President Obama held a news conference in which he sought to quell criticism from lawmakers from his own party of the deal he had struck with Republicans to preserve the Bush tax cuts even for upper-income earners for two more years.
“Because of this agreement, 2 million Americans who lost their jobs and are looking for work will be able to pay their rent and put food on their table,” he said Tuesday. “And in exchange for a temporary extension of the high-income tax breaks — not a permanent but a temporary extension — a policy that I opposed but that Republicans are unwilling to budge on, this agreement preserves additional tax cuts for the middle class that I fought for and that Republicans opposed two years ago.”
Obama announced the deal Monday to extend the Bush-era tax rates for two more years, despite pledging in his campaign and until recently that he was firmly opposed to extending the tax cuts for taxpayers who earn $250,000 or more (see Obama Strikes Deal on Bush Tax Cuts and Unemployment).
However, the White House published a “fact sheet” that noted, unless the tax cuts were extended for middle-class taxpayers, a typical working family faced a tax increase of over $3,000 on January 1. The House managed to pass an extension of the current tax rates for middle-class families last week, but attempts to pass two bills in the Senate were blocked by Republicans on Saturday because they did not extend the current tax rates for those earning above $250,000 or $1 million.
Obama negotiated the deal with Republican leaders, after negotiations among a six-man bipartisan working group of lawmakers and administration officials who were supposed to work out a compromise stalled within days of being organized last week. In return, the deal would extend unemployment benefits for another 13 months for those whose benefits expired at the end of last month or who faced the expiration of their benefits at the end of this month. It also provides a number of tax breaks for individuals and businesses, including a 2 percent reduction in the Social Security payroll tax and an extension of the Research and Experimentation Credit.
Some of Obama’s traditional allies in Congress were outraged over the deal, which would also lower the estate tax rate to 35 percent from the 55 percent that it was scheduled to return to at the start of next year. Sen. Bernie Sanders, I-Vt., threatened to filibuster the deal.
“In my view, it is a moral outrage that at a time when this country has a $13.8 trillion national debt, a collapsing middle class, and a growing gap between the very rich and everybody else, that the Republicans would deny extended unemployment benefits to 2 million workers who are desperately struggling to pay their bills and maintain their dignity," he said. “I believe that we have the American people on our side on this issue. My office, and I come from a small state, has received more than 600 calls today, 99 percent of them in opposition to this so-called compromise that the president negotiated with the Republicans. I will do everything in my power to stand up for the American middle class and defeat this agreement.”
Obama insisted that the framework for the compromise he had laid out would avoid a long partisan battle that would have continued after the House fell under Republican control in January.
“Now, I know there are some who would have preferred a protracted political fight, even if it had meant higher taxes for all Americans, even if it had meant an end to unemployment insurance for those who are desperately looking for work,” he said. “And I understand the desire for a fight. I’m sympathetic to that. I’m as opposed to the high-end tax cuts today as I’ve been for years. In the long run, we simply can’t afford them. And when they expire in two years, I will fight to end them, just as I suspect the Republican Party may fight to end the middle-class tax cuts that I’ve championed and that they’ve opposed.”
Obama acknowledged that the debate over the tax cuts probably would not be resolved, even after a bill had been passed. “But in the meantime I’m not here to play games with the American people or the health of our economy,” he said. “My job is to do whatever I can to get this economy moving. My job is to do whatever I can to spur job creation. My job is to look out for middle-class families who are struggling right now to get by and Americans who are out of work through no fault of their own.”
“A long political fight that carried over into next year might have been good politics, but it would be a bad deal for the economy and it would be a bad deal for the American people,” he added. “And my responsibility as President is to do what’s right for the American people. That’s a responsibility I intend to uphold as long as I am in this office.”
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