Obama blasts continued tax cuts for the rich

President Obama drew a sharp contrast with Republicans Wednesday over what was shaping up as a key issue in the midterm congressional elections: the extension of tax cuts for top earners, which he said were unsustainable.

Obama’s remarks, delivered in the traditional electoral battleground state of Ohio, sounded every bit like the speeches he gave there two years ago during his first election bid. Originally billed as a policy speech, Obama only briefly outlined his new plan for $180 billion in spending — including $50 billion in infrastructure investments and a permanent extension of research-and-development tax credits.

Instead, he used the debate over Bush-era tax breaks to make a populist pitch, shaping the coming congressional midterm election as a choice between Democrats who support policies to advance the middle class and Republicans who would return to policies that created only “the illusion of prosperity.”

As he did so, Obama mentioned House Minority Leader John Boehner (R-Ohio) by name eight times, as the White House sought to elevate the man who would become speaker of the House if Republicans gained a majority this fall.

“Make no mistake: He and his party believe we should … give a permanent tax cut to the wealthiest 2% of Americans,” Obama said. “With all the other budgetary pressures we have, with all the Republicans’ talk about wanting to shrink the deficit, they would have us borrow $700 billion over the next 10 years to give a tax cut of about $100,000 each to folks who are already millionaires.”

“So let me be clear to Mr. Boehner and everybody else,” he continued. “We should not hold middle-class tax cuts hostage any longer.”

Obama’s plan calls for extending tax cuts for households earning less than $250,000 a year, while allowing the marginal rates for higher earners to increase as scheduled Dec. 31.

“For those who claim that this is bad for growth and bad for small businesses, let me remind you that with those tax rates in place, this country created 22 million jobs, raised incomes, and had the largest surplus in history,” he said.

Obama also, as he had done often since Congress broke for its summer recess, urged Republicans to pass a package of small-business tax credits that had been stalled in the Senate, a holdup he said was delaying hiring.

Obama said Republican obstruction was emblematic of a strategy aimed at allowing the GOP to “sit on the sidelines and let Democrats solve the mess.”

“They’re making the same calculation they made just before the inauguration: If I fail, they win,” he said. “Well, they might think this will get them where they need to go in November, but it won’t get our country where it needs to go in the long run.”

Earlier Wednesday, Boehner announced two Republican alternative economic proposals for the September session. Foremost among them was a two-year extension – which he termed a freeze – of all current tax rates.

Republicans also would seek to cut non-security spending to 2008 levels, which they estimated would save $100 billion in its first year.

In January, Obama had proposed a three-year budget freeze that the White House said would save $250 billion over the next decade.

“We can’t deal with the deficit until we’re willing to get our arms around spending and have a strong economy,” Boehner said in an interview with ABC’s “Good Morning America” on Wednesday. “And you can’t have a strong economy if you’re raising taxes on the very people that you expect to invest in our economy to begin hiring people again.”

The Ohio Republican also seemed to welcome the direct confrontation with the Democratic president.

“Here’s the White House worrying about what I’ve got to say instead of working together to get our economy going again and to get jobs back in America,” he said.

Under election-year pressure, even Democrats have expressed reservations about Obama’s new proposals. Sen. Michael Bennet, seeking election to a full term this November in Colorado, said in a statement Wednesday morning that he opposed “additional spending in a second stimulus package.”

mmemoli@tribune.com