Obama announces economic plan, states he will not renew Bush tax cuts for the super-wealthy

As scheduled, Obama spoke about the economy in Cleveland today. While he formally unveiled the major new incentives and infrastructure projects that we discussed here last night, the big news came when he announced unequivocally that he would not support the extension of the Bush tax cuts for the super-wealthy. The statement was unexpected, as several advisors to the President, past and present, including Peter Orszag, seemed to be advocating for a two year extension, in order to avoid the wrath of the wealthy and their minions. But, Obama, it would seem, had decided that this was where he wanted to draw the line in the sand. So, it looks as thought this is where we’ll fight the Republicans in the run up to the midterm elections… The following clip comes from Salon:

…President Obama has laid his marker down. It is time to tax the rich. If there is going to be a single political battle that will define the two months between his speech Wednesday in Cleveland and Election Day in November, it will be between those who wish to end tax cuts for the wealthiest Americans and those who want to make them permanent. The president has a slick way with words, but he’ll have a hard time wiggling out of these….

But it’s a gutsy, risky move, making the repeal of tax cuts for the wealthy a top priority in the runup to the election. There are members of his own party who are wishy washy on the topic, and despite the president’s assertions, there are plenty of economists, including some former members of his own administration, who will argue that any tax hike is too much of a burden for the current economy to bear. The president and his advisors have made a clear political calculation — the Republican party’s biggest vulnerability is its ideological affiliation with the interests of the wealthiest Americans. But the aggressively populist posture is late in coming, and reigniting Democratic enthusiasm is going to take more than couple of good speeches. Will Senate Democrats back him up? Or will they fold? And will the president back up his own words, by taking follow-up actions, like, say, appointing Elizabeth Warren as director of the Bureau for Consumer Financial Protection…

This, in my opinion, is a great thing. It’s good policy, and it’s good politics. The country, nearly bankrupted by two wars, needs the money, and Obama needs to energize the Democratic base prior to the election. This delivers on both counts. It not only demonstrates to people that he has a spine, but, as the Salon article points out, it also exposes the Republicans for what they are – the party of the wealthy, completely disconnected from the concerns of the middle class… Following is an excerpt from Obama’s speech:

…I ran for President because for much of the last decade, a very specific governing philosophy had reigned about how America should work:

Cut taxes, especially for millionaires and billionaires. Cut regulations for special interests. Cut trade deals even if they didn’t benefit our workers. Cut back on investments in our people and our future – in education and clean energy; in research and technology. The idea was that if we had blind faith in the market; if we let corporations play by their own rules; if we left everyone else to fend for themselves, America would grow and prosper.

For a time, this idea gave us the illusion of prosperity. We saw financial firms and CEOs take in record profits and record bonuses. We saw a housing boom that led to new homeowners and new jobs in construction. Consumers bought more condos and bigger cars and better televisions.

But while all this was happening, the broader economy was becoming weaker. Job growth between 2000 and 2008 was slower than it had been in any economic expansion since World War II – even slower than it’s been over the past year. The wages and incomes of middle-class families kept falling while the cost of everything from tuition to health care kept rising. Folks were forced to put more debt on their credit cards and borrow against homes that many couldn’t afford in the first place. Meanwhile, a failure to pay for two wars and two tax cuts for the wealthy helped turn a record surplus into a record deficit….

And so people are frustrated and angry and anxious about the future. I understand that. I also understand that in a political campaign, the easiest thing for the other side to do is ride this fear and anger all the way to Election Day.

That’s what’s happening right now. A few weeks ago, the Republican leader of the House came here to Cleveland and offered his party’s answer to our economic challenges. Now, it would be one thing if he admitted his party’s mistakes during the eight years they were in power, and was offering a credible new approach to solving our country’s problems.

