Obama picks election-year tax fight with $250,000 ceiling for lower rate

President Obama on Monday called for the Bush-era tax rates to be extended for family incomes below $250,000 annually, thus reopening an election-year battle with Republicans.

The move underscored both Obama’s support for raising taxes on higher-income earners and his effort to cast himself as a populist while depicting Republican opponent Mitt Romney as a millionaire who is out of touch with the middle class.

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“In many ways, the fate of the tax cuts for the wealthiest Americans will be decided by the outcome of the next election,” Obama said in a brief address at the White House, where he was surrounded by middle-class workers. “My opponent will fight to keep them in place. I will fight to end them, but that argument shouldn’t threaten you.”

Romney sought to swing attention back to jobs even before the president’s address. His campaign swiped at Obama for responding to last week’s unemployment report, which showed the economy added only 80,000 jobs last month, with a “massive tax increase.”

“It proves again that the president doesn’t have a clue how to get America working again and help the middle class,” said Andrea Saul, a Romney spokeswoman. “The president’s latest bad idea is to raise taxes on families, job creators and small businesses.”

Democrats, who have been divided over how best to approach the Bush-era tax rates, rushed to show there was no daylight between congressional leaders and Obama. 

The White House in recent weeks lined up support for the tax plan from leading Democrats in both chambers, a senior House Democratic aide said. 

Senate messaging guru Charles Schumer (N.Y.) has acknowledged his party was searching for an effective message ahead of November’s elections, and he previously argued that families making roughly $250,000 a year were firmly in the middle class. 

But on Monday, he said Democrats stood in “total solidarity” with the president. 

“Republicans and Democrats alike agree on the need to extend the tax cuts for the 98 percent of Americans who make below $250,000, so let’s heed the president’s call and focus on that right away,” the New York Democrat said in a Monday statement. 

Like Schumer, House Minority Leader Nancy Pelosi (D-Calif.) has endorsed extending the Bush tax rates on family income under $1 million, but she also has suggested that the debate between $250,000 and $1 million was more about strategy, and finding whichever proposal would ensure that the tax cuts for the middle class were extended on their own.

With Obama trying to steer the conversation away from the economy, the Democratic aide made the case that the more pressing issue was not at what level Democrats would support extending the Bush-era rates, but the Republican insistence that the tax cuts be kept in place for the wealthiest.

While Democrats argued Obama’s proposal would only lead to a tax hike on 2 percent of taxpayers, Republicans think Obama’s embrace of a tax hike will hurt him in the fall campaign. 

They blasted the idea of letting current rates expire at the high end, saying it would hurt the economy and raise taxes on small businesses.

Republicans also highlighted disunity on the other side of the aisle, with some Democrats, including senators in swing or conservative-leaning states, having suggested they could consider extending all of the rates.

“In the wake of another weak jobs report, the president is doubling down on his quixotic call for the same small-businesses tax hikes that have been routinely rejected by the House and Senate,” House Speaker John Boehner (R-Ohio) said in a statement Monday.

Obama’s tax message dovetails with Team Obama’s all-out assault on Romney’s wealth, highlighting the president’s efforts to draw a contrast with the former governor. In recent days, Obama’s campaign and allies have accused the presumptive Republican nominee of having offshore accounts for use as tax shelters.

The overall effort is intended to cast Obama as a middle-class warrior. 

“He is trying to show that even within a stagnant economy he is fighting for the middle class,” said Julian Zelizer, a professor of history and public affairs at Princeton University. “In doing so, he wants to distinguish himself from Mitt Romney, primarily by saying no to the tax cuts for the wealthy, and remind Democrats — both the base and the moderates — that there is a difference between voting for the Democrats or the GOP in November.”

At the same time, Zelizer added, by forcing Republicans to go on record as the party defending tax cuts for top earners, Obama — who will campaign on the issue starting Tuesday in Iowa — “hopes to use this to play into perceptions that Romney is the candidate of wealthy America.”

Aides have maintained that Romney’s personal finances are relevant in regard to his ability to reform the tax code. But even some of the president’s supporters wonder if it runs the risk of making Obama look divisive.

“The risk is that [Obama] is vulnerable to criticism that he’s engaging in class warfare and divisive discussion,” said Don Peebles, who serves on the president’s national finance committee. “He should be making a stronger case about what this would do to the unemployment rate.”

Speaking to reporters on Monday, White House press secretary Jay Carney said Obama would veto legislation that included an across-the-board extension of all the tax cuts made by former President George W. Bush, adding that Obama’s stance on the issue “has not changed [and] will not change.” 

“He would not support it,” Carney said. “He would not sign that bill.”

But even Obama’s top supporters say they have trouble seeing the legislation enacted as Obama envisions it. 

“While it’s a good opportunity to show contrast and focus the debate, the announcement today won’t sway independents,” Peebles said. “This election will be much more about the economy and who voters believe has the best plan to lead the nation out of crisis.”