Posted: Wednesday, 28 July 2010 5:17AM
Obama Backs Letting Tax Cuts On Rich Expire
WASHINGTON (Reuters) - President Barack Obama remains committed to extend Bush-era tax cuts for middle class Americans but thinks those for the wealthy ought to expire to help ease the U.S. budget deficit, the White House said on Tuesday.
Obama made the argument to top lawmakers at an earlier White House meeting, rejecting Republican calls to extend all tax cuts beyond 2010 and drawing a clear line between Republicans and his Democrats on a key issue for the November 2 congressional midterm elections.
Obama pledged during the 2008 presidential campaign to renew tax cuts for couples making less than $250,000 a year, or $200,000 a year for individuals, and he still wants that to happen, White House spokesman Robert Gibbs said.
Allowing the top U.S. income tax rate to rise would lift it to 39.6 percent from 35 percent at the moment.
"The president believes that ... there are tax cuts that, based on our fiscal situation, simply cannot be afforded and we are not in favor of extending the higher Bush tax cuts," White House spokesman Robert Gibbs told a daily news briefing.
The 2010 deficit is projected to reach a record $1.47 trillion, or 10 percent of U.S. gross domestic product.
Obama has appointed a bipartisan fiscal commission to recommend how to tackle the U.S. deficit and rising debts.
It is due to report findings by the end of the year, as the sweeping tax cuts enacted by former President George W. Bush in 2001 and 2003 expire, and the panel is expected to recommend a mixture of tax hikes and spending cuts.
Republican House of Representatives leader John Boehner said raising taxes would hurt employment.
"I hope President Obama will reconsider his support for these job-killing tax hikes. Republicans are ready to work with the president to rein in spending and take action to support private sector job creation," he said.
This topic is likely to be a central theme of the November elections, when all 435 seats in the House and 37 of the 100 U.S. Senate seats will be in play.
The White House disputes raising taxes on top U.S. earners would hurt the wider economy, especially when the consequences of not curbing the deficit are taken into account.
"I don't think there is an economist who believes there is a stimulative effect to, or a good reason in terms of economic growth, to extend those tax cuts, particularly given the choice that one has to make about the budget deficit," Gibbs said.
Story Copyright 2010, Reuters
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