The White House is reiterating its intention to let the Bush tax cuts for the richest Americans expire as scheduled, setting up another summer battle with Congressional Republicans.
On Wednesday, White House Press Secretary Jay Carney told reporters that “President Obama has been clear about his position and it has not changed. We should not extend and he will not extend the … Bush-era tax cuts for the wealthiest two percent of the American people.”
Along the same lines, White House National Economic Council director Gene Sperling told the Economic Club of New York that the Obama administration is only open to a “grand comprimise” to reduce the national debt if it is “balanced” to include tax revenues along with spending cuts.
The tax cuts are due to expire at the end of this year, raising taxes on households that earn over $250,000 a year from the current 35 percent rate to the pre-Bush rate of 39.6 percent. Republicans such as Senate Majority Leader Mitch McConnell claim that the 4 percent rise would cripple the economy, and House Republicans plan to hold a vote on extending the cuts before Congress goes on recess in August.
“It’s pretty obvious that the economy needs the certainty of the extension of the current tax rates for at least a year,” McConnell told Reuters.
According to the Congressional Budget Office, while allowing the tax cuts to expire could hurt the economy, it would be preferable to the “much bleaker” alternative of extending the current tax cuts and spending rates.
If the battle over the tax cuts escalates, President Obama is well positioned politically. According to an April New York Times/CBS poll, 56 percent preferred increasing spending and raising taxes on the wealthy compared to just 37 percent who favored cutting taxes and spending. Furthermore, 57 percent said that upper middle income people pay “less than their fair share” in taxes.