WASHINGTON (Reuters) - President Barack Obama urged Republicans on Wednesday to help renew Bush-era tax cuts quickly for the middle class but not wealthier Americans — a flashpoint issue going into November’s congressional election.
“We simply don’t have time any more to play games,” Obama said at the White House.
With trillions of dollars in tax cuts due to expire on December 31, Obama again accused opposition Republicans of holding the middle class “hostage” and coddling millionaires with their demand that tax relief be extended for all Americans.
“Once again, leaders across the aisle are saying no. They want to hold these middle-class tax cuts hostage until they get an additional tax cut for the wealthiest 2 percent of Americans,” Obama said.
“We simply can’t afford that,” he said, rejecting the Republican argument it is not the right time to raise taxes on anyone, given concerns the economy is not rebounding fast enough from the worst recession since the 1930s.
Obama, speaking after a Cabinet meeting, was flanked by members of his economic team, including Vice President Joe Biden, Treasury Secretary Timothy Geithner and top economic advisers Larry Summers and Austan Goolsbee.
Republicans were swift to respond to Obama.
“Tax hikes aren’t going to grow the economy, just as no amount of spin can change the fact that the Washington spending spree hasn’t led to a hiring spree, despite the promises of Democrats,” Senate Republican leader Mitch McConnell said in a statement.
Republicans demand, with the support of some Democrats, that tax cuts for families earning more than $250,000 a year be renewed alongside those for the less wealthy.
Thirty-one House Democrats, many of them fiscal conservatives, urged their leadership in a letter to consider legislation to extend all tax cuts.
“In recent weeks, we have heard from a diverse spectrum of economists, small business owners, and families who have voiced concerns that raising any taxes right now could negatively impact economic growth,” they wrote.
Some opinion polls show voters like the idea of continuing the tax cuts for the middle class but not for the wealthy.
House Democratic Leader Steny Hoyer told reporters earlier that he was “always, as you know, prepared to discuss alternatives so we can move forward.”
But he quickly reaffirmed his support for Obama’s position to renew tax cuts only for families earning less than $250,000 a year. Extending the cuts for wealthier Americans, he warned, risked driving up the budget deficit.
A Hoyer spokeswoman said later, “He’s willing to listen to what other people have to say, but he’s not willing to change his opposition” to extending tax cuts for wealthier Americans.
Former Federal Reserve chief Alan Greenspan, reversing a long-standing aversion to higher taxes, said rates must rise to reduce the record budget deficit.
“I am in favor for the first time in my memory of raising taxes,” Greenspan told an audience at the Council on Foreign Relations in New York.
Greenspan warned of “very grave problems ahead” if the budget deficit, swollen to around $1 trillion by massive amounts of stimulus spending, was not tackled soon.
As Fed chairman, Greenspan backed the tax cuts passed during the Bush administration that are now set to expire at the end of this year unless Congress renews them.
Investors and companies are concerned about a possible rise in the tax rate for dividends and capital gains if Democrats and Republicans cannot reach a compromise.
Additional reporting by Kim Dixon, Richard Cowan, Andy Sullivan, Steve Holland, Alister Bull, Jeff Mason; Writing by Tom Ferraro and Ross Colvin, Editing by John O'Callaghan and Peter Cooney