Obama tries to corner GOP over tax rates

President Obama and Democrats are trying to back the GOP into a corner over tax hikes just as they did on the payroll tax fight a year ago.

The president and his party are arguing that Republicans should agree to extend the George W. Bush-era tax rates immediately on families earning up to $250,000 a year, and not dig in their heels to prevent rates from rising for higher-income earners.

On Monday, they argued that GOP opposition would take $200 billion in consumer spending from the economy.

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The argument attempts to cast Republicans as opponents of economic growth and as out of touch with the middle class, a theme the White House used successfully in the end-of-2011 vote to extend the payroll tax holiday.

Republicans agreed to extend that tax holiday on Dec. 23 amid intense public pressure, and a similar vote near Christmas Eve could be coming this year.

The GOP is worried, fearing Obama could jam them into a last-minute agreement as the nation approaches what Federal Reserve Chairman Ben Bernanke has dubbed a “fiscal cliff.” If Congress does nothing, all taxpayers will see higher bills next year.

“The White House positions itself as the party in favor of tax cuts, just tax cuts for the middle class,” said Julian Zelizer, a professor of history and public affairs at Princeton University. “This puts Republicans in the awkward position of opposing tax cuts even if they are actually calling for even broader tax cuts. Given the polls, the White House wins if this strategy works.”

Top Republican aides, however, cautioned against pinning the blame on Congress while lawmakers on both sides of the aisle are at the table and negotiating in good faith.

“I’d be amazed to see them go out there and attack us while we’re engaged in negotiations,” one top House aide said. “Hopefully, they want to have a productive second term, and having a productive second term means cooperation and common ground.”

Since Obama met with congressional leaders at the White House on Nov. 16, discussions at the staff level appeared to have made little progress. 

In a Monday floor speech, Senate Minority Leader Mitch McConnell (R-Ky.) said talks “remain at an impasse.” 

He called on Obama to submit a plan “that has a realistic chance of passing the Congress,” and he warned about what he called “the Thelma and Louise crowd” of liberal Democrats suggesting that lawmakers should simply take no action to stop the cascade of spending cuts and tax increases at year’s end.

“It’s time for the president to present a plan that rises above these reckless and radical voices on the hard left, that goes beyond the talking points of the campaign trail and that has a realistic chance of passing the Congress,” McConnell said. 

Some Democrats have said the party’s leverage could be greater after the nation goes over the cliff, because pressure would grow on both parties to reduce taxes for the middle class. 

A Democratic source close to the negotiations said that the White House “definitely” sees running out the clock as to its advantage, since it believes it has more public support for its position of extending middle-class tax rates but increasing them on the wealthy.

Another aide with knowledge of the negotiations, however, said that “everyone is talking constructively. Any talk of a deadlock is overstated.”

While Republicans have said they are open to new tax revenues and Democrats continue to cite the need for spending cuts, each side is pushing the other to offer more specific proposals of what it could accept.

Officials said Obama spoke by phone on Saturday with Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.), but no additional face-to-face meetings have been scheduled. 

White House press secretary Jay Carney on Monday would say only that the next meeting with congressional leaders would come “at the appropriate time.” 

In the meantime, White House aides met with U.S. Chamber of Commerce President Tom Donohue, and House Republicans planned to meet Wednesday with CEOs and civic leaders of the “Fix the Debt” coalition, including Erskine Bowles, a co-chairman of the president’s fiscal commission in 2010.

Since his reelection win three weeks ago, Obama has yet to say that he has a mandate to raise taxes on the wealthiest Americans, but he told reporters earlier this month that his victory sent a “very clear message” about where the electorate stands on taxes “and the majority of voters agreed with me.”

White House aides say that making a public case in the payroll-tax debate was “critical” to the success of the bill’s passage last year. The White House took to Twitter, asking Americans to weigh in on the debate, and even created a countdown clock, which appeared at daily press briefings and reminded viewers that if Congress didn’t act, middle-class taxes would increase.

This year, they appear to be planning a similar strategy.

While aides say Obama hasn’t started an intense push just yet, the president is expected to make public statements before middle-class Americans on the issue, just like he did last year. 

Carney on Monday wouldn’t discuss details behind the administration’s strategy. But he acknowledged that “communicating with the public on this issue and others is very important.”

“I would simply say that all of us here, I think, have a better and clearer understanding about how to engage the public in these important policy debates, because these policy debates are about the American people; they’re about the middle class,” Carney said.