Liberal Groups Pressuring Obama To Reject Preventing Tax Increases In January 2011

When Congress returns next week to begin its lame duck session, one of the key issues that needs to be tackled is preventing the massive tax hikes in January. If current tax rates (set by the tax relief packages in 2001 and 2003) are not extended before the end of the year, every American will face a huge tax increase. Republicans have been pushing to make the current tax rates permanent and provide some certainty for job creators, but some Democrats, and President Obama, have resisted.

However, this week the White House sent signals it might be willing to consider extending all the rates. Reuters reported yesterday, “The White House sent more signals on Thursday of the potential for a tax cut compromise with newly emboldened Republicans, who want to extend the cuts for wealthier Americans as well as the middle class. ‘The president has been clear that extending tax cuts for middle-class families is his top priority and he is open to compromise to get that done,’ said White House spokesman Bill Burton.”

Hopefully, the White House is beginning to agree with the several Senate Democrats and over thirty House Democrats who have signaled that they want to prevent any tax increases at the end of the year. In September, Sen. Ben Nelson (D-NE) said, “I support extending all of the expiring tax cuts until Nebraska’s and the nation’s economy is in better shape, and perhaps longer, because raising taxes in a weak economy could impair recovery.” Sen. Joe Lieberman (ID-CT) said, “I don’t think it makes sense to raise any federal taxes during the uncertain economy we are struggling through. The more money we leave in private hands, the quicker our economic recovery will be.” Democrat West Virginia Gov. Joe Manchin, now Senator-elect, said, “I wouldn’t raise any taxes.” And Thirty-one House Democrats wrote to Speaker Nancy Pelosi (D-CA), “Raising any taxes right now could negatively impact economic growth.” Meanwhile, Rep. Gary Peters (D-MI) was even more emphatic: “Extending the 2001 and 2003 tax cuts for all earners is the right thing to do as anything less jeopardizes economic recovery.”

Today, House Speaker Nancy Pelosi (D-CA) in an interview with NPR reaffirmed Democrats’ opposition to stopping the massive tax hike that will hit every American family and small business in less than 50 days.  At the same time, businesses across America continue to speak out against the job-killing uncertainty caused by the tax hike, which is making it impossible for them to plan for the future or create jobs.  Yesterday, the Milwaukee Business Journal highlighted the struggle that job creators are facing.

As an S corporation, Inland Power Group Inc., Butler, would be hurt by higher income taxes, said Don Stacy, executive vice president and a minority owner. Profits at S corporations, partnerships and most limited liability companies are taxed as the owners’ personal income.

“With less income, Inland owners would be less inclined to reinvest money into the company on expenses such as equipment and new hires, Stacy said. … the worst part of the current situation is the uncertainty." … "That uncertainty is causing many business owners to hold off on major decisions," said Doug Pessefall, an attorney with Whyte Hirschboeck Dudek SC in Milwaukee. "Clients want to wait and see what will happen with the tax cuts before they decide how to act," he said.

Yet President Obama is apparently being pulled back from this emerging bipartisan consensus by his far-left base. According to The Washington Post today, “On the heels of the Democratic Party’s huge losses in last week’s midterm elections, liberal activists have begun planning to push President Obama on a series of issues, demanding that he not cede any ground to Republicans. Liberal groups have blasted Obama at times over the past two years as not being sufficiently dedicated to their positions - history that factored into their criticism of the White House on Thursday for signaling that it will compromise with the GOP on the issue of extending tax cuts that are scheduled to expire this year. . . . [The president] has signaled that he wants to find big issues on which to compromise, with an eye toward his reelection campaign in 2012. But that signal has not gone over well with the liberal base. Nor did comments Wednesday by top Obama adviser David Axelrod, who told the Huffington Post that ‘we have to deal with the world as we find it.’ Liberals viewed the remarks as suggesting that the White House would accept a temporary extension of tax cuts for family income above $250,000. (The White House played down the remarks and said no formal decision has been made.)”

The Wall Street Journal adds, “The White House scrambled Thursday to tamp down a burst of anxiety among liberals worried that President Barack Obama would agree to extend Bush-era tax cuts for the wealthiest Americans. Liberal economists and activists were responding to comments senior White House adviser David Axelrod made to the Huffington Post, which reported that Mr. Axelrod said the administration was ready to accept a temporary extension of all such tax cuts, which are due to expire at the end of the year. . . . Liberals jumped in . . . accusing Mr. Obama of capitulating without a fight. . . . White House advisers sought to reassure liberals that Mr. Obama’s position hadn’t changed.”

So will President Obama side with liberals who apparently want to raise taxes on small businesses come January, or with a growing chorus of Democrats in Congress saying now is not the time to raise taxes on anyone?  While Democrats remain steadfast in their unwillingness to end the economic uncertainty and allow small businesses to get back to creating jobs, Republicans are listening to the American people and keeping up the fight to permanently stop all the job-killing tax hikes.

House Republican Leader John Boehner told Bloomberg, " A permanent extension of tax cuts is needed ‘to reduce the uncertainty in America’ that’s chilling business investment and hiring, John Boehner…said today. Asked whether he’s willing to compromise with President Barack Obama on the tax reductions enacted in 2001 and 2003, the Republican leader said he wants the cuts, which expire at the end of this year, to be made permanent for all taxpayers.” ABC News reported that Boehner said that "making the tax cuts permanent, not settling for a temporary extension, will help end the uncertainty that’s stopping employers from hiring more people. … You can’t invest when you don’t know what the rules are, when you don’t know what the tax rates are going to be next year. And that’s why making these permanent will be the most important thing we could do to help create jobs in the country."

Senate Republican Leader Mitch McConnell told Reuters, “While the president and some of his allies in Congress have a strange desire to raise taxes on hundreds of thousands of small businesses across the country, we would welcome the president’s help to extend all the current tax rates so that no one sees a tax hike.”

When Congress returns to Washington next week, Republicans appear ready to fight to stop the job-killing tax hikes as part of the Pledge to America, a new governing agenda designed to help create jobs by cutting spending, stopping the tax hikes, and reforming government.  Republicans have repeatedly called for the enactment of the entire Pledge to America to help our nation’s job creators put the 14.8 million unemployed Americans back to work.

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