President Obama and House Speaker John Boehner have each made cursory appeals to cooperation in the wake of Tuesday’s election. But they’re still making incompatible demands about the tax code. And on Friday, President Obama made clear that if Republicans reject the policy goal he campaigned on, all of the Bush tax cuts will expire.
“If we’re serious about reducing the deficit we have to combine spending cuts with revenue, and that means asking the wealthy to pay a little more in taxes,” Obama said in public remarks at the White House. “Right now if Congress fails to come to an agreement on an overall deficit reduction package by the end of the year, everybody’s taxes will automatically go up on January 1.”
In both 2008 and 2012, Obama campaigned on the goal of allowing the Bush tax cuts that exclusively benefit top earners to expire. That would increase the top marginal tax rate from 35 percent to 39.6 percent next year. But Boehner and other Republicans want tax rates off the table and GOP aides suggest higher tax rates can’t pass the Republican House.
In his first post-election press conference, a couple of hours before the President’s statement, Boehner also indicated his willingness to compromise — though he reiterated Republican opposition to raising tax rates. “On Wednesday, I outlined a responsible path forward to avert the fiscal cliff without raising tax rates,” Boehner said.
“There is no mandate for raising tax rates on the American people,” House Majority Leader Eric Cantor said in a Wednesday statement. “There is a mandate for avoiding the fiscal cliff and finding real solutions so we can make life work for people again.”
Obama did leave modest room for negotiations. “I’m not going to ask students and seniors and middle class families to pay down the entire deficit while people like me making over $250,000 aren’t asked to pay a dime more in taxes,” he said.
Boehner could meet Obama’s demand without raising tax rates by limiting tax expenditure benefits for high income people. But for now, Boehner has only suggested that revenues from this sort of base broadening should be used to lower tax rates. Obama, by contrast, is asking the House to pass a Senate bill that would isolate the Bush tax cuts for top earners and allow them to expire.
“The Senate has already passed a bill doing exactly this, so all we need is action from the House,” Obama said. “And I’ve got the pen, ready to sign the bill right away.”
In an official statement, Senate Majority Leader Harry Reid, echoed the President. “The Senate passed a bill to cut taxes for Americans making less than $250,000, and the House should pass it immediately.”
White House Press Secretary Jay Carney was even more blunt. “He will veto any bill extending Bush era tax cuts for the top two percent of wage earners in this country.”
That leaves the onus on Boehner to either pass that bill, or find an equivalent way to take the same amount of new revenue from high income earners. So far, he and other GOP leaders seem unwilling.
“”The increased tax rates that would be allowed under the Senate-passed bill are part of the fiscal cliff that economists are warning us to avoid,” Boehner said in response to the Presidents remarks. “Those increased tax rates will destroy jobs in America by hurting small businesses across the country.”
Senate Minority Leader Mitch McConnell was more strident. “[T]here is no consensus on raising tax rates, which would undermine the jobs and growth we all believe are important to our economy,” McConnell said. “While I appreciate and share the President’s desire to put the election behind us, the fact is we still have yet to hear an actual plan from the President for addressing the great economic challenges we face. What’s needed now is a realistic and specific proposal from the President that can actually pass the Congress.”
They’ve left themselves some wiggle room. But if they don’t squeeze themselves through it, Obama said, everyone’s taxes go up at the end of the year.