Obama Rejects Tax Cuts for the Rich, Calls for Big Oil to Pay Fair Share

by Joel Wendland
This article originally appeared at PoliticalAffairs.net, Sept. 9, 2010

The President came out swinging in a major economic policy speech in Cleveland, Sept. 8, against Republican Party obstructionism on economic recovery. He flatly rejected GOP plan's to give mammoth new tax cuts to the richest Americans and accused its leaders of pushing the "same philosophy that was tried for the last decade which led to the greatest economic crisis since the Great Depression: tax cuts for millionaires, cut rules for corporations, and leave the middle class to fend for itself."

Instead, President Obama called for a new package of tax cuts for working families, tax credits for businesses to purchase new equipment and for research and development, and infrastructure projects to spur job growth.

To pay for these proposals, administration officials told reporters the President wants to close tax loopholes for big oil companies and other companies that move jobs out of the country.

President Obama said he favors extending tax cuts for Americans earning $250,000 or less, while letting the Bush tax cuts for the very richest Americans sunset.

"We are ready, this week, to give tax cuts to every American making $250,000 or less," the President said. "For any income over this amount, the tax rates would go back to what they were under President Clinton."

He rejected Republican claims that this move would be bad for the economy, citing the high deficit. "We can’t afford the $700 billion price tag [for tax cuts for the rich]." He also recalled that with a similar tax code in place in the 1990s, the U.S. economy created 22 million jobs.

When the economic crisis began, President Obama said, "My hope was that the crisis would cause everyone, Democrats and Republicans, to pull together and tackle our problems in a practical way. "

"But as we all know, things didn’t work out that way," he said. Ideological and partisan considerations caused "[s]ome Republican leaders [to figure] it was smart politics to sit on the sidelines and let Democrats solve the mess."

House Republican Minority Leader John Boehner, R, Ohio, offered his party's views on the economy late last month, but, the President said, they were awfully familiar.

"There were no new policies from Mr. Boehner," he explained. "There were no new ideas. There was just the same philosophy we already tried for the last decade – the same philosophy that led to this mess in the first place."

Instead Republicans want to scale back the major accomplishments of the past year and a half. They want to allow health insurance companies to once again deny care for people who are sick and allow the credit card companies to raise interest rates unfettered, Obama pointed out. Republicans want to privatize Social Security and voted against family tax credits for higher education.

Indeed, the President continued, Republicans have kept tax loopholes for corporations that move jobs out of the country. "For years, Republicans have fought to keep these corporate loopholes open," he said.

"In fact, when Mr. Boehner was here in Cleveland he attacked us for closing a few of these loopholes – and using the money to help states like Ohio keep hundreds of thousands of teachers and cops and firefighters on the job," the President noted.

Referring to the jobs bill passed by Congress last month, President Obama explained that the closed tax loopholes will help pay to keep teachers in schools, cops on the beat, and firefighters protecting our families.

But Boehner "dismissed these jobs … as quote 'government jobs' – jobs that I guess he thought just weren’t worth saving," President Obama added.

"Mr. Boehner and the Republicans in Congress said no to these projects. Fought them tooth and nail," Obama emphasized.

"Though I should say that didn’t stop a lot of them from showing up at the ribbon-cutting ceremonies and trying to take credit," he said, referring to to the fact that numerous Republicans who voted against the recovery act have claimed credit for money brought to their home districts. "That’s always a sight to see."

Republican obstructionism and hypocrisy earned additional fire from White House Director of Communications Dan Pfeiffer who told reporters by a teleconference with the press, Sept. 8, Boehner and the Republicans want to return to the same policies that caused the crisis and hurt America's working families in the first place.

"We know the policies that Leader Boehner and the Republicans are advocating," Pfeiffer said, citing the huge deficits, the financial meltdown, and jobs crisis. "We know what they'll do. We're still reaping the consequences of that."

