WASHINGTON — With a torpid job market and a fragile economy threatening his re-election chances, President Obama is changing the subject to tax fairness, calling for a one-year extension of the Bush-era tax cuts for people making less than $250,000.
Mr. Obama plans to make his announcement in the Rose Garden on Monday,
senior administration officials said. The ceremony comes as Congress
returns from its Independence Day recess, and as both parties and their
presidential candidates head into the rest of the summer trying to seize
the upper hand in a campaign that has been closely matched and
stubbornly static.
House Republicans plan to vote this month to extend permanently all of
the Bush tax cuts, for middle- and upper-income people.
The president’s proposal could also put him at odds with Democratic
leaders like Representative Nancy Pelosi of California and Senator
Charles E. Schumer of New York, who have advocated extending the cuts
for everyone who earns up to $1 million. And it will most likely do
little to break the deadlock in Washington over how to deal with fiscal
deficits, an impasse that has only hardened as Republicans sense a
chance to make gains in Congress this fall.
But by calling for an extension for just a year, Mr. Obama hopes to make
Republicans look obstructionist and unreasonable. Trying to bounce back
from another weak jobs report on Friday, he also hopes to deepen the
contrast with his challenger, Mitt Romney. On Friday, the president said
Mr. Romney would “give $5 trillion of new tax cuts on top of the Bush
tax cuts, most of them going to the wealthiest Americans.”
From their stronghold in the House, Republicans plan to vote this week to repeal Mr. Obama’s health care law,
hoping to energize their base even though they know that the campaign
to abolish the law, which the Supreme Court upheld, stands no chance in
the Democratic-led Senate. Republicans also renewed their call for an
overhaul of the tax code.
“You know, what we ought to be doing is extend the current tax rates for
another year with a hard requirement to get through comprehensive tax
reform one more time,” the Senate minority leader, Mitch McConnell of
Kentucky, said on Sunday on the CNN program “State of the Union.”
The struggle to frame the tax debate comes as the campaign moves into a
period, only four months before the election, when the perceptions of
voters begin to harden. Polls show a persistently tight race, with Mr.
Romney closing in on Mr. Obama in certain swing states but with neither
candidate able to break out decisively. Control of Congress is also up
for grabs, with Mr. McConnell saying on Sunday that he believed the
Republicans had a 50-50 chance to regain control of the Senate.
To find a compromise with Republicans on which Bush tax cuts to extend,
Ms. Pelosi, the House minority leader, and Mr. Schumer, a member of the
Senate Finance Committee, favor making $1 million the cutoff. Above that
level, Mr. Schumer has said, people are not likely to spend the savings
from lower taxes and help the economy.
Administration officials said they did not believe that the difference
between the White House and these Democratic leaders was a big obstacle.
They said that whether to use $250,000 or $1 million as a cutoff was
more a matter of strategy than a “religious debate,” in the words of one
official, who added that many other Democrats favored $250,000.
The White House hopes to squeeze maximum political mileage out of the
Rose Garden event, surrounding Mr. Obama with families and workers who
would benefit from the extension. On Tuesday, he will take his message
to Iowa, the battleground state that turned him into a serious
presidential contender in 2008.
In Cedar Rapids, Mr. Obama plans to visit the home of Jason and Ali
McLaughlin, a high school principal and an account manager at a
document-scanning company, a campaign official said. The McLaughlin
family, with a combined income of $82,000, would face an extra $2,000
burden next year if the tax cuts on the middle class expired as
scheduled, the campaign said.
White House officials insisted that Monday’s move was more than
politics. They said it would ease anxiety over the “fiscal cliff” — the
combination of tax increases and automatic spending cuts that are
scheduled to kick in at the end of this year. That one-two punch,
economists say, could deal a heavy blow to an already tender economy
unless the White House and Congress work out some kind of compromise.
Proposing a one-year extension, a senior official said, recognizes that
Mr. Obama and the Republicans are not likely to resolve the larger
debate over whether to permanently extend the Bush tax cuts for everyone
or, as Mr. Obama has long advocated, just for the middle class. That
debate is likely to be decided at the ballot box, where a victory by Mr.
Romney would almost certainly enshrine all the tax cuts.
“To the degree that there is concern about the economy, we’re saying,
‘Let’s extend the middle class tax cuts for a year,’ ” said Gene B.
Sperling, director of the White House’s National Economic Council.
“Economically, extending tax cuts to those workers will have the most
effect on them and the strongest impact on the economy.”
A one-year extension for people making under $250,000 would cost the
government $150 billion in revenue, the administration estimates, an
amount that would be added to the deficit. In a point of comparison,
economists estimate that letting the cuts expire for people above that
threshold would generate $850 billion over 10 years.
While Mr. Obama returns to the tax issue this week, House Republican
leaders will press forward Wednesday with a vote to fully repeal his
health care law, testing their faith that they can make the law part of
their attack on Democratic economic policies against evidence that swing
voters want to move past the fight.
Just as Mr. Obama needs to worry about divisions on the tax bill, some
Republicans are in disagreement over the wisdom of relitigating the
health care law. Some Republicans, facing re-election in swing
districts, are openly suggesting that some measures should remain.
Representative David B. McKinley, a Republican freshman from West
Virginia, said prohibitions on lifetime coverage caps and on
discrimination against people with pre-existing medical conditions
should “absolutely” stay in force, even if health care costs would have
to rise.
“If it means increasing my premiums, so be it,” he said. “That’s what insurance is about.”
Mr. Romney’s supporters on the Sunday talk shows hammered away at the
idea that Mr. Obama is at fault for the poor economy. Representative Tom
Price, Republican of Georgia, said Mr. Romney supported preserving all
of the Bush-era cuts for another year because he believes “that will
stimulate the economy and provide certainty out there in the job
market.”
For Mr. Obama, the biggest advantage of the tax proposal may be simply
to move the political discussion off the job market. On his bus tour
through Ohio and Pennsylvania last week, the president took pains to
present himself as a guardian of the middle class, whose most cherished
childhood memories included raiding the ice machine at a Howard Johnson
while on a Greyhound tour of the United States.
On Friday, however, when the latest poor jobs number was reported, Mr.
Obama was back to talking about the long road to recovery.