But that’s not what happened. There were no new policies from Mr. Boehner. There were no new ideas. There was just the same philosophy we already tried for the last decade – the same philosophy that led to this mess in the first place: cut more taxes for millionaires and cut more rules for corporations. Instead of coming together like past generations did to build a better country for our children and grandchildren, their argument is that we should let insurance companies go back to denying care to folks who are sick, and let credit card companies go back to raising rates without any reason. Instead of setting our sights higher, they’re asking us to settle for a status quo of stagnant growth, eroding competitiveness, and a shrinking middle class…

Let me give you a few specific examples of our different approaches. This week, I proposed some additional steps to grow the economy and help businesses spur hiring. One of the keys to job creation is to encourage companies to invest more in the United States. But for years, our tax code has actually given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries.

I want to change that. Instead of tax loopholes that incentivize investment in overseas jobs, I’m proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in America. And I’m proposing that all American businesses should be allowed to write off all the investment they do in 2011. This will help small businesses upgrade their plants and equipment, and will encourage large corporations to get off the sidelines and start putting their profits to work in places like Cleveland and Toledo and Dayton.

To most of you, this is just common sense. But not to Mr. Boehner and his allies. For years, Republicans have fought to keep these corporate loopholes open…

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…

Assuming he can stick to his guns, and not back down in the face of Republican pressure, and the frothing of Teabaggers, this could be a defining moment in his Presidency. My hope is that he can pull it off.

And just a few quick notes to end with…. 1) The new top marginal tax rate of 39.6% will still be considerably lower than it has been historically. 2) A majority of Americans feel as though the Bush tax cuts on the super-wealthy should be allowed to expire. 3) Allowing the Bush tax cuts to expire would save us over $800 billion, or 16-times more than Obama is suggesting that we put toward infrastructure improvements. And, 4) The Bush tax cuts never delivered what they promised. All things considered, I’d say this is a damned fine move by the President.

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  1. dragon
    Posted September 8, 2010 at 10:51 pm | Permalink

    Orszag is a former advisor to the President. He also wasn’t advocating for extending the tax cuts for the wealthy.

    But Orszag told me that a key point had gotten lost: He only favors temporarily extending the tax cuts for the rich reluctantly, and only if it’s the sole way of obtaining a deal that would end them altogether.

    “The point I was trying to make is that we can’t afford the tax cuts over the medium term, and they shouldn’t be made permanent—but the middle class tax cuts should not expire today,” Orszag told me.

    “If the price to be paid for that a temporary extension of the upper income tax cuts, my view is that we should reluctantly accept that,” Orszag continued. “I would prefer that that not be the price that is paid.”

  2. EOS
    Posted September 9, 2010 at 5:08 am | Permalink

    From Wikipedia: Class conflict is a term long-used mostly by socialists, communists, and many anarchists, who define a class by its relationship to the means of production–such as factories, land, and machinery. Class conflict is seen to occur primarily between the bourgeoisie and the proletariat, and takes the form of conflict over hours of work, value of wages, cost of consumer goods, the culture at work, control over government, and economic inequality. During periods of crisis or revolution class conflict takes on a violent nature and involves repression, assault, restriction of civil liberties, and murderous violence such as assassinations or death squads.

    It has worked so well for Marx and Lenin, it’s no wonder Obama is adopting the same tactics. “Those that fail to learn from history, are doomed to repeat it.”

  3. EOS
    Posted September 9, 2010 at 5:22 am | Permalink

    Yesterday, Fidel Castro told Jeffrey Goldberg, a national correspondent for The Atlantic magazine, that Cuba’s communist economic model doesn’t work. The state controls well over 90 percent of the economy, paying workers salaries of about $20 a month in return for free health care and education, and nearly free transportation and housing. At least a portion of every citizen’s food needs are sold to them through ration books at heavily subsidized prices.

  4. kjc
    Posted September 9, 2010 at 6:11 am | Permalink

    There are no socialists in American politics. Get over it.

  5. Knox
    Posted September 9, 2010 at 6:16 am | Permalink

    They’d still be paying less in taxes than they did under Reagan. How is that socialism? Was Reagan a socialist too?

