Obama hints economy strong enough for tax hike
The president suggested the economy had become sturdy enough to absorb the consequences of letting the lower tax rates originally introduced by George W. Bush expire for households with incomes above $250,000.
President Obama has previously urged tax hikes on wealthier Americans, only to back down two years ago in the face of a brittle economy and a resistant and resurgent GOP.
That won’t happen again, he assured the country today in his first news conference since securing a second term last week. The president suggested the economy had become sturdy enough to absorb the consequences of letting the lower tax rates originally introduced by George W. Bush expire for households with incomes above $250,000.
But the country can’t endure a $200 billion hit from letting all of the Bush-era rates end as scheduled next year. That would wallop middle class households who on average have seen their incomes fall in recent years. Obama sought common ground by encouraging the Republican majority in the House to vote for a measure to continue the tax breaks for the 98 percent of the country who fall beneath the $250,000 level.
“What we can do is make sure that middle-class taxes don’t go up,” Obama said. “If we get that in place, we are actually removing half of the fiscal cliff. Half of the danger to our economy is removed by that single step.”
The news conference touched on the FBI investigation that uncovered former CIA director David Petraeus’ extra-marital affair, Syria, Iran, climate change, and Republican criticism of Susan Rice, the ambassador to the United Nations, mistakenly characterizing the Sept. 21 terrorist attack in Libya as spontaneous.
This disagreement with Republicans—who claim increases on wealthier Americans would kill job creation—is the primary source of friction in discussions curb the deficit while averting the fiscal cliff, which also includes $110 billion in automatic spending cuts next year.
When the Bush rates were first slated to expire in 2010, GOP lawmakers basically compelled Obama to break a 2008 campaign promise and extend the rates across-the-board for another two years. Their bargaining power was strengthened at the time by a 9.4 percent unemployment rate, which has since dropped in Obama’s favor to 7.9 percent.
“Two years ago, the economy was in a different situation. We were still very much in the early parts of recovery from the worst economic crisis since the Great Depression,” Obama said. “What I said at the time is what I meant, which is this is a one-time proposition. What I have told leaders privately as well as publicly, we cannot afford to extend the Bush tax cuts for the wealthy. What we can do is ensure that middle-class taxes don’t go up.”
That slow but certain improvement in the economy helps Obama in the negotiations this time around. Back in 2010, the gist of the bargaining was to bolster a fragile economy, whereas the case this time is to not squander what gains have been achieved.
The president opened the door to raising taxes on the wealthy by restricting deductions—an idea touted by some Republicans — but his basic principle is that more of the responsibility for trimming the deficit should rest with high-earners.
His argument is backed up by analysis by the progressive Center on Budget and Policy Priorities. The Washington-based think tank, drawing on projections by the Congressional Budget Office, concluded that the lower rates for Americans with incomes above $250,000 would add just a tenth of a percentage point to gross domestic product.
But House Budget Committee Chairman Paul Ryan, who was Mitt Romney’s running mate in the presidential election, told ABC News that last week’s presidential election did not give Obama a mandate to raise taxes. The Republican majority in the House was preserved, the Wisconsin congressman said, so Obama will have to consider options other than his proposed $1.6 trillion tax increase over the next decade to shear the deficit.
"Raising tax rates hurts economic growth and of all things we need right now, to prevent a fiscal cliff, prevent a recession, prevent a debt crisis, is we need people to go back to work," Ryan said. "There are other ways of getting more revenue into our government without damaging the economy, and that's the kind of thing we hope to achieve."
Josh Boak is the National Correspondent at The Fiscal Times. Subscribe to The Fiscal Times' FREE newsletter.
More from The Fiscal Times:
- How Much More Would You Pay with Obama’s Tax Hike?
- Tax Hikes over $250K: End of the Upper Middle Class?
- Obama Takes His 'Tax the Rich' Show on the Road
Ever notice how many letter pairs Warren Buffett has in his name? RR, FF, TT and two Es.
The Fiscal Cliff has many faces, and one of the faces is the perpetual opposition of Senator McCain to all the beneficial things president Obama wants to do for the economy, also the House of representatives is full of very antagonistic Tea party, and Republicans members that seems to have an a hearty pleasure in wanting to destroy Obama, and all of us the people!
The one that needs to retired is Senator McCain for his continues attack on the Obama’s administration, and his poor judgment in foreign policies since all the blunders he perpetuate in fomenting the Iraq war, and now his new attack trying to annihilate our Ambassador for the UN, Susan Rice.
