GOP Grapples with Democrats on Tax Cuts
(WASHINGTON) -- As President Obama calls on Congress today to extend tax cuts for individuals making less than $250,000, House Speaker John Boehner criticized the president for failing to lead on the economy, restating his opposition to extending only some tax rates while letting others run out.
“President Obama is still asleep at the switch when it comes to our economy and jobs,” Boehner, R-Ohio, wrote in a statement. “In the wake of another weak jobs report, the president is doubling down on his quixotic call for the same small businesses tax hikes that have been routinely rejected by the House and Senate. How will these small business tax hikes create jobs?”
At the center of the debate is a range of temporary tax cuts that are timed to run out at the same time January 1, 2013. Today the president is drawing his line in the sand, cutting off the extension of the current rates for anyone making more than $250,000 per year – a familiar threshold for lawmakers fighting this battle over the past couple of years.
The House is set to repeal the president’s signature health care law again later this week, and to extend all of the current tax rates before the end of the month. For the speaker, these two votes go hand-in-hand not only for spurring job creation, but also to winning the election this fall.
“We have already announced that later this month we will boost economic growth and create jobs by preventing the looming, massive tax hikes and providing a fairer, simpler tax code that lowers rates and closes special interest loopholes,” Boehner said. “President Obama needs to learn that when it comes to jobs and the economy ‘leading from behind’ is not good enough.”
Still, it is highly improbable that Congressional Democrats will cave without a fight. Instead, the resolution of the tax standoff will likely be delayed until the Lame Duck session after the election.
That won’t stop House Republicans from passing these measures in order to demonstrate what the GOP could achieve with a full congressional majority. As one senior Republican put it, “A jobs message will trump a fairness message every time. Washington Democrats will lose on this politically and substantively.”
A senior House Democrat summarized the Democratic defense by emphasizing that it is “unnecessary” to extend the current tax rates for the wealthiest earners because doing so does little to grow the economy.
“Democrats support immediate extension of the middle income tax cuts and we have offered our support at several levels to ensure passage and provide economic security to the middle class,” the aide said. “Republicans are very clear: they continue to hold tax cuts for the middle class hostage to costly and unnecessary tax breaks for the wealthiest Americans, even though tax cuts for the rich have created more debt and won't produce jobs. Democrats say pass the extension of the middle income tax cuts now and end the uncertainty.”
Some Democrats have signaled a willingness to extend the current rates for taxpayers earning up to $1 million per year.
Congressional Republicans point to the lack of support in the Democratic-controlled Senate for anything less than a full extension across the board, demonstrated by the Democrats’ compromise on a two-year extension of all the rates in December 2010.
“President Obama already caved once on a full extension of the tax rates; he will again,” one senior GOP leadership aide predicted.
The aide also foresees Senate Finance Chairman Max Baucus, who figures to be a top player in future negotiations, treading carefully given an upcoming reelection bid in 2014.
“[Baucus] is a key player in getting a tax agreement done,” the source said. “While he may echo the president’s position now, when push comes to shove, he will again push for a full extension of the tax rates that he helped negotiate back in 2001.”
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