Obama on Taxes: 'I'm Not Proposing Anything Radical Here'

The president hopes to seize the advantage on the economy by painting Republicans into a corner on middle-class tax rates.


As he campaigns against a drumbeat of bad economic news, President Obama has been under increasing pressure to do something -- anything -- besides continue to blame Congress for its refusal to pass his jobs legislation. And so, on Monday, Obama called a news conference to demand that Congress do something else he wants it to do: Extend the Bush tax cuts on those earning less than $250,000 per year.

"What's holding us back" from improving the economy, he said, is "not a lack of plans, not a lack of ideas. It is a stalemate in this town, in Washington, between two very different views."

Republicans, Obama noted, agree with him that middle-class tax rates shouldn't go up when the tax cuts expire at the end of the year. The disagreement is on whether to keep the tax cuts for the 2 percent of Americans (about 2.5 million households) earning more than $250,000. The GOP would keep those people's taxes at their current marginal rate of 35 percent, while Obama would hike the top marginal rate 39.6 percent.

"Let's agree to do what we agree on," Obama said, speaking from a podium in the East Room of the White House against a backdrop of specially imported Middle-Class Americans. The rest, he said, can wait until after the election, when the American people will have had their say on which economic vision they prefer. Whichever party wins the election, that is, will get its way on taxes for the wealthy -- that, of course, is the way the president would like to see the choice in November framed.

"I'm not proposing anything radical here," he said. "I just believe that anybody making over $250,000 a year should go back to the income tax rates we were paying under Bill Clinton."

Obama's position wasn't new. He took the same stance in advance of the 2010 lame-duck session of Congress, which ended in a compromise that extended all the tax cuts until the end of this year. Nor would his proposal, even if Congress acts on it, be likely to do anything to buck up the economy right away: Any stimulus from the extra money in people's pockets won't happen until the extension kicks in next year.

But it is, as he pointed out, a popular position. "The American people are with me on this," he said. "Poll after poll shows that's the case." It's true -- solid majorities consistently support raising taxes on the rich. In a Gallup poll in April, for example, 62 percent said "upper-income people" were paying too little in federal taxes -- the highest support for that position since 2008.

Will Obama's gambit work, either politically or in Congress? Politically, as Jonathan Chait points out, it is of a piece with the unapologetic class warfare the president and his campaign have waged against Mitt Romney and the Republican Party of late. On Sunday, Democratic surrogates making the rounds of the political talk shows repeatedly hammered Romney for his personal finances, from Swiss bank accounts to offshore tax havens. The president's stump speech and ads make prominent mention of the involvement of Romney's former company, Bain Capital, in outsourcing jobs. The "stalemate" language is also an extension of Obama's tactic of campaigning against gridlock and a do-nothing Congress.

Democrats are convinced these are winning lines of attack that could help turn around the perception of Obama as passive in the face of a stagnant economy. Republicans, for their part, say the (eventual) tax hike Obama is advocating will suffocate the economy. "President Obama's response to even more bad economic news is a massive tax increase," Romney spokeswoman Andrea Saul said in a statement. "It just proves again that the president doesn't have a clue how to get America working again and help the middle class."

That's the line from Congressional Republicans as well. But it's worth keeping in mind that, last time Obama proposed extending a tax cut -- the February payroll-tax extension -- he won. Facing a barrage of criticism for their initial reluctance to go along with that extension, Republicans caved. As Sen. John McCain said at the time, "We're dumb, but we're not stupid." Obama's other problem, though, may lie with his own party. Senate Majority Leader Harry Reid's response to the president's speech was that he would "be discussing the next steps" with Senate Democrats -- not exactly a promise to bring the proposal up for a vote.