In a speech in Cleveland today, President Obama will come out unequivocally against keeping Bush-era tax cuts for the wealthy. As part of the White House’s latest economic package (don’t call it a stimulus), the tax breaks would be extended for 98 percent of households with income below $250,000 for couples and $200,000 for individuals. Those who make more than the cutoff would see their tax rates go back to pre-2001 levels next year. Obama “intends to cast the issue as a choice between supporting the middle class or giving breaks to the wealthy.” Congressional Democrats in a weak position against Republican attacks say he is the only one who can convince lawmakers to to increase taxes during the recovery and make good on repealing the Bush economic agenda, which once seemed like a given.
Obama is bundling the proposed changes to the top income tax bracket with a plan to expand and make permanent a business tax credit for research and development, along with increased infrastructure spending.
The prospects of the White House economic package are not great. Liberals aren’t jazzed about business tax credits for R&D over projects that more directly create jobs. (The $50 billion to rebuild infrastructure apparently doesn’t do it for them, either.) Republicans, aside from their staunch opposition to eliminating any of the Bush tax cuts, aren’t too keen on Obama’s proposal to offset costs by closing corporate tax loopholes for multinationals and oil and gas companies.