President Obama on Wednesday clobbered Republicans for holding “hostage” tax cuts for 98 percent of Americans just hours after a top House Democrat, House Majority Leader Steny H. Hoyer, signaled a willingness to compromise on an issue that has become the ultimate political football ahead of November’s elections.
Freshman Rep. Glenn Nye, Virginia Democrat, caused the administration additional headaches by collecting nearly 31 signatures from members of the House who want to preserve all the expiring Bush-era tax cuts, including those for wealthier earners Mr. Obama wants to omit.
“Many of the taxpayers included in this ‘upper-income’ bracket are successful small-business owners,” Mr. Nye said in a letter to House Speaker Nancy Pelosi and Mr. Hoyer. “Now is not the time to raise taxes on anyone. These cuts will provide some financial security at a time when our economy is still in a vulnerable position. I strongly believe that small businesses are the key to our economic recovery, and we should be giving them the support they need to thrive.”
Mr. Obama’s tough rhetoric was the latest in a steady drumbeat of criticism as he and his Democratic allies have sought to paint Republicans eager to maintain the tax cuts for all as obstructionists whose stubbornness could result in a tax hike for the middle class.
“Right now, we could decide to extend tax relief for the middle class,” Mr. Obama told reporters in the Rose Garden after meeting with his Cabinet on the economy. “Right now, we could decide that every American household would receive a tax cut on the first $250,000 of their income. Well, once again, the leaders across the aisle are saying ‘no.’ They want to hold these middle-class tax cuts hostage until they get an additional tax cut for the wealthiest 2 percent of Americans.”
Republican leaders quickly took issue with Mr. Obama’s characterization of their position, pointing out that several moderate and conservative Democrats have come forward saying they oppose any tax increase during a recession.
“Tax hikes aren’t going to grow the economy, just as no amount of spin can change the fact that the Washington spending spree hasn’t led to a hiring spree — despite the promises of Democrats in Washington,” Senate Republican Leader Mitch McConnell said in a statement after Mr. Obama spoke to reporters in the Rose Garden. “The good news is that a growing chorus of Democrats, here in the Senate and out on the campaign trail, are opposing the tax hikes the administration is proposing.”
At issue is the question of whether to extend tax cuts for families earning more than $250,000 or individuals who make more than $200,000. Those cuts, along with relief for lower-income earners, are scheduled to expire at the end of the year.
The comments by Mr. Obama and Mr. McConnell suggested the two parties are further from a possible deal, such as a temporary extension of all the tax cuts, than they appeared just hours earlier.
In a briefing with reporters Wednesday morning, Mr. Hoyer, Maryland Democrat, echoed his Republican counterpart and signaled a willingness to cross the party line — and break with Mr. Obama — as Congress struggles to overcome a stalemate over the fate of soon-to-expire tax cuts passed under President George W. Bush.
“Are we prepared to discuss alternatives?” Mr. Hoyer said. “My answer to that is, I’m always, as you know, prepared to discuss alternatives so we can move forward.”
The fight over tax cuts established under Mr. Bush in 2001 and 2003 has dominated the discussion since Congress returned to Washington from its summer recess.
House Minority Leader John A. Boehner, Ohio Republican, upset many in his caucus last week when he said he was willing to swallow Mr. Obama’s plan to limit the tax breaks to couples earning less than $250,000 if that was the only plan on offer.
Still, Mr. Hoyer and Mrs. Pelosi, California Democrat, have come under increasing pressure from fellow House Democrats, some of whom are in tough re-election battles, to preserve all the tax cuts.
The battle in the House coincides with a similar fight in the Senate, where Mr. McConnell has repeated that the GOP’s resistance to tax increases and where five Democrats apparently are willing to side with Republicans.
Mr. McConnell added additional fuel to the political fire this week by offering a Tax Hike Prevention Act, which would extend all the Bush-era tax cuts, limit the alternative minimum tax and reform the so-called “death tax.”
But Mr. Hoyer and a growing chorus of Democrats argue that the McConnell proposal would cost a whopping $3.9 trillion over 10 years and that he has come up with only $300 billion to pay for it.
It “will cost more than all of the legislation that the Bush administration asked for to meet the economic crisis or anything that together we have done over the last 20 months of this Congress,” Mr. Hoyer said.
Heading into Wednesday, Mr. Obama and Democratic leaders have suggested there is no wiggle room when it comes to their opposition to extending the cuts for households earning more than $250,000 a year. The president maintained that it would cost $700 billion over 10 years to extend the tax breaks for wealthier Americans, something the country simply can’t currently afford.
But, following Mr. Hoyer’s move on Wednesday, it appears the tone is shifting on Capitol Hill and that there could be growing opposition to Mr. Obama’s plan.
Mr. Hoyer admitted as much on Wednesday after he was asked what he was doing about members who oppose the White House’s plan to end tax cuts for the top 2 percent to 3 percent of income earners. “Every member needs to take their own position on this issue to what they think is appropriate,” he said.
The debate picked up speed on Sunday after Mr. Boehner, Ohio Republican, said he is prepared to support Mr. Obama’s plan to extend tax cuts for just the lower and middle classes, even if it does not include Republican-backed cuts for wealthier Americans.
“If the only option I have is to vote for some of those tax reductions, I’ll vote for it,” Mr. Boehner said on CBS’ “Face the Nation.” “But I’ve been making the point now for months that we need to extend all the current rates for all Americans if we want to get our economy going again, and we want to get jobs in America.”
The remarks followed a campaign-style rally last week in Cleveland, Mr. Boehner’s backyard, where Mr. Obama called to extend the tax cuts for those earning less than $250,000 and attacked the Republican House leader for bringing “no new ideas” to the table for economic policy.
On Wednesday, Mr. Hoyer suggested to reporters that Mr. Boehner made the “mistake of a few short seconds of reasonableness,” which led some, including the Wall Street Journal, to suggest he may be unfit to be the next speaker of the House should Republicans win the chamber in the coming elections.
Mr. Boehner, meanwhile, continued to qualify his comments on Wednesday, saying, “Raising taxes on anyone, especially small businesses, is the exact wrong thing to do in a struggling economy. Economists agree and a growing number of Democrats agree.”