Former president Bill Clinton caused additional headaches for the Obama campaign on Tuesday when he told CNBC that he wouldn't have a problem with Congress temporarily extending all the Bush tax cuts, which are due to expire at the end of the year.
Clinton went on to insist that President Obama should not sign off on legislation that would extend the top end tax cut rates permanently, a concession that Republicans have demanded. In that regard both he and Obama are on the same page: They both believe the high-end Bush tax cuts need to be de-coupled, extended for the middle and lower classes and ended for the upper earners. But Clinton's insistence that he would have "no problem" extending all of the tax cuts for some amount of time puts the Obama campaign in an awkward position. In this hyper-political climate, Republicans were quick to pounce on the daylight between the current and former Democratic president.
The White House is readying for a tax cut showdown this summer. House majority leader Eric Cantor (R-Va.) indicated the House will vote on extending tax cuts before its August recess.
A Congressional Budget Office report released last month warned that the country may be thrown into a recession if the Bush tax cuts expired and scheduled spending cuts took effect as planned.
Clinton emphasized his opposition to the permanent extension of the Bush tax cuts, but conceded they might need to be temporarily renewed until the country gets out of what he called a recession.
"What I think we need to do is find some way to avoid the fiscal cliff, to avoid doing anything that would contract the economy now, and then deal with what's necessary in the long term debt-reduction plans as soon as they can, which presumably would be after the election," he said.
"I don't have any problem with extending all of it now, including the current spending levels." But the tax cuts are already set to be in place through the end of the year -- after the election -- and so Clinton's extension would take them further.
A spokesman for House Speaker John Boehner, Michael Steel, quickly pounced on Clinton's comments. "The fact that former President Clinton supports stopping all of the tax hikes scheduled for January 1 is very, very big news," he said, according to Politico.
This is not the first comment by Clinton that could pose problems for the Obama campaign. During a CNN appearance last week, Clinton praised Romney's work at Bain as "sterling," and questioned the strategy of criticizing private equity. Clinton himself dabbled in private equity.
In a sign of the new media landscape, Mitt Romney's campaign launched a parody Bill Clinton twitter account, highlighting comments by the former president that seemed to undercut Obama.
A full transcript of Clinton's remarks on the Bush tax cuts are included below, via CNBC:
MARIA BARTIROMO: So what about this upcoming fiscal cliff? Because a lot of people are worried and the markets certainly have been reacting to the-- to the idea that these Bush tax cuts will expire at year end along with the spending programs that will expire. Should those programs and those tax cuts be extended?
PRES. BILL CLINTON: What I think they should do is find a way to keep the expansion going. And I think the-- as weak as it is here, you know, unemployment in the euro zone I think is 11%. And-- Germany's doing well but the-- and a lot of the smaller countries are doing extremely well, many of which are not in the euro.
But they're trying to figure out a way to promote growth. And what I think we need to do is to-- find some way to avoid the fiscal cliff, to avoid doing anything that would contract the economy now, and then deal with what's necessary in the long-term debt reduction plan as soon as they can, which presumably will be after the election.
MARIA BARTIROMO: So does that mean extending the tax cuts?
PRES. BILL CLINTON: Well, I think what it means is they will have extend-- they will probably have to put everything off until early next year. That's probably the best thing to do right now. But the Republicans don't want to do that unless he agrees to extend the tax cuts permanently, including for upper income people.
And I don't think the president should do that. That's going to-- that's what they're fighting about. I don't have any problem with extending all of it now, including the current spending level. They're still pretty low, the government spending levels. But I think they look high because there's a recession. So the taxes look lower than they really would be if we had two and a half, 3% growth. And the spending is higher than it would be if we had two and a half, 3% growth because there are so many people getting food stamps, so many people getting unemployment, so many people are Medicaid.
But-- the real issue is not whether they should be extended for another few months. The real issue is whether the price the Republican House will put on that extension is the permanent extension of the tax cuts, which I think is an error.
UPDATE (9:05 p.m. ET): Clinton spokesman Matt McKenna released a statement on the former president's CNBC appearance.
Two questions have been raised regarding President Clinton's interview on CNBC today. First, on extending the Bush tax cuts, as President Clinton has said many times before, he supported extending all of the cuts in 2010 as part of the budget agreement, but does not believe the tax cuts for the wealthiest Americans should be extended again. In the interview, he simply said that he doubted that a long-term agreement on spending cuts and revenues would be reached until after the election. Second, on the current condition of the economy, he said at the top of the interview that the main goal for those in Washington was "to keep the expansion going." Later, in the interview, he said government spending levels were higher and revenues were lower than they would normally be because there was a recession and we're still living with the aftermath of it. It's obvious since we've had 4.3 million new private sector jobs in the last 27 months that we're not in a recession, even though we'd all like growth to be higher.
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