It was billed as a major announcement on taxes, but President Barack Obama didn’t say anything new: he wants to extend the Bush tax cuts for those earning less than $250,000 a year while letting them expire for the upper income earners. He is challenging congressional Republicans to act now — all the tax cuts expire in January absent congressional action — so he can pose as a middle-class tax-cutter and proponent of tax fairness.
The real question is what Obama would do come January if Congress sends him a renewal of the full tax cut. Would he veto it and let taxes go up on everyone? Or would he once again agree to extending all the tax cuts like he did at the end of 2010? Naturally, the president is trying to avoid that scenario with a congressional vote now, though his deficit reduction plans add up better if he lets taxes go up on everybody.
While polls suggest Obama’s tax fairness argument has some takers among the American people — and make no mistake, it is purely a fairness argument; the deficit reduction case for allowing only the tax cuts on the wealthy and investors to expire is weak — Democrats are divided too. House Minority Leader Nancy Pelosi wants to move up the threshold at which the cuts expire to $1 million a year. Some Democrats want all the tax cuts to expire, while others want them all extended. Obama’s attempt to thread the needle is nothing new.