  6. EOS
    Posted September 9, 2010 at 7:13 am | Permalink

    There are few in American politics today who are not socialists. Get a clue.

    My comments do not apply to the rate of taxation but to the tactics used to achieve those rates. Reagan didn’t encourage factions of the electorate to retaliate against each other.

  7. kjc
    Posted September 9, 2010 at 7:18 am | Permalink

    “There are few in American politics today who are not socialists. Get a clue.”

    go read some history dude. or maybe philosophy. the idea that American politicians are mostly socialists is laughable.

  8. Edward
    Posted September 9, 2010 at 8:39 am | Permalink

    EOS, you are perhaps the most stupid person I have ever come into contact with. I can only hope that you’re some kind of fictional character, dreamed up by a novelist somewhere. If you were real flesh and blood I think you’d know, like the rest of us, that this tax break on the wealthy, when written into law by Bush, had a sunset provision. This has nothing to do with Obama and his nefarious socialist plans. No one was strong-armed. The tax breaks are just being allowed to expire in accordance with the law as it was written by Republicans.

    If you are a real flesh and blood entity, please loosen your tricorner hat a bit, take a deep breath, and pick up a newspaper.

  9. Kim
    Posted September 9, 2010 at 10:05 am | Permalink

    Not so quick on the praise. A few hours after the speech, Obama was asked if he’d veto the extension of the Bush tax cuts if Congress chose to do that. He refused to say.

    The exchange, for what it’s worth, was flagged by a Republican congressional aide who noted how little Democrats would likely feel emboldened by the remarks. It does, indeed, seem increasingly likely that Congress punts on the issue, passing a temporary extension of all Bush tax cuts with the goal of revisiting their expiration in two years. Senate Minority Leader Mitch McConnell (R-Ky) has said he would be willing to discuss this compromise. And the lack of an overt veto threat from Obama suggests that the White House isn’t willing to rule it out either.

    More for Sam Stein at the Huffington Post-


  10. God Damn
    Posted September 9, 2010 at 10:22 am | Permalink

    Here I was feeling all good about Obama and then Dems, and then I get to that last comment about him refusing to commit to the veto. Mother fucking spineless asshole. Now the dicks in congress are going to have no choice by to compromise ona two year extension. I’m sick of getting my hopes up about these guys only to have them dashed.

  11. Alan Hemming
    Posted September 9, 2010 at 1:39 pm | Permalink

    WH spokesman Gibbs says it would never come to a veto, so speculation as to whether or not Obama would, is moot.


  12. Meta
    Posted September 9, 2010 at 2:51 pm | Permalink

    From EJ Dionne’s column in the Washington Post.

    Until Obama’s Labor Day speech in Milwaukee and his statement of principles Wednesday near Cleveland, it was not clear how much heart he had in the fight or whether he would ever offer a comprehensive argument for the advantage of his party’s approach.

    In the absence of a coherent case, Republicans were winning by default on a wave of protest votes. Without this new effort at self-definition, Obama was a blur: a socialist to conservatives, a sellout to some progressives, and a disappointment to younger Americans who wondered what happened to the ebullient, hopeful guy they voted for.

    That’s why the Milwaukee-Cleveland one-two punch mattered. The first speech showed Obama could fight and enjoy himself in the process. The second speech spelled out why he has chosen to do battle.

    The news headline was Obama’s decision to draw the line on George W. Bush’s tax cuts. He would continue the most economically stimulative cuts for families earning less than $250,000 a year but say no to extending the rest of the tax cuts that, as Obama noted, “would have us borrow $700 billion over the next 10 years to give a tax cut of about $100,000 to folks who are already millionaires.” What do Democrats stand for if they are not willing to take on this cause?

    The best line of the whole thing? “Suddenly, there’s a point to this election. Obama is late to this game, but at least he’s finally playing it.”

