Obama launches election-year tax offensive against Republicans

President Obama on Monday called for extending Bush-era tax rates for family incomes below $250,000 for a year, reopening a tax battle with Republicans just before the last stretch of the presidential election. 

Obama said Republicans and Democrats agree that the tax rates on middle-class families should be extended, and called on the two parties to come together on a policy that finds common ground.

{mosads}”Let’s agree to do what we agree on. That’s what compromise is all about,” Obama said in the East Room of the White House, joined by taxpayers he said would be hit with a more than $2,000 tax increase if current middle-class rates weren’t extended.

“Let’s not hold the vast majority of Americans and our entire economy hostage while we debate the merits of another tax cut for the wealthy,” Obama added. “We can have that debate.”

Obama ramped up his attacks on his opponent, Mitt Romney, seeking to telegraph a stark contrast between the two presidential candidates on taxes. 

“In many ways the fate of the tax cuts for the wealthiest Americans will be decided by the outcome of the next election,” Obama said. “My opponent will fight to keep them in place. I will fight to end them. That argument shouldn’t threaten you.”

Before Obama addressed the crowd on Monday, the Romney campaign swiped at Obama for responding to last week’s unemployment report, which showed the economy added only 80,000 jobs last month, with a “massive tax increase.”

“It proves again that the president doesn’t have a clue how to get America working again and help the middle class,” said Andrea Saul, a Romney spokeswoman. “The president’s latest bad idea is to raise taxes on families, job creators and small businesses.”

Republicans are unlikely to agree to a deal that decouples some tax rates from others, but Monday’s announcement was aimed more at election-year politicking than policy. It allowed Obama to cast himself as the champion of middle-class tax cuts while arguing Republicans would hold tax relief up to preserve low rates for the rich. 

Both parties are taking steps to play up the tax issue in the fall. 

The House is expected to vote to extend all of the Bush-era rates for one year before leaving for the August recess, and GOP leaders in both chambers have talked about also including a mechanism to force comprehensive tax reform in 2013.

Senate Majority Leader Harry Reid (D-Nev.) said in a statement after the president’s speech that he agreed with setting the line at $250,000 annually, and suggested that a Senate vote on that very proposal would be coming shortly. 

“Republicans have claimed they want to reduce our deficit,” Reid said. “In the weeks ahead, they will have a chance to do so by joining Democrats to vote to extend tax cuts for all middle-class American families on the first $250,000 of their income.”

“In the wake of another weak jobs report, the president is doubling down on his quixotic call for the same small businesses tax hikes that have been routinely rejected by the House and Senate,” House Speaker John Boehner (R-Ohio) said in a statement Monday.

Obama cast the debate over taxes as a large part of the broader stalemate in Washington and of Democrats and Republicans having stark differences of opinion on fiscal issues.

The president also said that his tax plan was part of his idea to build the economy from the bottom up, not the top down, as he said Republicans prefer — a theme he also touched on during a bus trip through the Rust Belt last week.

“We tried it their way,” Obama said. “It didn’t work.”

Obama sought to convince voters that ending tax breaks on the rich would help middle-class families and give small businesses “the security they deserve.” 

“This isn’t about taxing job creators, this is about helping job creators,” he said. “I want to give them relief.”

The president has said, dating back to his original 2008 campaign for the White House, that Bush-era rates should only be extended for family incomes below $250,000 a year. He also said Monday that 97 percent of small businesses make below the $250,000 threshold.

“I want to give those 97 percent a sense of permanence,” Obama said.

But this is the first time that Obama has explicitly proposed continuing those rates for one year. As part of a larger tax package, the president also agreed to extend all of the current income tax rates for two years in 2010, adding then he would not sign off on extending the top rates again.

That also puts him on a different page than some other top Democrats, including House Minority Leader Nancy Pelosi (Calif.) and Sen. Charles Schumer (N.Y.), who have called for setting the income cutoff for the Bush-era rates at $1 million.

Asked during his briefing on Monday if Obama was wedded to the $250,000 number, White House press secretary Jay Carney replied, “The president’s position has been this very same position.”

Carney said the White House consulted with Pelosi and Schumer and other congressional leaders before Monday’s announcement. But he did not give details on the discussions.

Carney said Obama’s stance “has not changed [and] will not change,” adding that the president would veto an extension of the Bush tax rates on the wealthy.

Obama is expected to continue to make his case for the one-year extension over the next couple of days, sitting for interviews with local television anchors from more than a half-dozen cities on Monday and jetting to Iowa on Tuesday.

Monday’s address comes on the heels of Obama’s campaign strategy to portray Romney as an out-of-touch millionaire who can’t identify with middle-class Americans.

“The next four years, we’re going to have to undergo comprehensive tax reform. Is someone who has sheltered their income taxes in Switzerland, the Caymans and Bermuda really someone who’s going to get under the hood and get us to a place of tax fairness?” Obama campaign senior adviser Robert Gibbs said Monday on MSNBC.

—This story was posted at 12:28 p.m. and updated at 1:41 p.m.