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Obama Won't Extend Bush Tax Cuts Again: Pledge To House Dems

Obamataxes

First Posted: 06/02/11 10:14 PM ET Updated: 08/02/11 06:12 AM ET

WASHINGTON -- In a meeting with House Democrats on Thursday, President Obama stressed that his administration would draw a firm line on taxes and revenues both in the deficit- and debt-reduction debates and in the buildup to the 2012 elections.

According to multiple meeting attendees, the president reiterated on several occasions that a deal to raise the country's debt ceiling would include revenue increases, even as Republican lawmakers insist that such a deal should be restricted to spending cuts and entitlement reforms.

"I've been very clear about revenues as a part of a balanced package, and I will continue to be," said Obama.

Underscoring his commitment, Obama noted taxes would be a defining area of contrast with Republicans on the campaign trail. He insisted that he would not compromise again on his position that the tax rates for the top earners be raised to pre-Bush levels.

"'Whatever we agree on, we are still going to have plenty to argue about in 2012,'" a senior administration official said, paraphrasing the president. "'I've said I'm not going to renew the tax cuts for the top two percent. We might agree on tax reform or simplification, but on the upper-income tax cuts we are just going to have to agree to disagree.'"

Two House Democrat attendees confirmed the substance of those remarks. One of those lawmakers, who agreed to speak about the event on condition of anonymity, said that members were "worried that the Obama Administration would cave [in debt ceiling negotiations] because Republicans were willing to default on our debt if they don’t get what they want."

The President responded by saying it was vital to have revenues as part of the mix, stressing that a budget can't be balanced on non-defense discretionary spending or the "backs of the most vulnerable." Obama added, according to the member, that, "he would not support extending the Bush tax cuts for the top two percent again no matter what hostages Republicans took."

That line in the sand was greeted warmly by attendees, many of whom were disillusioned with the administration's decision to cut a deal with congressional Republicans in December 2010 that allowed all of the Bush tax cuts to continue.

The politics now are notably different. As pressure has mounted for lawmakers to make major cuts, both to discretionary spending and entitlement programs, Democrats have turned to raising revenues as a partial budget substitute. As a Democratic source briefed on Thursday's meeting relayed, House Minority Leader Nancy Pelosi was adamant that the party not cut Medicare benefits. A recent upset victory in New York's 26th district has seemingly provided the party with the type of template to win the tax-and-spend debate.

At the Thursday White House meeting, newly-minted member of Congress Kathy Hochul (D-N.Y.) received an enthusiastic welcome. Addressing both the caucus and the president, she explained how she won the office not just by defending Medicare, but by speaking out about tax equity.

"She talked about how she had been attacked on taxes but won anyway," said the senior administration official. "She said she would talk to small business owners about the fact that they pay a higher rate than General Electric."

The tone of the more than hour-long discussion, the official said, was positive, with the president ending the affair by referring to the party as a "family." Other attendees, however, said that the discussion was not without its points of friction.

As The Huffington Post's Michael McAuliff reported, Obama largely rebuffed requests from congressional Democrats to be more forceful in deficit and debt discussions with Republicans, noting that the office he holds requires a more delicate touch:

"He was a little testy with the [Rep. Henry] Waxman question. Essentially, Mr. Waxman was urging him to fight more," one legislator said. "The president reminded folks that he's the president sitting in that chair and he knows how to negotiate."

Obama also told the assembled Democrats not to count on more fiery rhetoric from the Oval Office.

"He said, 'There's a difference between me and a member of Congress,'" another lawmaker said, paraphrasing the president as saying: "When I say something the markets react, all of society reacts, other countries react. I've got to be careful with what I say. I can't just say it for brinkmanship. I've got to say it in a way so that I get what I want said, but I don't upset markets and so on."

"He said it like this," the Democrat elaborated: "'When Eric Cantor says something, Eric Cantor says something. When I say something, markets and countries and people react in a way where it could cause us more problems than we have now.'"

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