Obama wants to extend Bush-era tax cuts to middle class for year
President Obama on Monday plans to call for a one-year extension of the Bush-era tax cuts for people making less than $250,000.
The New York Times
WASHINGTON — President Obama on Monday plans to call for a one-year extension of the Bush-era tax cuts for people making less than $250,000.
Obama plans to make his announcement in a Rose Garden ceremony, senior administration officials said, as Congress returns from its Independence Day recess and both parties and their presidential candidates head into the rest of the summer trying to seize the upper hand in a campaign that has been closely matched and stubbornly static.
House Republicans plan to vote this month to extend all of the Bush administration cuts, for middle- and upper-income people, permanently beyond 2012.
The president's proposal could also put him at odds with Democratic leaders like former Speaker Nancy Pelosi of California and Sen. Charles Schumer of New York, who have advocated extending the cuts for everyone making up to $1 million.
To find a compromise with Republicans on which Bush tax cuts to extend, Pelosi, the House minority leader, and Schumer, a member of the Senate Finance Committee, favor making $1 million in income the cutoff. Above that level, Schumer has said, people are not likely to spend the savings from lower taxes and help the economy.
Administration officials said they did not believe the difference between the White House and these Democratic leaders was a big obstacle. Whether to use $250,000 or $1 million is more a matter of strategy than a "religious debate," in the words of one official, who added that many other Democrats favored the $250,000 threshold.
White House officials insisted that Monday's move was more than politics. They said it would ease anxiety over the combination of tax increases and automatic spending cuts that are scheduled to kick in at the end of this year. That one-two punch, economists say, could deal a heavy blow to an already tender economy unless the White House and Congress work out some kind of compromise.
Proposing a one-year extension, a senior official said, recognizes that Obama and the Republicans are not likely to resolve the larger debate over whether to permanently extend the Bush tax cuts for everyone or, as Obama has long advocated, just for the middle class. That debate is likely to be decided at the ballot box, where a victory by Romney would almost certainly enshrine all the tax cuts.
"To the degree that there is concern about the economy, we're saying, 'Let's extend the middle-class tax cuts for a year,' " said Gene B. Sperling, director of the White House's National Economic Council. "Economically, extending tax cuts to those workers will have the most effect on them and the strongest impact on the economy."
A one-year extension for people under $250,000 would cost the government $150 billion in revenue, the administration estimates, an amount that would be added to the deficit. In a point of comparison, economists estimate that letting the cuts expire for people above that threshold would generate $850 billion over 10 years.