Obama's call for middle-class tax cut extension: three key points
Cutting to the chase: It won't pass. Although voters support higher taxes on the rich 鈥� even some Democrats are wary that what counts as 'rich' in some states doesn't go as far in others.
President Obama speaks July 9 at the White House about the need for Congress to extend tax cuts for middle-class families.
Kevin Lamarque/Reuters
President Obama on Monday called on Congress to pass a one-year extension of Bush-era tax cuts for the middle class, but not wealthier Americans. Households earning more than $250,000 can afford to pay higher taxes in the name of deficit reduction, he said.
鈥淚t鈥檚 time to let the tax cuts for the wealthiest Americans 鈥� folks like myself 鈥� to expire,鈥� said Mr. Obama in an East Room appearance before an audience of about 150.
The president said he might act differently on this issue if the nation were in better fiscal shape. He鈥檚 not wild himself about paying higher taxes, he said. But the looming debt demands action.
鈥淭he money we鈥檙e spending on these tax cuts for the wealthy is a major contributor to our deficit,鈥� said Obama.
Presumptive GOP nominee Mitt Romney quickly responded that Obama鈥檚 move would mean a tax hike for millions of Americans, including small-business owners crucial to the future of the US economy.
鈥淯nlike President Obama, Governor Romney understands that the last thing we need to do in this economy is to raise taxes on anyone,鈥� said Romney campaign aide Andrea Saul in a statement.
Obama鈥檚 tax proposal is certain to drive Washington news for the day ahead. Here are three key points to help you understand the chatter:
It won't pass. Obama鈥檚 proposal has about as much chance of becoming law as Lichtenstein does of winning the gold medal race at the London Olympics. It won鈥檛 pass the House, given the ferocious opposition of the chamber鈥檚 majority Republicans.
Obama鈥檚 proposal is even at odds with the ideas of many in his own party. House minority leader Nancy Pelosi of California and Sen. Charles Schumer (D) of New York have both pushed an extension of tax cuts for households earning up to $1 million. (Should we note that Representative Pelosi鈥檚 district contains many wealthy San Franciscans, and New York is home to many of Wall Street鈥檚 richest?)
Voters support higher taxes on the rich. However, generally speaking, US voters have no problem with the wealthy paying bigger tax bills next April 15. That鈥檚 what polls appear to indicate, in any case. A Gallup survey from last April found that 62 percent of respondents believed that upper-income people pay 鈥渢oo little鈥� in taxes. Meanwhile, 56 percent of respondents said middle-income people pay their 鈥渇air share.鈥�
鈥淎s Republicans continue to resist any plan that would raise taxes on wealthy Americans, they face not only opposition from the Democrats and Obama, but the pressure of public opinion. This could be especially daunting if Republicans鈥� attempt to extend the tax cuts for all is seen as benefiting wealthy Americans at the expense of the middle class,鈥� .
Will Americans equate households earning more than $250,000 as 鈥渨ealthy鈥�? That鈥檚 a question the Gallup survey does not address. Yet it could be key to the political response to Obama鈥檚 proposal.
It's a lot of money.聽In political terms, Obama is moving to seize the tax-cut initiative from Republicans. The House GOP plans to vote later this week on extending the Bush-era cuts for all Americans. Yet there is a practical aspect of the move, too 鈥� it鈥檚 a quick way to raise loads of tax money to help close the nation鈥檚 yawning gap between income and expenses.
Lowering the threshold for extending Bush tax cuts to $250,000 would generate $829 billion in revenue between 2013 and 2022, according to figures compiled by the Joint Committee on Taxation. Setting the threshold at the higher $1 million mark would lose $366 billion of this cash, by the relatively liberal Project on Budget and Policy Priorities.