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Tags: Economy | Senate | Tax | Obama

Faltering Economy, Senate Revolt on Bush Tax Cuts Don't Faze Obama

By    |   Friday, 23 July 2010 01:54 PM EDT

Struggling to get back on message after a week of battling other controversies, President Obama touted what he called "enormous progress" made on the economy — while ignoring a growing insurgency from Democrats who want to renew the expiring Bush tax cuts in order to stave off a double-dip recession.

Speaking from the West Wing shortly after noon Friday, the president escalated his recent campaign of lambasting Republicans and Wall Street bankers, despite increasing concerns that the anti-business rhetoric discourages job creation.

Citing the Friday report from White House "pay czar" Kenneth Feinberg naming 17 financial institutions that distributed $1.6 billion in executive compensation, Obama excoriated the banks for paying out "lavish bonuses at the height of the financial crisis."

During his five-minute statement, the president again criticized his Republican opponents for "political games."

Looking to fire up the Democratic base for the looming midterms, Obama said of the extension of unemployment benefits: "We finally overcame the procedural blockade of a partisan minority in the Senate to restore unemployment insurance for about 2.5 million Americans who are out of work and looking for a job."

He also delivered a lecture on bipartisanship.

"They didn't send us here to wage a never-ending campaign," he said. "They didn't send us here to do what's best for our political party. They sent us here to do what's best for the United States of America, and all its citizens, whether Democrats or Republicans or independents. In other words, they sent us here to govern."

The president urged Congress to pass the $30 billion small business loan program "without delay and without additional partisan wrangling." That program, which provides a $30 billion fund that banks can tap into to provide loans to small businesses, took a big step forward in the Senate last night. Democrats overcame a GOP filibuster that Obama characterized as "partisan delays."

In his remarks, Obama praised two Republicans, Florida Sen. George LeMieux and Ohio Sen. George Voinovich, for voting to cut off debate, thereby breaking the GOP filibuster.

Obama gave three examples of recent progress made on the economy: The recent passage of the financial-reform legislation, the extension of unemployment benefits, and new regulations he says will crack down on some $50 billion in "improper payments" that the federal government routinely doles out. Obama said the government is even sending checks to people who are no longer alive.

The speech was an effort by the White House to reclaim the media agenda.
The president has been engaged in a whistle-stop tour in recent weeks touting what he calls the success of the $862 billion stimulus package, despite unemployment that continues to linger around 9.5 percent.

But despite high-profile stops in Las Vegas, Nev.; Racine, Wis.; and Kansas City, Mo., the headlines have been dominated by the BP oil spill and the on-again, off-again firing of former USDA employee Shirley Sherrod, whose racially charged statements had been widely misinterpreted.

In some ways, however, Obama's speech Friday was more notable for what it did not address: Growing signs of economic weakness, and clear indications members of his own party are no longer willing to blindly follow his lead on the faltering economy.

On Thursday, the chairman of the Federal Reserve caught some by surprise by announcing he favors preserving the Bush administration's 2001 and 2003 tax cuts, in order to help a faltering U.S. economy.

"In the short term, I would believe that we ought to maintain a reasonable degree of fiscal support, stimulus for the economy,” Bernanke told the House Financial Services Committee. “There are many ways to do that. This is one way.”

Bernanke's statement put him directly at odds with the White House. Treasury Secretary Tim Geithner, White House economic adviser Larry Summers, former Fed Chairman Alan Greenspan, and House Speaker Nancy Pelosi all of whom continue to support Obama's campaign pledge to raise taxes on wealthy Americans whose small- and medium-sized businesses generate many of the nation's jobs.

The administration received more bad economic news earlier in the week, when the Labor Department reported a spike in claims for state unemployment benefits to more than 464,000 last week.

New York Fed President William Dudley told a House panel Thursday that the “road to recovery is turning out to be a bit bumpy.”

Polls suggest the "bumpy" economy portends a very rocky road for Democrats on the ballot in November's midterms. And some congressional Democrats are beginning to balk at some of the president's economic decisions.

Three Senate Democrats — Sen. Kent Conrad of North Dakota, Sen. Ben Nelson of Nebraska, Sen. Evan Bayh of Indiana — have come out in support of GOP proposals to extend the tax breaks enacted under the Bush administration. Not doing so, they fear, could further dampen the economic recovery.

"As a general rule, you don't want to be cutting spending or raising taxes in the midst of a downturn," Conrad said. "We know that very soon we've got to pivot and focus on the deficit. But it probably is too soon to cut spending or raise taxes."

The three senators join at least a half-dozen House Democrats who also have come out in favor of delaying the scheduled tax increases for those earning $250,000 or more annually — a demographic that consists of many small business owners who play a key role in job creation.

Republicans have been arguing for months that raising taxes amidst a struggling economy wracked by high unemployment would be a major mistake.

But Speaker Pelosi, who has stated that unemployment benefits have a stimulus effect on the economy, insists that even during a shaky recover taxes should rise.

“My stance is that the Bush-era tax cuts contributed to the deficit, did not create any jobs, and that they should be repealed,” said the California Democrat.

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Struggling to get back on message after a week of battling other controversies, President Obama touted what he called enormous progress made on the economy while ignoring a growing insurgency from Democrats who want to renew the expiring Bush tax cuts in order to stave...
Friday, 23 July 2010 01:54 PM
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