Congressional Republicans on Wednesday floated the idea of a one-year extension of all of the 2001 and 2003 tax cuts, saying it will give the economy certainty and give Capitol Hill breathing space to take up a broader reform of the tax code next year.
The push comes just a day after former President Clinton, breaking with the White House line, said the tax rates should be extended in the short-term — though he later tried to walk back those comments somewhat. Then on Wednesday morning Larry Summers, a former top economic adviser to both Mr. Clinton and President Obama, also called for a short-term extension of the tax rates, saying the economy cannot handle tax increases right now.
Republicans gleefully seized on both men’s comments.
The tax rates were scheduled to go up at the beginning of 2011, but late in 2010 Mr. Obama and Mr. McConnell struck a deal to extend the tax cuts through the end of this year. At the time, Mr. Obama said the economy was too fragile to handle a tax increase.
Mr. McConnell said Wednesday that economic growth now is worse than it was in 2010, so the underlying need for low taxes remains.
The White House said Mr. Obama wants to see tax cuts extended for most Americans, but wants to increase rates on couples making $250,000 or more.
But even among Democrats there is some disagreement. House Minority Leader Nancy Pelosi has suggested a compromise that would raise taxes only on those making $1 million or more a year — a move that would bite far fewer taxpayers, but reduce the new revenue coming to the government.
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