WASHINGTON — President Barack Obama expressed confidence Monday that he can win an election-year fight with Republicans over taxes and the economy despite three straight months of weak job growth.
Obama urged Congress to pass a one-year extension of the Bush-era tax cuts for most Americans, but aides said he would veto a bill that included providing relief to households earning $250,000 or more, as GOP congressional leaders and presumptive Republican presidential nominee Mitt Romney want to do.
“Let’s not hold the vast majority of Americans hostage and our entire economy hostage while we debate the merits of another tax cut for the wealthy,” Obama said in the White House’s ornate East Room.
Obama’s appeal drew a disdainful response from Republicans on Capitol Hill.
“President Obama is still asleep at the switch when it comes to our economy and jobs,” said House Speaker John Boehner of Ohio.
Boehner spokesman Michael Steel noted that Obama made his pitch “just days after another dismal jobs report,” which showed the unemployment rate holding at 8.2 percent in June and the economy adding only 80,000 jobs during the month.
While Obama’s aides denied that his appeal was a political move aimed at distracting attention from Friday’s disappointing employment numbers for June, the president claimed broad political support for his refusal to back across-the-board tax relief after Dec. 31, when the Bush tax cuts are set to expire.
“The American people are with me on this,” he said. “Poll after poll shows that’s the case.”
Obama upped the ante by framing the November election as a referendum on his advocacy of middle-class tax cuts vs. Romney’s desire to extend tax relief to all Americans regardless of income.
“In many ways, the fate of the tax cut for the wealthiest Americans will be decided by the outcome of the next election,” Obama said. “My opponent will fight to keep them in place. I will fight to end them.”
Romney, the former Massachusetts governor, readily accepted the challenge.
“President Obama’s response to even more bad economic news is a massive tax increase,” said Romney campaign spokesman Chris Walker. “It just proves again that the president doesn’t have a clue how to get America working again and help the middle class.”
White House Press Secretary Jay Carney tussled with reporters who asked him why Obama, in December 2010 when the Bush tax cuts were originally set to end, backed unrestricted tax relief but now wants to limit it to families earning less than $250,000 a year.
Carney said Obama’s stance then was a political tradeoff as part of a larger political deal with congressional Republicans that included extension of unemployment benefits and payroll tax reductions.
Carney said flat out that Obama would veto any Republican plan to extend the current tax cuts for all Americans. But the Obama spokesman repeatedly declined to make the same vow when reporters asked him about a proposal floated by some Democratic congressional leaders to limit tax hikes to households earning at least $1 million.
Obama and his aides tread a thin line in trying to explain his position.
Obama said Bush’s tax cuts “didn’t work” and blamed his “top-down economics” for the 2008 economic collapse and subsequent Great Recession.
At the same time, Obama called for extending the same tax cuts to what he said would be 98 percent of all Americans were the $250,000 household income cap – with a limit of $200,000 for individuals – to be imposed.
Obama said the lower tax rates for affluent Americans are “a major contributor to our (federal budget) deficit, costing us a trillion dollars over the next decade.”
Yet that price tag is a fraction of the current federal debt of almost $16 trillion, and the “tax cuts for the middle class” that Obama advocates would reduce by trillions more dollars government revenues that could make a bigger dent in the debt.
Budget-watchdog groups such as the Concord Coalition, a bipartisan group dedicated to slashing the deficit, criticized Obama’s stance.
“Obviously this is intended to be a campaign talking point to highlight the differences between the two candidates,” said Robert Bixby, the organization’s executive directly.
“It’s certainly not the deficit fix that is needed,” Bixby said. “There is nothing new about this proposal. It’s kind of frustrating that we keep going over the same ground on these things without addressing the issues.”
Most economists believe that a mix of tax hikes and spending cuts are needed to cut the debt significantly. A special commission Obama appointed soon after taking office in January 2009 recommended such an approach, but the president and congressional leaders from both parties largely ignored the panel’s advice.
Romney wants to go further than Bush by reducing current tax rates by an additional 20 percent for all Americans. He hasn’t said how he would pay for the plan, though he wants to cut federal spending to 20 percent of gross domestic product, down from its present 24 percent level.
Romney says he would work to "slowly raise the retirement age" for future Social Security recipients, while slowing the growth in benefits for “higher-income retirees." On Medicare, Romney said the private sector would “compete to offer insurance coverage at the lowest possible price,” while raising the Medicare eligibility age by one month each year from its current threshold of 65.
Romney’s approach would add $2.6 trillion to the federal debt through 2021, according to U.S. Budget Watch, a nonpartisan watchdog group.
While reinforcing the election’s sharply drawn battle lines, Obama acknowledged that he’s in for a fight.
“What’s holding us back from meeting these challenges – it’s not a lack of plans, it’s a lack of ideas,” the president said. “It is a stalemate in this town, in Washington, between two very different views about which direction we should go in as a country. And nowhere is that stalemate more pronounced than on the issue of taxes.”
Republicans hotly dispute Obama’s claim of Bush’s failed economic policies, saying the economy grew for more than six years after his first round of tax cuts in 2001 and before the 2008 crash.
The Republican-controlled House is expected later this month to pass a one-year extension of across-the-board tax cuts, but the Democratic-led Senate almost certainly will not follow suit.
Kevin G. Hall of the Washington Bureau contributed.
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