Aide’s Comments Cause Stir as White House Discusses Tax Strategy
12:41 p.m. | Updated White House officials met on Thursday morning with allies from several progressive organizations to discuss strategy for the battle over whether to extend the Bush-era income tax rates, and the session took on added interest after reports circulated that the administration might cave in to Republican demands on the issue.
David Axelrod, the senior White House adviser, caused a flurry Thursday morning after The Huffington Post wrote that he was ready to accept an extension of the lower tax rates on all income, and not just on the first $250,000 of income a year for most families, as President Obama has proposed.
But Mr. Axelrod and other senior White House officials quickly insisted that his comments had been mischaracterized and that President Obama remained opposed to a permanent extension of those rates at year’s end.
“I didn’t say anything we haven’t said before,” Mr. Axelrod wrote in an e-mail.
Still, the comments by Mr. Axelrod appeared to signal more clearly than before that the administration was willing to consider temporarily extending the reduced rates for all income levels, as Mr. Obama implied immediately after last week’s election. Unless Congress takes action, they are due to expire for everyone at the end of the year.
In an interview with The Huffington Post, Mr. Axelrod underscored the new political reality in Congress and stressed that the administration places a high priority on permanently extending the tax rates only for those families earning less than $250,000 a year.
“We have to deal with the world as we find it,” Mr. Axelrod told a reporter for the Post’s Web site. He expressed “concerns” about a temporary extension of tax cuts for the wealthy, but added that “I don’t want to trade away security for the middle class in order to make that point.”
The question of whether the White House would be willing to accept a temporary extension of the upper-income tax rates — for perhaps a year or two — is likely to be at the center of the debate as Congress returns to Capitol Hill next week.
Liberal groups have urged the president and his aides to stand firm against continuing the lowered tax rates for the wealthiest Americans.
Before the midterm elections, the administration had consistently said it opposed even a temporary extension for family income above $250,000 a year, arguing that it would cost too much revenue and would not significantly boost job creation. The White House put the cost of a permanent extension at $700 billion more over 10 years that Mr. Obama’s preferred approach.
But in his post-election news conference, Mr. Obama said his administration was “absolutely” open to negotiation on that issue.
Mr. Axelrod’s comments highlight how difficult it will be for the administration to sustain its pre-election position on the tax cuts in the post-election political environment, with Republicans taking control of the House in January.
In September, John A. Boehner, the Ohio Republican who is expected to become speaker of the House, said he would accept the president’s proposal to extend the lower rates for the middle class but not the wealthy if that were the only option open to him. More recently, though, Mr. Boehner has stood firm on the idea of a permanent extension for all taxpayers.
“You can’t invest when you don’t know what the rules are, when you don’t know what the tax rates are going to be next year,” Mr. Boehner told reporters, according to Bloomberg News. “That’s why making these permanent will be the most important thing we can do to help create jobs.”
A spokesman for the Senate Republican leader, Mitch McConnell of Kentucky, sent in the following statement: “While the president and some of his allies in Congress have a strange desire to raise taxes on hundreds of thousands of small businesses across the country, we would welcome the president’s help to extend all the current tax rates so that no one sees a tax hike. There is no reason we can’t work together to prevent equally a tax hike on families and small businesses.”
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