Welcome to election season! With Labor Day weekend in our collective rearview mirror, and a sure to be hotly contested midterm elections on the horizon, President Obama gave a classic political stump speech today in Parma, Ohio. At times rambling, at times inspired, the President seemed to draw a clear line in the sand between he and his GOP adversaries over tax cuts for the middle class, versus continuing tax cuts for the wealthy in an effort to spur a stagnant economy.
He says he’s willing to give the middle class (everyone making under $250K per year) if the GOP is willing to let the tax cuts expire for the rich (those above). He even says he’d be willing to extend the tax cuts starting this week.
Policywise this is fine, and we think it could be a good political message even — forcing the GOP to explain why they won’t support a widespread tax cut, if it means a tax hike for the rich.
As we’ve said before, the current administration appears to be staking a giant flag on the Middle class with regards to the economy. And while the President’s rhetoric is back in campaign form, most middle class voters aspire to be wealthy, so it’s not yet clear that this is a strategy that will pay off in big dividends come November. Either way, it appears that with the specific mentions of Minority Leader Boehner, Obama has come out of his corner swinging. (A transcript of his prepared statement follows the video below.) (H/T Joe Weisenthal)
I’ll give you one final example of the differences between us and the Republicans, and that’s on the issue of tax cuts. Under the tax plan passed by the last administration, taxes are scheduled to go up substantially next year. Now, I believe we ought to make the tax cuts for the middle class permanent. These families are the ones who saw their wages and incomes flatline over the last decade – and they deserve a break. And because they are more likely to spend on basic necessities, this will strengthen the economy as a whole.
But the Republican leader of the House doesn’t want to stop there. Make no mistake: he and his party believe we should also give a permanent tax cut to the wealthiest two percent of Americans. With all the other budgetary pressures we have – with all the Republicans’ talk about wanting to shrink the deficit – they would have us borrow $700 billion over the next ten years to give a tax cut of about $100,000 to folks who are already millionaires. These are among the only folks who saw their incomes rise when Republicans were in charge. And these are folks who are less likely to spend the money, which is why economists don’t think tax breaks for the wealthy would do much to boost the economy.
So let me be clear to Mr. Boehner and everyone else: we should not hold middle class tax cuts hostage any longer. We are ready, this week, to give tax cuts to every American making $250,000 or less. For any income over this amount, the tax rates would go back to what they were under President Clinton. This isn’t to punish folks who are better off – it’s because we can’t afford the $700 billion price tag. And for those who claim that this is bad for growth and bad for small businesses, let me remind you that with those tax rates in place, this country created 22 million jobs, raised incomes, and had the largest surplus in history.
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