HATFIELD, Pa. — With negotiations in Washington apparently going nowhere, President Obama took the fiscal fight outside the Beltway on Friday, restaging it in a toy factory where he tried to pile public pressure on Republicans to accept his tax proposals.
In remarks filled with St. Nick puns and yuletide jokes, Obama stood on the factory floor flanked by workers taking a break from the holiday rush, and executives who support his plan to raise taxes on top earners. The message: Take my plan before the year-end deadline or risk damaging the economy.
“This is not some run-of-the-mill debate,” Obama said. “This isn’t about which political party can come out on top in negotiations. We’ve got important decisions to make that are going to have a real impact on businesses and families all across the country.”
Republicans answered with their own political theater, enlisting the help of another Pennsylvanian, a construction executive, who appeared in a video to cast Obama’s plan as bad for small business.
The back and forth was the first postelection skirmish outside Congress or the White House in what is expected to become a series of staged plays for public opinion. The White House has promised to stay in campaign mode, using the bully pulpit to force Republicans to buckle.
Republicans, hobbled by their poor showing in the election, have fewer options, but the video, released by Rep. Kevin McCarthy (R-Bakersfield), showed an effort to stay in the public relations game.
Obama is trying to push Republicans to agree to freeze the lower rates only for the lower and middle brackets, letting the top two rise. Republicans would like the current rates made permanent.
The tax fight is only a piece of a larger discussion consuming Washington: how to avert the year-end fiscal mess of automatic tax increases and spending cuts. Those discussions had stalled Friday as most lawmakers headed out of town for the weekend.
“There’s a stalemate; let’s not kid ourselves,” House Speaker John A. Boehner (R-Ohio) told reporters.
Republicans seemed to harden their opposition to Obama’s tax plan Thursday after Treasury Secretary Timothy F. Geithner delivered the White House’s opening offer on Capitol Hill.
Obama wants existing tax rates to expire for couples who make more than $250,000 a year, or $200,000 for individuals. The highest rate would revert from 35% to 39.6%. Obama would also end the historically low 15% tax rate on capital gains and dividends for these upper-income households, taxing dividends at ordinary income tax rates and increasing the capital gains rate to 20%.
Republicans are irked that the president has not offered to make additional cuts to entitlement spending beyond what he has already outlined in his budget proposal.
“Republicans are not seeking to impose our will on the president; we’re seeking a bipartisan solution that can pass both chambers of Congress and be signed into law by the president in the coming days,” Boehner said. “While I may be affable and someone that can work with members of both parties, as I’ve demonstrated over the 22 years that I’ve been here, I’m also rather determined to solve our spending problem and to solve this looming debt crisis that is about to consume us.”
Obama, too, played the good guy on Friday, even casting himself in the role of Santa Claus after he toured the Rodon Group factory, where plastic is molded into toy pieces — “Cheaper than China!” the company’s website proclaims.
“I’ve been keeping my own naughty-and-nice list for Washington,” Obama told a crowd surrounded by elaborate roller coasters and Ferris wheels built of Tinkertoys and K’NEX building toys. There will be some members of Congress who deserve toys, he suggested, “and some who don’t.”
Obama didn’t let the thought go without conjuring up the image of Vice President Joe Biden in the White House playing with K’NEX. “But I told him he had too much work to do. I wasn’t going to have him building roller coasters all day long,” Obama said.
Both parties found other spokesmen to make their cases.
In Hatfield, Rodon President Michael Araten said that, if he had to choose, he would be more worried about the loss of the middle-class tax cuts than those for the wealthy. The expiration of the middle-class tax cuts would cost the typical family of four about $2,200 next year, according to White House economists, and Araten said that would harm demand for his products.
“That’s going to have an effect on discretionary spending,” said Araten, a Democrat who voted for Obama. “That’s going to have a much greater effect than the incremental percent more I might pay in my taxes” if the upper-income tax cuts go away.
In the Republican video, Jerry Gorski, the head of Gorski Engineering in Collegeville, Pa., sits in a corner office and says his firm’s work was down 40% in the recession. “And now our company has figured out how to survive in this economy, and the first thing we want to do with any income I have is tax it? That’s uncertainty,” said Gorski, a Republican who voted for Mitt Romney.
Gorski’s circumstances are less common than the video implies. Only about 3% of all small businesses earn enough to be hit by the higher tax rates, according to the nonpartisan Tax Policy Center.
In an interview, Gorski, a former national chairman for Associated Builders and Contractors, a trade and lobbying group, had gentle criticism for both parties: Neither has done a “perfect job” of presenting clear deficit reduction plans.
He said he wished the nation’s leaders would focus on bipartisan proposals already crafted by outside groups. And he suggested that Republican lawmakers should be moving away from their vow never to raise taxes, a pledge that has been a stumbling block.
“There’s not a lot of things that I think a legislator should say ‘always’ and ‘never’ to,” Gorski said. “I just think that right now to solve this problem people have to have an open mind.”
Kathleen Hennessey in the Washington bureau contributed to this report.