Fiscal Cliff

Read Obama's Lips: Higher Taxes Coming for the Wealthy


President Barack Obama holds a news conference in the East Room of the White House, in Washington, DC.

Photograph by Chip Somodevilla/Getty Images

President Barack Obama holds a news conference in the East Room of the White House, in Washington, DC.

At a press conference addressing the fiscal cliff Wednesday afternoon, President Obama spoke with the confidence of a guy who feels like he’s holding the cards.

Reporters asked lots of questions, but no matter what was asked, Obama came back to the same hard line that the White House has been broadcasting since winning the election: He won’t agree to any deal that preserves the Bush tax cuts for the well-off. Unlike in 2010, when Obama signed off on extending the Bush tax cuts after he said he wouldn’t, he seemed pretty clear that he wouldn’t back down.

The odds are in the president’s favor this time. Obama knows that if he sits on his hands, the Bush tax cuts will expire for everyone, giving the government some of the revenue infusion he’s been trying to wrangle from Congress, without success. Since many of the Bush tax cuts—including the eased marriage penalty, increased child credits, and lowered rates—benefit the middle class, Obama can also say that Republican obstructionism caused a tax hike on working families. He can say that the only thing that stood in the way of him signing a bill that would extend those middle class cuts was the Republican obsession with preserving lower tax rates for the rich.

And that’s exactly what a relaxed-looking Obama said Wednesday, as he joked about getting a letter from a man in Tennessee who didn’t vote for him and playfully teased reporters. “If Congress fails to act, everyone’s taxes will go up,” he said, adding, “We should not hold the middle class hostage while we debate tax cuts for the wealthy. We should at least do what we agree on.”

He even quipped that a modest increase on the wealthy “isn’t going to break their backs. They’ll still be wealthy.”

Just two years ago, Congress was faced with the same conundrum of whether to extend the Bush tax cuts, but the White House took a different approach. As is the case now, the expiration of those tax cuts would have meant a tax hike for just about everyone. In addition, unemployment insurance was running out for millions of families. The Republicans bet that an incumbent facing reelection in two years couldn’t afford to let that happen, and they were right. Obama caved, brokering a deal that extended the cuts, and assured disappointed Democratic colleagues that this was a one-time extension and that the cuts would be front and center in the upcoming presidential campaign. Democrats toed the line, and the White House called it a victory.

This time around, it just might be a real one.

Dwoskin is a staff writer for Bloomberg Businessweek in Washington. Follow her on Twitter: @lizzadwoskin.

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