“There’s a stalemate; let’s not kid ourselves,” said the Ohio Republican, speaking to reporters Friday at the Capitol as the president took Air Force One to a toy factory in Pennsylvania to argue for his proposal to keep the current tax rates for 98% of Americans, while allowing rates to rise on the wealthiest.
“Republicans are not seeking to impose our will on the president; we’re seeking a bipartisan solution that can pass both chambers of Congress and be signed into law by the president in the coming days,” Boehner said. “While I may be affable and someone that can work with members of both parties, I’ve demonstrated over the 22 years that I’ve been here, I’m also rather determined to solve our spending problem and to solve this looming debt crisis that is about to consume us.”
Republicans had harsh words for the offer Obama’s Treasury secretary presented this week to avert the year-end fiscal crisis of automatic tax hikes and spending cuts. Obama proposed generating new revenue by allowing existing tax rates on to expire for those earning above $250,000 for couples, or $200,000 for single households. The highest rate would revert from 35% to 39.6%. Obama would also end the historically low 15% tax rate on capital gains and dividends for these upper-income households, taxing dividends at ordinary income tax rates and increasing the capital gains rate to 20%.
“Laughable” and “absolutely insulting” were among the comments coming from Republicans over the White House offer, which was essentially a reprise of the president’s earlier budget proposal to Congress. GOP lawmakers also objected to Obama’s calls to renew stimulus spending to spur the economy, aid homeowners in refinancing mortgages and extend long-term unemployment benefits.
Republicans want Obama to put deeper spending cuts on the table in exchange for their offer to produce new revenue by capping deductions and lowering rates to generate economic growth – a proposal that experts say does not add up unless you extract more money from middle-class households.
“Increasing tax rates draws money away from our economy that needs to be invested in our economy to put people back to work,” Boehner said. “It’s the wrong approach.”
As Obama seizes the bully-pulpit in a very high-profile public relations campaign, Republicans have both criticized and copied the approach – embarking on their own counter-campaign on Twitter and traditional media, while complaining the president should spend more time negotiating in Washington.
Republicans took particular aim at Obama’s visit Friday to a small business, as they argued that companies would be especially hurt by the tax hikes because many owners of small businesses file individual income tax returns.
Studies have shown nearly 3% of the small businesses earn enough income to be hit by the higher tax, about 900,000 businesses.
No talks are scheduled as the impasse deepens. If no agreement is reached by year's end, the combination of higher taxes and deep spending cuts would rattle the fragile economy. Tax rates are set to automatically rise on Jan. 1 – resulting in a $2,200 tax hike on ordinary Americans; at the same time, previously agreed to spending cuts would begin Jan. 2, slicing through the federal budget.
Doing nothing could tip the economy into another recession, economists have warned, especially as Wall Street is eager for a deal that would fundamentally reform tax and spending to lower the nation’s annual deficits.