The topic of discord about our UN Ambassador Susan Rice came up frequently in the news lately. The complaint coming from Senator McCain and Senator Graham saying she purposely concealed information about the Bengahzi attack, and expressing their feelings she was not qualified to present the report to the American people. It was well understood by all listeners when she first gave the report it was only to inform the American public of the riots events at that time in Benghazi, and no more. When Mr. McCain said Miss Rice was not qualified to give the report of the attack, we got very upset to his wrong interpretation, much later to become and unjust persecution, and relentless discredit of the performance of our UN Ambassador. As it was confirm later, she was faithfully doing her assignment in the light of the unclassified document given to her of the situation in Benghazi at the time! The whole USA, knows well of Senator McClain erroneous selection, and protection of Sara Palin when running for VP, she evidently had the poorest qualifications for the job, she may have created a permanent irreparable damaged to our country had she been elected as a VP. With all our honest respects to the Senator, he has made other mistakes during his brilliant career. We think the Senator true motives for the creation of this newly pre meditated havoc over the unpredictable Benghazi attack is his dislike for our president Mr. Obama, and it’s is clearly showing. This worthless loss time the Senator is putting on a lackluster efforts in the persecution on the innocent UN Ambassador should stop, he should be concentrating eagerly on helping the America workers get fruitful paying jobs, and reducing the trillion of dollars Deficit Budget by helping increasing the tax to the very rich that have made millions with the sweat of the long oppress middle class since the Bush presidency!
I do not see a consensus plan coming to fruition with the current administration. This so called fiscal cliff will be dealt with just like last year.
It will end up being a can kicking contest that will look like the movie dumb and dumber, going the wrong way for years and then running out of gas. There are such few fiscally responsible Congressional members on Capitol Hill that it really does not matter since they will only compromise between a dumb plan and an even dumber plan. Pick your poison as to which one is dumb and which one is dumber, not much difference.
MR. PRESIDENT, THE AMERICAN PEOPLE ARE FED UP WITH THE ONE MIND WORTHLESS TEA PARTY CONGRESS LED BY RYAN AND ALL HIS FOLLOWERS.---WE WANT YOU TO MAKE IT POSSIBLE TO LET THE BUSH TAX CUTS EXPIRED TO GIVE THIS CONGRESS A LESSON THEY NEED TO LEARN.--- WE NEED TO BALANCE THE BUDGET WITH THE BILLIONS OF DOLLARS THE RICH HAVE NOT CONTRIBUTE TO THE GROWTH OF OUR COUNTRY SINCE 2012. THE BILLIONARES ARE TAKING BATHS IN THE MONEY THEY MADE FROM THE WORKING CLAS OF AMERICA., PLEASE STOP THEM THIS TIME , STOP THE CONGRESS ABUSE OF THE 48%, WE WILL NOT TAKE IT ONE MORE TIME!
They've shown us they don't care about the middle class. All they want is to amass more wealth and power - they will do everything they can to put their policies into place while they destroy our social mobility and make the American dream into a nightmare.
Wake up America
We all listening to a late program, informing us that Boehner has selected Paul Ryan to work the necessary police changes to do the proper Medicare, and Social Security cuts or changes to be able to later prepared the work in Ryan’s future plan to modified the tax cuts for the 1%, and to considered other changes for the middle class cuts and tax deductions modifications as part of their Fiscal Cliff tax plans! The problem here is that the proposed policies changes will greatly affect the pockets of the young and the old, to make it worse they keep closed lips about all other diabolic policy changes in prospect affecting the middle class, the workers, the poor, the disable, the sick, the hungry, male, female! Are these people in House of Representatives very mentally sick? They are so strongly determined to destroy the middle class as Romney and Ryan the liar wanted to have it done post election if winning after taking the white House! We, the people for Mr. Obama won the elections, and they have a Mandate from us to increase the tax on the rich, to help the Fiscal Budget burden, and to cut tax for the middle class! No to touch Medicare, SS, and Medicaid .What is going on year after year of this resolute disregard for the people of America coming from the House of Representatives members, the Tea Party morons, the truly insurgents led as before by the indolent Ryan, wanting to decrease tax on the 1% and perhaps to keep the meager tax cut for the middle class, junking Medicare and SS? These people forget the many tax increases of President Ronald Regan, and President Clinton, but perhaps they had reasonable people in Congress that love America, and the people then, but not now, since the Tea Party came into existence with the help of Sara Palin, we have these dishonorable members of the House perpetually working against the 48%. We rejected Romney, and Ryan plans during the Presidential elections just because of the many secret ideologies they harbored against the middle class in tax cuts, and other tricks while favoring the 1%, and every other cuts they were hiding and dreaming to perpetuate the demise of the on the American people. And now, Boehner gives Ryan the privileged to get even with the 47%, because no VP job for him! We totally despised Ryan Budgeting Plans before, and now. He’s getting even with us Democrats lead by the anti 48% Boehner! We are telling our President Mr. Obama, that we are good and ready to Fall from the Cliff, but not to give the Republicans one single concession to their favor! This is a disgrace against the people of America; we won the elections, not them. Who are they to keep telling us what to do, stop this Congress Constitutional abuse of the working people of America year after year? The country is hungry and they are all rich in the House of Representatives, unless they think we have no fighting spirit in us the 47 %. Mr. President show Congress the gigantic voice of the people, we will fight until we win.
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