Monday, October 4, 2010

Does this mean the middle class are "spend thrifts"?

Obama debates tax cut with business leaders

BY MARK S. SMITH (Associated Press Writer)
Originally Published: Monday, October 04, 2010
Updated: Monday, October 04, 2010

WASHINGTON (AP) — Intending to talk about colleges and worker training, President Barack Obama on Monday suddenly found himself in a spirited, election-year debate with a U.S. business advisory group about whose tax cuts should be extended and for how long.

At a meeting of the President's Economic Recovery Advisory Board, Harvard University economist Martin Feldstein pressed Obama to keep all the Bush-era tax cuts, not just the middle-class cuts the president wants to extend.

"That would give a boost to confidence," Feldstein declared. Security and Exchange Commission Chairman William Donaldson added that an extension would allay business and consumer uncertainty.

Obama replied that his stand would benefit 98 percent of American taxpayers. "You'd think (that) would provide some level of certainty," he said.

The fate of the Bush-era tax cuts has become an issue as campaigning for the Nov. 2 congressional vote enters its last four weeks.

Obama and most Democratic leaders favor letting the cuts, passed in 2001 and 2003, lapse for the rich, but continue for everyone else. Republicans suggest that could wreck the fragile economic recovery; they want all the cuts extended.

Obama also reiterated his view that top-income tax brackets would do little to boost the recovery, since the wealthy are not holding off buying flat-screen TVs and other big-ticket purchases for lack of a tax cut. Plus, he said, those tax cuts are unaffordable.

"If we were going to spend $700 billion, it seems it would be wiser having that $700 billion going to folks who would spend that money right away," he said.

Obama dismissed the notion that the well-off — he included himself — would simply "take our ball and go home" if they did not continue to get a big tax cut.

Former Federal Reserve Chairman Paul Volcker, who heads the advisory group, backed up Obama. "I want to assure you that my psychology will not be affected," he declared amid laughter.

Congressional Democratic leaders have postponed a vote on tax cut extensions until after the November election, but Obama has accused Republicans of holding middle-class cuts "hostage" by demanding top-end cuts, too.