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President Obama Proposes Tax Cuts For Middle Class
2012-07-10 14:11:05 (220 weeks ago)
Posted By: Intellpuke
U.S. President Barack Obama has placed tax cuts at the center of the presidential election campaign, presenting a stark choice between Democrats committed to helping the working- and middle classes and a Republican challenger in Mitt Romney intent on protecting the wealthy.

The President, at a White House gathering, challenged Republicans in Congress to pass legislation that would extend tax cuts due to expire in January but, he said, wealthy Americans earning more than $250,000 a year should not benefit from the tax cuts any longer.

"We don't need more top-down economics. We tried that theory … we can't afford to go back to it," said President Obama. "That's why I believe it's time for the tax cuts for the wealthiest Americans, including folks like myself, to expire."

President Obama's move opens the way for a new standoff with Congress, where Republicans control the House and are guaranteed to oppose tax cuts that do not include the wealthy.

Democrats view the tax issue as being one of the defining issues of November's White House election: a vote for tax cuts for everyone other than the wealthy, or a vote for Romney who will extend them for the rich, too.

Tax is an awkward issue for Romney, who is on the defensive over his refusal to release his tax records. The Democrats are hinting he may be guilty of tax evasion after Vanity Fair reported he kept parts of his fortune in accounts in Switzerland, Bermuda, the Cayman Islands and elsewhere.

(story continues below)

Romney's campaign team is adamant he has remained within the law.

President Obama's pivot to the tax issue comes after days in which the president has been on the back foot, with Republicans accusing him of having failed in his stewardship of the economy in the light of Friday's disappointing unemployment figures, which showed the jobless rate total stuck at 8.2%. The President is to make tax the core message of visits later this week to swing states.

Polls suggest the White House election will be tight, with the latest showing President Obama leading Romney by just 47% to 45% in the swing states. The Romney campaign is also outstripping Obama in fundraising, announcing it had raised $106 million in June compared to Obama's $71 million.

The tax cuts in question were passed by Congress in 2001, but only for 10 years. When they were scheduled to expire, President Obama proposed ending the tax cuts for the wealthy but bowed to Republican pressure to extend them until the end of the year. If Congress does not extend them against, all Americans face a tax rise in January, which could further slow economic recovery.

With the Republicans controlling the House and the Democrats the senate, Washington is facing another lengthy Congressional stand-off.

President Obama suggested the question of tax cuts for the wealthy would be determined by the election. "My opponent will fight to keep them in place. I will fight to end them," he told the White House gathering.

He rejected the Republican argument that if taxes are cut for the wealthy, it has a trickle-down effect on the rest of the economy. "I believe prosperity comes from an economy that's built on a strong and growing middle class," said President Obama, with people described as working Americans standing behind him.

Obama said that 98% of Americans earned $250,000 or less. If the tax cuts were extended to the remaining 2%, the wealthiest, it would add $1 trillion to the U.S. deficit over the next ten years.

The president faces problems not just with Republicans but inside his own party. Some senior Democrats argue that the $250,000 threshold is too low, particularly for those living in cities such as New York or Los Angeles, and that a more realistic ceiling would be $1 million. Others, on the left, will strenuously opposed Obama agreeing to any compromise with the Republicans that would see tax cuts that would include the wealthy.

A Romney campaign spokeswoman, Andrea Saul, said President Obama was advocating huge tax rises.

"President Obama's response to even more bad economic news is a massive tax increase," said Saul.

"The president's latest bad idea is to raise taxes on families, job creators, and small businesses. Almost half a million fewer Americans are working today than the day Barack Obama took office, and we've just come through the worst job creation quarter in two years."

Mitch McConnnell, the Republican leader in the senate, called for an extension of tax cuts for all. "No one should see an income tax hike next year – not families, not small businesses and other job creators. We should extend all the tax rates while we make progress on fundamental tax reform," he said.

Intellpuke: You can read this article by Guardian Washington, D.C., Bureau Chief Ewen MacAskill in context here:

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