U.S. President Barack Obama is renewing a contentious political fight, calling for an extension of tax cuts for middle-class Americans but not for wealthier people.
With the presidential election less than four months away, Mr. Obama invited taxpayers to the White House on Monday who would benefit from renewal of the tax cuts beyond their scheduled expiration at the end of the year. The president, a Democrat seeking a second four-year term, called for a one-year extension of the tax rates for those earning less than $250,000 a year. Such an extended cut would cover about 98 percent of U.S. taxpayers.
In the past, as broader U.S. spending plans were adopted, Mr. Obama has agreed to keep the cuts for all taxpayers. But he says that is no longer necessary for the top two percent of U.S. wage earners, and that keeping the cut for them would add $1 trillion over the next decade to the government's total debt.
“We don't need more top-down economics. We've tried that theory. We've seen what happens. We can't afford to go back to it. We need policies that grow and strengthen the middle class.”
The president said he is convinced the American public supports his position to end the tax break for upper-income earners.
“And this is not just my opinion. The American people are with me on this. Poll after poll shows that's the case. And there are plenty of patriotic and very successful, very wealthy Americans who also agree, because they know that by making that kind of contribution, they're making the country as a whole stronger.”
Republican challenger Mitt Romney and congressional Republicans continue to oppose Mr. Obama's tax plans, saying that the reduced rates first set 11 years ago under President George W. Bush should be extended for all taxpayers.
Romney called the Obama proposal a “massive tax increase” and said it proves the president “doesn't have a clue how to get America working again and help the middle class.”
The periodic renewal of the tax rates has led to extensive debate, with Democrats saying that is only fair that wealthier people pay more, while Republicans contend that elimination of the upper-income tax break would hurt job growth in the country.
House Republicans plan to vote later this month for a permanent extension of the tax cuts for everyone, but it is unlikely that Congress will settle the issue before the November election. At that point, the White House and Congress will also face other financial issues as well, chiefly whether to allow scheduled cuts for domestic and defense spending to take effect and whether to again raise the country's national borrowing limit.
In the end, the spending issues that sharply divide the two main U.S. political parties could be pushed into 2013 after a newly elected Congress assumes office.
The fight over taxes almost certainly will play an important role in the Obama-Romney presidential campaign as part of the broader debate over the state of the sluggish U.S. economy.
The American economy, the world's largest, has slowed in recent months, with an average of only 75,000 new jobs added in each of the last three months, a third of the job growth earlier in the year.
Nearly 13 million U.S. workers remain unemployed. The country's jobless rate has been pegged at more than 8 percent since Mr. Obama's first full month in office in February 2009, well above the usual rate between 5 and 6 percent.
