President Obama described his proposed $1.6 trillion tax increase Friday as “a little more revenue” and raised the rhetoric on Republican lawmakers to approve the tax hike for families earning more than $250,000 per year.
“It’s not acceptable to me, and I don’t think it’s acceptable to you, for just a handful of Republicans in Congress to hold middle-class tax cuts hostage simply because they don’t want tax rates on upper-income folks to go up,” Mr. Obama told an audience at a toy-manufacturing plant in Hatfield, Pa. “That doesn’t make sense.”
Mr. Obama has been waging a public-relations campaign this week in his battle with congressional Republicans, who want to extend tax cuts for all Americans as part of negotiations to avoid tax hikes and automatic spending cuts next year. The Bush-era tax relief is set to expire on Jan. 1.
Republicans have proposed changes to tax laws that they say would raise about $800 billion over 10 years — roughly the same as a Senate bill that would raise rates on the top 2 percent of wage earners. But Treasury Secretary Timothy F. Geithner and other administration officials presented Congress Thursday with a plan that would raise taxes by double that — $1.6 trillion over a decade.
The president said Friday that lawmakers should approve the extended tax cuts for the middle class immediately, and then work after Jan. 1 on other fiscal issues such as entitlement reform and deficit reduction.
“Our long-term goal is to get our long-term deficit under control in a way that is balanced and is fair,” Mr. Obama said. “I believe both parties can, and will, work together in the coming weeks to get that done. We know how that gets done. We’re going to have to raise a little more revenue, we’ve got to cut out spending we don’t need.”
The administration’s framework also includes a promise to trim about $400 billion from entitlement programs in the future, and to spend about $50 billion on economic stimulus initiatives. Senate Minority Leader Mitch McConnell, Kentucky Republican, reportedly laughed when Mr. Geithner presented him with the proposal.
“The administration has remained focused on raising taxes and attending campaign-style events, with no specific plans to protect Medicare and Social Security or reduce our national debt in a meaningful way,” Mr. McConnell said. “And [Thursday], they took a step backward, moving away from consensus and significantly closer to the cliff, delaying again the real, balanced solution that this crisis requires. This is a real problem — every day they delay brings us one step closer to the fiscal cliff that we simply must avoid.”
The office of Speaker John A. Boehner, Ohio Republican, said on his blog Friday that the White House proposal isn’t worthy of consideration.
“Three weeks after Republicans outlined a balanced, popular framework for averting the fiscal cliff by cutting spending and reforming our tax code, the White House finally made its offer: a spectacularly unserious grab bag of tax rate hikes, ‘stimulus’-style spending, and other Democratic pipe dreams,” Mr. Boehner’s office said.
Mr. Obama warned that a tax increase on Jan. 1 would cost the typical family about $2,200 next year.
“That’s sort of like the lump of coal you get for Christmas,” he said. “That’s a Scrooge Christmas.”
He said resolving the tax-cut issue now will give the administration and lawmakers more time next year to work on “tax reform, working on entitlements, and asking the wealthiest Americans to pay a little bit more.”
Wealthier Americans would pay more automatically on Jan. 1 if Congress approves the tax-cut extensions only for families earning under $250,000.
Michael Araten, president and CEO of toy manufacturer K’NEX in Hatfield, said he supports the president’s approach but disputed Mr. Obama’s contention that uncertainty about the negotiations in Congress might hurt the holiday shopping season. He said orders at K’NEX are up 20 percent over the same time last year.