Obama cites ‘legitimate fears’ about debt

President Obama acknowledged Monday that the government’s response to the financial crisis created “legitimate fears” about the nation’s growing debt, but argued that extending tax cuts for the wealthiest Americans would only exacerbate the problem.

Speaking in the backyard of a Northern Virginia family before an audience that included small-business owners, Obama renewed his debate with Republicans over the best course to jump-start a sluggish economy, just as members of Congress returned to Washington.

“The vast majority of Democrats think that because wages and incomes had flatlined for middle class families … [they] should definitely get an extension of the tax cuts that were instituted in 2001 and 2003,” he said. “We could get that done this week. But we’re still in this wrestling match with John Boehner and Mitch McConnell about the last 2 to 3 percent, where on average we’d be giving them $100,000 for people making $1 million or more.”

That would be worth consideration, he continued, except that the nation “just can’t afford” the additional $700-billion price tag.

Obama continued to make the case that the economy was growing, albeit slower than many had hoped, and reiterated new proposals to provide additional stimulus.

“I have never been more confident about the future of our economy, if we stay on track and we deal with some of these longstanding problems that we haven’t dealt with in decades,” he said.

But he also addressed growing unease about government spending that was represented by protests in Washington on Sunday by conservative activists.

“They saw the Recovery Act, they saw TARP, they saw the auto bailout. They look at this and [say], ‘God, all these huge numbers are adding up.’ So they’re right to be concerned about that,” he said. “I think that there’s an opportunity for Democrats and Republicans to come together and to say, what are the tough decisions that we can make right now that won’t squash the recovery … but how can we get ourselves on a trajectory where mid-term and long term we’re starting to bring our debt and deficits slowly under control.”

He pointed to recommendations that will be coming after the election from his fiscal responsibility commission as the first step in doing so, but returned to the idea of tax cut extensions as an example of what is unsustainable given the debt challenges.

“We can’t give away $700 billion to folks who don’t need it and think somehow that we’re going to balance our budget,” he said.

Congressional Republicans today have signaled that they would oppose any effort by the administration and Democrats to allow any tax cuts to expire. In doing so, they argued that House Minority Leader John Boehner had not, as the White House argued, “blinked” by saying he would consider only voting on an extension middle class.

“Raising taxes in this environment is a non-starter for me and millions of American small business people who are struggling to keep the lights on and meet their payroll obligations,” House Minority Whip Eric Cantor (R-Va.) said in a statement.