Deputy Assistant to the President for Economic Policy Jason Furman touted the Obama administration's accomplishments in the economy. In addition to the recovery act, President Obama's legislative accomplishments include the "cash for clunkers" program, extension of the homebuyer tax credit, tax credits for businesses to hire unemployed workers and those involved in infrastructure projects, and the passage of the new jobs bill last month.

Furman also noted that new tax credits the President has proposed would be designed to benefit companies who do research and development here in the U.S. He added that the President wants to pay for new tax credits and infrastructure projects by ending massive government tax subsidies for the biggest oil companies.

"The big oil companies actually pay lower tax rates on their profits than most other corporations in the economy," he said. "Get rid of those tax breaks so the big oil companies are being treated just the same as every other corporation when it comes to taxes."

Furman added that new revenue could be created by closing some 350 remaining loopholes that still provide incentives for companies who move their profits, investments and jobs out of the country.

Notes on the stimulus bill

By Joel Wendland

The Republicans in Congress hated the economic recovery bill from the beginning. I think it reminded them too much of the past eight years and Bush's failure to handle economic matters in any intelligent way. It reminded them of how they toed Bush's economic line without deviation and voted for every single one of his budgets and his $3 trillion war in Iraq blindly. It reminded them of all the reasons they lost power.

This psychological turmoil combined with the humiliation of the loss in November prompted a bad decision-making process on how to handle the new political and economic reality in the country. When Obama and the Democrats introduced the stimulus package, top Republicans said to each other, let's fight the election battle all over again. Let's put our free-market fundamentalist, trickle-down ideology and policies that lost us the election out front – even with John McCain leading the way – and have it out all over again with Barack Obama.

So McCain led the way with an amendment to the stimulus bill that would have cut all the job-creating provisions in favor of hundreds of billions in new tax cuts for the wealthiest Americans. Needless to say, it flopped.

Other Republicans had other ideas. They have been a little trickier. They wanted to influence the outcome of the bill without having to actually vote for it.

Republican Sens. Tom Coburn, Chuck Grassley, Johnny Isakson, Mel Martinez, and David "DC madame client" Vitter added their own amendments or co-sponsored other amendments that were ultimately adopted to the bill and finally passed.

So much for the argument that the bill lacked bi-partisan input. Ironically, none of these Senators voted for final passage. Each one, instead, claimed the bill lacked bipartisan support and cost too much.

Funny claim, because two of those amendments offered by Republicans with bipartisan support added something like $100 plus billion to the final Senate version of the bill. One of those provisions actually would have provided $30 billion or so for a housing tax credit. They claimed it addressed the country's housing problems. In fact, the bill would have given a $15,000 tax credit to real estate speculators trying to take advantage of falling house prices by buying foreclosed homes on the cheap and flipping them for quick profits, and the government, under the Republican amendment would guarantee them a $15,000 profit for each house -- paid for by taxpayers.

That scheme wouldn't have fixed "the housing problem"; it would have exacerbated it. In fact it would have robbed taxpayers to pay off speculators.

But even with that Republican amendment, those Republicans who insisted it was meant to fix housing failed to vote for final passage of the bill.

(Note: the compromise package hammered out in conference Wednesday evening cut that $30 billion tax credit to $2 billion and reasonably limited it to first-time home buyers and imposed an income cap on who could claim the credit.)

Even more ironically, after the group of five Republicans named here (and probably more I have overlooked) added their amendments and raised the price tag of the total bill by more than 12 percent, most Republicans refused to vote for the bill.

Guess what their argument was. You got it. It cost too much and raised the deficit too much. This only shows a deficit in the Republican thought process. Their tax cut policy and war in Iraq added more than $5 trillion to the national debt after Bush inherited a surplus. Their tax policies delayed economic recovery after the 2001 recession for more than four years. Their economic policies and ideology of free-market fundamentalism handed the big banks the keys to the kingdom. They looked the other way as bankers robbed home buyers and made business decisions that caused the credit meltdown and the current economic collapse.

I don't envy Barack Obama the political and economic difficulties under which he leads this country. But the Republicans have proven, if nothing else, the bankruptcy of their ideas and the hypocrisy of their politics.