One day ahead of a key Senate vote, the White House made a final lobbying effort to extend middle-class tax cuts Tuesday with Vice President Biden accusing Republicans of holding the measure hostage for larger tax relief for the rich.
Wednesday’s vote is fraught with election-year politics, with Republicans arguing for extending all the tax cuts, saying that with the fragile economic recovery, it’s not the time to raise anyone’s taxes.
Republicans also point to an estimate by Congress’s nonpartisan Joint Committee on Taxation that says 940,000 small businesses would be affected by allowing tax cuts for the top 2 percent to expire.
But the White House decided that no one says middle class like Mr. Biden, and countered the Republican arguments with a conference call with reporters.
If the Bush-era tax cuts aren’t extended for all but the 2 percent of taxpayers before the end of the year, “a typical middle-class family making 50 grand, a family of four, is going to pay $2,200 extra,” Biden said. “And if you're a firefighter and a teacher, and you have an income of $100,000, you're going to see it go up over $4,000.”
Biden also spoke of the Republicans’ concern about “decoupling” – that is, separating the bulk of the tax cuts from those that benefit the wealthiest taxpayers.
“They know that if there's a separate vote and the middle-class tax cut is in, they don't have the popular support for extending the tax cuts beyond that,” he said. “But the Republicans have fixated on extending all the cuts and what they're doing is very simple, and you can understand it from their perspective. They're holding the middle- class tax cuts hostage.”
On the same conference call, a White House economist Jason Furman portrayed the 940,000 figure put forth by Republicans as misleading.
“Ninety-seven percent of small businesses would get to continue their full tax cut. The other 3 percent of small businesses would get to continue part of their tax cut. That number you just cited includes, for example, if you have a law firm with 500 partners... that would count as 500 different small businesses,” said Jason Furman, principal deputy director of the National Economic Council.
Earlier on Tuesday, the White House put out a 20-page report laying out the president’s proposal: extend all the income-tax cuts that benefit families making less than $250,000 a year, while allowing the cuts for the top 2 percent of earners to expire.
“Allowing these tax cuts to expire is an essential component of the president’s overall plan for balanced deficit reduction,” the report says.
Biden acknowledged “procedural challenges” in getting the tax cut issue to a vote.
“As usual, we'll probably have [a] 60-vote threshold even to be able to get to it, but that's being worked on now in the Senate,” the vice president said.
If the measure fails, President Obama and his surrogates will be able to maintain their mantra that they’re all about helping the middle class and the Republicans are all about helping the rich.
“I would argue that we've always done well in this country when we built from the middle out,” Biden said. “The reason for that is the poor have a way up, a way out, and the wealthy do very, very well, thank you.”
On Tuesday, House Republicans unveiled their plan, which extends current rates on income, capital gains, dividend, and estate taxes. The House is expected to vote on the plan next week.