Giving on Taxes in '10, White House Promises Fight in '12

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Days after cutting a deal giving Republicans what they want on income tax rates for two years, White House officials said President Obama will fight for middle-class only tax cuts in 2012 -- and win politically.

Austin Goolsbee, chairman of the White House Council of Economic Advisers, and David Axelrod, the top political adviser to the president, said in separate television appearances Sunday that an improved economy will allow Democrats to successfully argue in 2012 that Bush-era income tax rates should rise for families who earn more than $250,000.

"We're going to be in a fundamentally different position in 2012," Axelrod said on ABC's This Week. "The economy will be stronger. We'll have gone through a big debate on ... what we have to cut and give up. I don't think people are going to make that tradeoff in 2012."

In two years with improved economic growth, "those tax cuts will have to stand on their own merits, which they cannot," Goolsbee said.

"They don't work," Goolsbee said of cuts for top earners, "but by trading that we were able to get long term" economic benefits.

Goolsbee walked back comment by Larry Summers, an outgoing White House economic adviser, that failure by Congress to okay the tax deal could cause a "double-dip" recession.
Goolsbee said only that passing the bill would help the economy.

"I don't think we should get into the semantics how much it raises the probability of double-dip," he said.

Despite current liberal anger over the tax deal Obama cut with Republicans, former presidential candidate Howard Dean -- a darling of many liberals -- agreed with Axelrod that Obama will not face a challenge from the left when he runs for reelection.

"I don't think he's going to face an opponent in the Democratic primary," Dean, the former Democratic National Committee Chairman and Vermont governor said on CBS's Face the Nation. "I think that would be bad thing for the country and a bad thing for the Democratic Party."
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Dan Friedman is a staff writer (Senate leadership) for National Journal.

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