Has an olive branch been extended in Washington? In a Nov. 9 press conference President Obama told Republican lawmakers he was “open to compromise” in order to solve the nation’s approaching fiscal cliff debacle—when massive spending cuts and expiring tax cuts will simultaneously trigger Jan. 1 without Congressional action.
“We can’t just cut our way to prosperity,” Obama said. “If we’re serious about reducing the deficit we have to combine spending cuts with revenue—and that means the wealthiest Americans pay a little more in taxes.”
Obama showed his willingness to entertain ideas from both parties when he invited congressional leaders—both Democrats and Republicans—to a meeting at the White House next Friday. After making his support of additional taxation for the wealthy abundantly clear during his re-election campaign, however, Obama is now quick to remind Republicans that America stands behind him.
“It was debated over and over again,” he said during White House East Room appearance. “And on Tuesday night we found out that the majority of Americans agree with my approach. I’m open to compromise, but I refuse to accept any approach that isn’t balanced.”
Voter exit polls from the presidential election showed 47 percent of surveyed voters support raising taxes on incomes exceeding $250,000, as Obama has proposed. Another 13 percent of voters surveyed favored raising everyone’s taxes. A minority 35 percent opposed any type of tax increase.
The next two months place extra pressure on Republican lawmakers, who have thus far conflicted with Obama during extended debt talks. The Senate has already passed a bill extending tax cuts to the middle class but not for the upper two tax brackets. The measure would ensure taxes would not increase for 98 percent of Americans come Jan. 1. Tax rates for the wealthiest Americans, however, would return to Clinton-administration levels.
House Speaker John Boehner has held steadfastly against increasing tax rates for wealthy Americans. He has suggested, instead, eliminating tax loopholes and deductions that allow many to dramatically decrease their tax burden.
“Raising tax rates will slow down our ability to create the jobs everyone says they want,” Boenher said Nov. 8. “This is an opportunity for the president to lead. This is his moment to engage the Congress and work toward a solution that can pass both chambers.”
The real question may actually be, is Boehner ready to lead his party into causing another recession, just so some millionaires and billionaires can pay lower taxes? If the House fails to pass a bill—and Obama has promised to veto anything that reduces taxes on the wealthy—the average family’s tax burden will increase between $2,000 and $3,000 when the Bush tax-cuts expire, and the overall economy could shrink by .5 percent, according to the Congressional Budget Office.
The CBO also states allowing the tax cuts to expire across all income brackets will cost the economy about 1.8 million jobs in 2013. Alllowing only the upper-income—top 2 percent of earners—tax cuts to expire would do far less harm, and provide the government about $800 billion in revenue over the next 10 years.
Although Boehner and Obama have clashed heavily on their tax positions, Washington analysts are wondering if recent remarks may indicate approaching negotiation. Boehner acknowledged his party has some work to do during statements to reporters, and Obama stressed he wants the wealthy to pay “a little more taxes,” but didn’t specify by how much more. Will there finally be a truce in Washington? We can hope so, but it’s too soon to tell.
