Posted on Thu, Oct. 06, 2011
last updated: March 15, 2013 11:57:47 AM
WASHINGTON — President Barack Obama endorsed a tax on millionaires to pay for his job creation package as he prodded lawmakers Thursday to deliver a jolt to a moribund economy, warning that frustrated voters are likely to "run them out of town" if they fail to act.
Senate Democrats who are grappling to get enough support in the caucus for the $447 billion package have suggested taxing millionaires, and Obama said Thursday at the White House that he'd back the move, though he suggested that he'd still want other tax increases he's proposed to help reduce long-term budget deficits.
"I'm fine with the approach they're taking," he said during a news conference that he used primarily to press Congress to move on his jobs plan.
"The reason I keep going around the country talking about this jobs bill is because people really need help right now. The economy needs a jolt right now," Obama said. "This is not a game. This is not the time for the usual political gridlock."
But congressional Republicans are unlikely to go along with the tax, and independent economists suggested that it would do little to prod a stalled economy.
"It's mainly symbolic," said Brian Bethune, visiting professor of economics at Amherst College. "It doesn't get you a lot, and it affects a very small percentage of the population."
The tax, 5.6 percent on all income — including capital gains, estates, individual income and so on — would apply to each dollar of taxable income over $1 million.
The original Senate Democratic plan would have imposed a 5 percent surtax, starting next year. That changed after the White House said it didn't want tax increases next year, so the rate was raised and the effective date delayed until 2013.
It would still raise an estimated $452.8 billion over 10 years, enough to pay for Obama's jobs plan. An estimated 317,000 people, less than 1 percent of all taxpayers, would be subject to the surtax.
The plan has a positive political effect for Democrats, bringing them together under a tax increase plan. They were split over the president's original plan to raise about $400 billion by limiting itemized deductions for individuals who earn more than $200,000 a year and joint filers who make more than $250,000.
"Many of them are not rich, and in large parts of the country, that kind of income does not get you a big home or lots of vacations or anything else that's associated with wealth in America," said Sen. Charles Schumer, D-N.Y.
Republican opponents say the surtax is nothing more than a political ploy, one that would stifle job creation.
Rep. Austin Scott of Georgia, one of the House of Representatives' 87 GOP freshmen, said the money would be used for more spending, which would trouble his constituents.
"The White House has been politically clever, but the American people want solutions to the economic problems, not just politics," he said.
"I mean, what's our goal here?" asked Senate Republican leader Mitch McConnell of Kentucky. "If the goal is to create jobs, then why are we even talking about tax hikes?"
Obama accused Republicans of playing politics, saying he's looking to provide a needed boost to the economy and has been thwarted by the GOP at every turn.
"If Congress does nothing, then it's not a matter of me running against them. I think the American people will run them out of town because they are frustrated and they know we need to do something big and something bold," he said.
The president called the hastily arranged news conference as the Senate prepares to vote next week on his American Jobs Act, which Obama says includes measures that Republicans and Democrats traditionally have supported, such as a cut in the Social Security payroll tax and spending for road construction, schools and aid to the unemployed.
Senate Democrats don't have enough votes to pass the bill, and the millionaires' tax was floated as a way to sell the measure to wavering Democrats and even some Republicans.
In the Senate, 60 votes are needed to cut off debate and bring the bill to a final vote. Democrats control 53 of the 100 seats.
Obama said the White House was open for negotiations with congressional Republicans, but that he'd tried to bargain for more than two years without success.
"I have gone out of my way in every instance — sometimes at my own political peril and to the frustration of Democrats — to work with Republicans to find common ground to move this country forward," he said. "Each time, what we've seen is games playing, a preference to try to score political points rather than actually get something done on the part of the other side."
The president said he was willing to press for individual pieces of his bill, such as a proposed extension and expansion of a one-year cut in the payroll tax, or spending for public works.
But he added, "We're going to keep on going and we will put forward maybe piece by piece ... and each time they're going to have to explain why it is that they'd be opposed to putting teachers back in the classroom or rebuilding our schools or giving tax cuts to middle-class folks and giving tax cuts to small businesses."
He rejected suggestions by political pundits that he wants to use Republican opposition as a weapon on the campaign trail, railing against a "do-nothing" Congress as Democrat Harry Truman did in 1948 on his way to re-election.
"We will just keep on going at it and hammering away until something gets done," Obama said as he closed the news conference. "I would love nothing more than to see Congress act so aggressively that I can't campaign against them as a do-nothing Congress."
(Steven Thomma contributed to this article.)
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