has to be giving middle-class families and small businesses the security they deserve.”
However, Obama insisted that Congress should allow the tax cuts to expire for those earning more than $250,000 a year, arguing that the revenue is needed to help pay down the nation’s deficit.
“We’ve got this huge deficit, and everybody agrees that we need to do something about these deficits and these debts. So the money we’re spending on these tax cuts for the wealthy is a major driver of our deficit, a major contributor to our deficit, costing us a trillion dollars over the next decade,” said Obama. “By the way, these tax cuts for the wealthiest Americans are also the tax cuts that are least likely to promote growth. So we can’t afford to keep that up, not right now.”
Anticipating Republican attacks, Obama pointed out that the “top-down” economics – the theory that cutting taxes for the wealthy will lead to job creation – favored by the GOP have only led to the widening income gap between the rich and the middle-class.
“We’ve tried it their way. It didn’t work,” said Obama. “The wealthy got wealthier, but most Americans struggled. Instead of creating more jobs, we had the slowest job growth in half a century. Instead of widespread prosperity, the typical family saw its income fall.”
Not surprisingly, House Republicans objected to the President’s plan, demanding that the Bush tax cuts be extended to everyone.
“The president’s announcement today that he wants to permanently increase taxes on families and small businesses has an economic effect similar to siphoning gas from a car when it’s already running on empty,” said House Republican Conference Chairman Jeb Hensarling (R-Texas).
Allowing the tax cuts to expire for those making more than $250,000 a year would hurt small businesses, Hensarling claimed.
However, Obama refuted the GOP’s claim, pointing out that 97% of small businesses fall under the $250,000 threshold and would qualify for tax cuts under his plan.
“The fate of the tax cut for the wealthiest Americans will be decided by the outcome of the next election. My opponent will fight to keep them in place. I will fight to end them. But that argument shouldn’t threaten you. It shouldn’t threaten the 98 percent of Americans who just want to know that their taxes won’t go up next year,” said Obama.
Hensarling said that a vote on the Bush tax cuts will be scheduled for later this month.
According to the Congressional Budget Office, making the Bush tax cuts permanent for the middle-class will add another $2.4 trillion to the nation’s deficit over the next decade.
- WhatTheFolly.com: Transcript: President Barack Obama on extending middle-class tax cuts
- GOP.gov: Hensarling Statement on President Obama’s Plan to Raise Taxes
- WhatTheFolly.com: CBO warns of approaching ‘fiscal cliff’
- WhatTheFolly.com: CBO projects Obama’s tax cuts will add trillions to deficit
- WhatTheFolly.com: How the 2001 and 2003 Bush tax cuts benefit the wealthy
- WhatTheFolly.com: Romney’s tax controversy shines spotlight on tax code that favors wealth over wages
- WhatTheFolly.com: CBO report shows extending Bush tax cuts will raise deficit