    The rest of the op ed can be found at –


  13. Leo Tard
    Posted September 9, 2010 at 10:05 pm | Permalink

    Tax cuts “for all the research and innovation they do right here in America.” Wow. That’s nicely vague. Tax cuts for “innovation.” The KFC Double Down deserves one of those.

    So, Democrats win putting forth an agenda that is so Republican that the Republicans can’t explain why they’re not for it?

    I’ve heard that the next steps are to put forward a Constitutional amendment to waterboard gays until they are straight. Let’s see the Republicans oppose that one! HA! WE WON!!!

    (At least Obama still wants to tax the rich, but just the lazy rich, not “innovators” and “researchers” as in “I’m researching how much more oil is in the gulf and innovating a way to drill it.”)

  14. Leo Tard
    Posted September 9, 2010 at 10:18 pm | Permalink

    “I want to change that. Instead of tax loopholes that incentivize investment in overseas jobs, I’m proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in America.”

    I’m sorry. I like Obama. But what does that mean? The “research and innovation” in American companies is, by enlarge, being done here in the U.S. It’s the manufacturing and service that is being sent overseas. An American designer sketches the new Levis. They’re manufactured in Indonesia. How does this change anything as far a jobs? If he’d said, “Instead of tax loopholes that incentivize investment in overseas jobs, I’m proposing a NEW tax credit that goes to companies for all the manufacturing they do right here in America” well … that would have been something.

  15. Posted September 9, 2010 at 10:24 pm | Permalink

    I agree about the KFC double down, because it should have been way bigger. Somebody should have researched that.

    Also it should have had more bacon in it. I think it was only two slices. Big let down. Tasty, though.

  16. KFC Double Down
    Posted September 12, 2010 at 12:43 am | Permalink

    Yes, I need more bacon in me, and I would like a complete ear of corn between my sheaths of chicken with half a stick of margarine slathered all around.
    I deserve a complete refund of my taxes for all I have done for the American Middle Class. And I promise not to burn the Q’Uran ever.

  17. Posted September 12, 2010 at 2:12 pm | Permalink

    Hold the corn and double the margarine. Do what you want with the Koran, just don’t put it in my sandwich.

  18. Stephen
    Posted September 23, 2010 at 2:11 pm | Permalink

    It looks like the Democrats in Congress are too scared at present to move on the Bush tax cuts for the wealthiest Americans, even though an overwhelming majority of Americans want it to happen.

    File this under “spineless”.

    Senate Democrats are looking to punt the tax-cut debate past the November elections, facing pushback from Democrats facing re-election in 2010 who worry about getting tagged with raising taxes on small businesses, senior Democratic aides say. The party gathered Thursday afternoon for a caucus-wide meeting to set the pre-election agenda.

    Democrats emerged from the meeting mostly mum about what final decision had been reached, though Sen. Tom Harkin (D-Iowa) said it was “generally accepted” that no vote would be taken before the election.

    Sen. Dick Durbin of Illinois, the number two Democrat, added that “the likelihood of our passing anything by way of tax extensions is very, very slim.” Like many of his colleagues, however, he said no final decision was reached. “Harry will make the final decision,” Durbin said.

    The White House has been pushing hard for such a vote, circulating polling showing that a majority of Americans, including wide margins of independents, support extending the middle-class tax cuts. Ultimately, though, Democrats up for election feared an assault from the GOP that the party was raising taxes on “small businesses,” even though a vanishingly small portion of those who would face a tax hike are real small businesses. But, in an age of 30-second commercials, it only takes one to stare into the camera and lament the effect of the tax change on hiring.


  19. Posted December 7, 2010 at 11:26 am | Permalink

    American taxes are at their lowest in over 60 years, and Americans pay nearly the lowest income taxes in the industrial­ized world, and it is never enough.

  20. Thao
    Posted June 20, 2011 at 7:09 pm | Permalink

    Ha, ha, ha. This was good for a laugh.

  21. North Carolina
    Posted June 29, 2011 at 10:17 am | Permalink

    Have you ever wanted to travel back in time and slap an entire nation of people?

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