Obama's Plan To Extend Some Tax Cuts May Be Gaining Traction
WASHINGTON - A consensus may be forming on President Barack Obama's plan to extend Bush-era tax cuts to everyone but the nation's richest people. On Sunday talk shows, Obama's economic advisers touted the idea while the top Republican in the U.S. House said he would vote for it if no other option existed.
The Bush tax cuts enacted in 2001 and 2003 cover all taxpayers and are scheduled to expire at the end of the year.
Obama and congressional Democrats want to keep in place those tax cuts that apply to Americans earning less than $250,000 a year. People earning more than that would have their rates restored to higher levels in place before the tax cuts were enacted.
Speaking on "CNN's Fareed Zakaria GPS," former Obama budget director Peter Orszag said the tax cuts have to go at some point in order to balance the federal budget.
"We, unfortunately, can't afford the tax cuts over the medium and long-term," Orszag said. Ending all of the Bush-era tax cuts would "pretty much" solve the deficit problem in the medium term, he added.
Republicans and some Democrats oppose the plan, saying that what amounts to a tax increase in a weak economy would deter economic growth by hindering investment and spending by wealthy Americans and small businesses.
House Minority Leader John Boehner, R-Ohio, told the CBS program "Face the Nation" that he wanted the tax cuts extended to all Americans, not just those earning less than $250,000 a year.
However, if Obama and congressional Democrats push through their plan, Boehner said he would vote for it.
"If the only option I have is to vote for those at $250,000 and below, of course I'm going to do that," Boehner said. "But I'm going to do everything I can to fight to make sure that we extend the current tax rates for all Americans."
White House Press Secretary Robert Gibbs later reacted to Boehner's comment with a dose of caution.
"We welcome John Boehner's change in position and support for the middle class tax cuts, but time will tell if his actions will be anything but continued support for the failed policies that got us into this mess," Gibbs said in a statement.
Austan Goolsbee, the new head of Obama's Council of Economic Advisers, said Boehner's comment showed a growing realization that action is needed on the issue of whether to extend the tax cuts.
"If he's truly saying that we can, as the president called for, get a broad consensus to extend the middle-class tax cuts, we should do it," Goolsbee said on the ABC program "This Week."
A broad consensus exists for a "middle ground" approach "that Democrats and Republicans, business people and workers can agree on to get ... the economy growing faster," Goolsbee said.
At the same time, Goolsbee insisted Obama was not open to an extensive negotiation over the tax cut extension issue.
"He said we will be open for discussion," Goolsbee said of Obama, noting "it was literally in a sentence where he said we should all be able to agree that what would give some certainty to the economy now would be extending the middle class tax cuts permanently."
Boehner argued that extending the tax cuts would inspire confidence among businesses and consumers to spur investment and spending. At the same time, he said, cutting government spending will help narrow the budget deficit.
"If we cut spending, we will help our economy, we will send signals to the markets, we will send signals to the business community, that Washington's attempting to get its fiscal house in order," Boehner said.
To David Axelrod, Obama's senior adviser, such GOP policies were what got America into the worst recession since the Great Depression in the first place.
"That agenda was a disaster," Axelrod said on the NBC program "Meet the Press," later adding: "We don't want to go back to the same practices and the same policies that drove our economy into a ditch."
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