President Obama is setting the stage for another tax battle with Republicans as lawmakers signaled on Sunday a worsening deadlock in Congress over how to tackle critical fiscal deadlines looming at year's end, including deciding whether to extend tax cuts for the wealthiest Americans.
Obama plans to call for a one-year extension of the Bush-era tax cuts for people making less than $250,000 on Monday in a Rose Garden announcement, The New York Times
reports. House GOP leaders want to extend the cuts permanently for middle- and -upper income people, and a vote is expected in the House later this month.
And the move potentially puts Obama in a position to oppose Democratic leaders including Representative Nancy Pelosi and Sen. Charles E. Schumer who want to extend the cuts for everyone earning up to $1 million. But Obama, facing a tough re-election fight with increasingly bad economic numbers, is hoping the move will make Republican leaders appear inflexible.
In the meantime, a scenario known by economists as the "fiscal cliff" could unfold at the end of the year. The historically low tax rates first enacted under Republican former President George W. Bush in 2001 and 2003 are set to expire at the end of the year if Congress fails to act, as are jobless benefits for the long-term unemployed and a temporary payroll tax cut.
In addition, $1.2 trillion in across-the-board reductions in spending on federal programs would begin to phase in as a result of Congress' failure late last year to find a comprehensive deal to cut the budget deficit.
The United States also is expected to hit the $16.4 trillion statutory limit on its debt sometime between the November 6 U.S. election and the end of the year. If Congress fails to raise it, it would lead to a U.S. default.
Robert Gibbs, a senior adviser to President Obama's re-election campaign, said the president was "100 percent committed" to allowing the Bush-era tax cuts for Americans making $250,000 and above to expire at the end of the year while keeping in place tax cuts for middle-income people.
"We should protect the tax cuts for the middle class and we should let tax cuts for millionaires and billionaires expire," Gibbs told CNN's "State of the Union," adding that wealthy Americans should "begin to pay their fair share."
Republicans argued against allowing any of the Bush-era tax cuts to disappear.
Senate Republican Leader Mitch McConnell, also speaking on "State of the Union," said, "You know, what we ought to be doing is extend the current tax rates for another year with a hard requirement to get through comprehensive tax reform one more time."
Republicans control the House of Representatives and Obama's fellow Democrats control the Senate. The deadlock over the fiscal path forward comes months before Obama seeks re-election against Republican challenger Mitt Romney in November.
Representative Tom Price, a member of the House Republican leadership, said the House would pass Republican legislation before the end of July to keep tax rates at current levels for another year - preserving the Bush-era cuts.
Price said on the "Fox News Sunday" program that Romney supports that move "because he believes that will stimulate the economy and provide certainty out there in the job market."
Representative Xavier Becerra, a member of the House Democratic leadership, said Democrats would not support any measure that did not address the nation's fiscal challenges on a long-term basis.
"Those are bills to nowhere," Becerra said, referring to the House Republicans' legislation to extend the Bush tax cuts. "Tom knows it won't become law. We need to work together to come up with a real proposal that can pass both houses and get signed by the president."
"It's time for us to do something, rather than work against each other," Becerra said on "Fox News Sunday."
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