Obama Lashes GOP, Holds Firm On Tax Hike For Rich
Adopting a bravado seldom seen lately, President Obama on Wednesday set the midterm election season into full tilt with new proposals intended to strengthen the economy and call out Republican lawmakers planning to defeat the otherwise politically popular slate of initiatives.
Obama called on Congress to permanently extend certain tax credits for companies, allow businesses to write off all spending on expansion and improvements and renew tax cuts for those who earn up to $250,000 a year. He also reiterated his opposition to continuing the Bush-era tax cuts for the highest-earning Americans, saying an extension would cost $700 billion over 10 years.
The president sought to invigorate fellow Democrats as they head toward the November elections against a Republican voter base highly motivated by its opposition to Obama's fiscal policies. The White House timed the release of the proposals to coincide with this period in which voters are beginning to pay closer attention to hotly contested congressional races, in an effort to throw the spotlight on the Republicans' refusal to support some initiatives that have drawn public and bipartisan support.
But with members of Congress spending most of their time campaigning for re-election -- not to mention Washington's already heated partisanship -- lawmakers aren't likely to vote on Obama's incentives in time to help Democratic candidates, or the economy, by November.
Taking On Republicans
Still, Obama lambasted the Republicans with the soaring rhetoric, vivid personal stories and barbed attacks rarely seen since the 2008 presidential campaign. Cleveland was chosen as the site in part as a shot across the bow of Ohio Rep. and House Minority Leader John Boehner, who unveiled the GOP's fiscal platform during his own speech in Cleveland last month. During his remarks, Boehner urged Congress to continue the Bush tax cuts.
During his speech, Obama said Boehner’s position reflects the Republican Party’s goal to restore "the same failed policies that ran our economy into a ditch" under former President George W. Bush.
"Let me be clear to Mr. Boehner and everyone else: We should not hold middle-class tax cuts hostage any longer. ... In fact, if the Republican leadership in Congress really wants to help small businesses, they'll stop using legislative maneuvers to block an up-or-down vote on a small-business jobs bill that's before the Senate right now," Obama said.
Following the speech, Boehner shot back in a statement: "If the president is serious about finally focusing on jobs, a good start would be taking the advice of his recently departed budget director and freezing all tax rates, coupled with cutting federal spending to where it was before all the bailouts, government takeovers, and 'stimulus' spending sprees."
In a column in The New York Times this week, Peter Orszag, Obama's former budget director, advocated a political compromise: extend all the tax cuts, but just for two years.
A recent survey conducted in late July by the Federal Reserve found that economic growth was flat or had slowed in five of the 12 geographic regions tracked by the Fed. Officials said the economy grew this summer, but that the results revealed "widespread signs of deceleration."
Few states have been hit harder than Ohio. The state's unemployment rate for July remained higher than the national average, at 10.3 percent, only slightly down from 10.5 percent in June. The number of unemployed has declined by roughly 22,000 people in the past year, as the private sector has increased hiring. However, the recent gains have been offset by reductions in the government workforce.
Obama acknowledged that "progress has been painfully slow."
"People are frustrated and they're angry and they're anxious about the future. I understand that," he said. "I also understand that in a political campaign, the easiest thing for the other side to do is to ride this fear and anger all the way to Election Day."
As a remedy, the Obama administration says it plans to pour $50 billion into public works projects to repair highways, railways and roads -- the sort of investments the White House says would create jobs and shore up the nation's infrastructure to handle long-term economic growth.
Reviving The Economy
Despite the Republican outcry about the rising federal debt, many economists have argued in favor of increased federal spending targeted at large-scale public projects as the best way to jolt the economy.
"The big question isn't whether it's working; the big question is, 'Are we going big enough?' " said Jason Seligman, an Ohio State University economist who specializes in public finance. "On the monetary policy side, we're seeing less and less progress. So you're going to have to do it on the fiscal policy side -- deficit-financed spending.
"You want to increase spending over the near term and, because the U.S. has a problem with its long-term economic condition, you want to make sure the spending is on high-powered public infrastructure investment, which will encourage the private sector to make meaningful investments."
Seligman also advocates reversing the Bush tax cuts because, he said, they won't "demonstrably" help the economy.
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