Just days after thousands of progressives converged on Washington to demand that President Obama do more to create jobs, Obama on Monday sat down with economic advisers to talk about that very topic, along with education. What the president ended up talking about, however, wasn’t jobs. It was taxes.
Two Republican members of the President’s Economic Recovery Advisory Board — Harvard economist Martin Feldstein and former Securities and Exchange Commission Chairman William Donaldson — used the meeting to urge Obama to extend the Bush-era tax cuts for the nation’s wealthiest taxpayers and not just the middle class, as Obama proposed.
Feldstein, who chaired President Reagan’s Council of Economic Advisers, and Donaldson, who served under President George W. Bush, argued that extending the tax cuts for people who earn more than $250,000 a year would help the economy recover faster. Obama wants to extend the cuts to everyone but that top 2 percent of wage earners.
Obama countered that the federal budget can’t afford the $700 billion hit that extending tax cuts to the rich would cost the Treasury, and other members of the advisory panel backed him.
Congress, which adjourned last week to hit the campaign trail prior to the Nov. 2 midterm elections, put off any action on the tax cuts until it reconvenes for a brief session following the elections.
For the president, extending Bush-era tax cuts has become a prominent, and unwelcome, election-year issue. Politically, tax cuts have become hopelessly tangled in the debate over jobs and other economic concerns that top voters’ list of priorities.
The tax cuts are set to expire in January, and Republicans are campaigning hard on a claim that failing to extend the cuts would be the same as increasing taxes on financially strapped Americans.
“Nearly 15 million Americans are looking for work and can’t find it; another 11 million are underemployed, meaning they’ve settled for part-time work instead of a full-time job,” said Senate Republican Leader Mitch McConnell. “Household income is down for the second year in a row and Democrats want to take more money out of people’s pockets.”
Democrats in Congress were leery of doing anything so close to an election that resembled a tax increase, and left the issue on the table for the lame duck session at the end of the year.
If Congress doesn’t act on the tax-cut extension in November, the cuts would automatically expire, putting lawmakers and the president in a difficult political position.
A recent poll by CNBC found 55 percent of Americans believe that increasing taxes on any Americans will slow the economy and hurt job growth. The same poll found 55 percent of Americans faulting Obama’s economic policies for making things worse.
“It was a robust discussion,” Obama said following the meeting with his advisers. “The tax debate is a long one.”
