Former President Bill Clinton stood alongside President Barack Obama at a news conference and endorsed Obama’s deal with congressional Republicans to extend the Bush-era tax cuts and unemployment benefits.
The two men appeared after a private meeting Friday, in which the two reportedly discussed Clinton’s experience in 1994 after Democrats lost their majority in Congress in the aftermath of a stinging midterm election. The main topic of conversation, however, according to Obama, was the Bush tax cut extension.
“Obviously, there’s a big debate going on about taxes, and about the need to grow the economy and to create jobs,” said Obama. “And just about every day this week, I’ve been making an argument as to why the agreement that we’ve struck to provide billions of dollars in payroll tax cuts that can immediately help rejuvenate the economy, as well as tax cuts for middle-class families, unemployment insurance for folks who desperately need it, credits for college, Child Tax Credits, as well as a range of business investments credits are so important to make sure that we keep this recovery moving. I just had a terrific meeting with the former President, President Bill Clinton. And we just happened to have this as a topic of conversation. And I thought, given the fact that he presided over as good an economy as we’ve seen in our lifetimes, that it might be useful for him to share some of his thoughts.”
Clinton admitted up front that extending the current tax rates would benefit him personally, as he earns well over $250,000 a year. “I want to make full disclosure I make quite a bit of money now, so the position that the Republicans have urged will personally benefit me,” he said. “And on its own, I wouldn’t support it because I don’t think that my tax cut is the most economically efficient way to get the economy going again. But I don’t want to be in the dark about the fact that I will receive the continuation of the tax rates.”
Clinton went on to defend the tax cut compromise struck by Obama only a few days earlier with the Republican leadership in Congress. Senate Majority Leader Harry Reid, D-Nev., introduced a bill Thursday based on the framework of the agreement struck by Obama and the Republicans, and the bill is expected to come up for a vote in the Senate on Monday and pass (see Reid Introduces Bush Tax Cut and Unemployment Extension Bill).
CCH is providing a guide to the tax ramifications of the legislation in a Special Tax Briefing document here.
However, Democrats have threatened to vote down the bill in the House unless revisions are made, particularly to increase the 35 percent estate tax rate, with a $5 million exemption, agreed to by Obama (see House Democrats May Block Tax Cut Bill).
“The agreement, taken as a whole is, I believe, the best bipartisan agreement we can reach to help the largest number of Americans, and to maximize the chances that the economic recovery will accelerate and create more jobs, and to minimize the chances that it will slip back, which is what has happened in other financial collapses,” said Clinton. “That’s what Japan faced, and it’s something that we have to avoid in America.”
Clinton argued that the 13-month unemployment extension that Obama had insisted on including as part of the deal would be spent and would bolster the economy. The former President also pointed to the conversion of the Making Work Pay Tax Credit into a $120 billion one-year payroll tax cut of 2 percent.
He said the payroll tax relief would be, “according to all the economic analyses, the single most effective tax cut you can do to support economic activity. This will actually create a fair number of jobs. I expect it to lower the unemployment rate and keep us going.”
Clinton also pointed to the business tax credits that would be available to encourage more energy-related jobs to be created in the U.S.
“I’ll remind you, just in the last two years, there have been 30 high-powered battery factories either opened or presently being built in America, taking us from 2 to 20 percent of the world’s share of that,” he said. “And we’re going to probably be at 40 percent by 2014. This is a really important thing, bringing manufacturing back to America, because it’s a huge multiplier to create new jobs.”
Clinton later pointed to several factories that Chinese companies recently announced would be built in Nevada and Texas for building LED lights and wind turbines, and he credited the tax incentives for encouraging the Chinese to build them here.
“So in my opinion, this is a good bill,” he said. “And I hope that my fellow Democrats will support it. I thank the Republican leaders for agreeing to include things that were important to the President. There is never a perfect bipartisan bill in the eyes of a partisan. And we all see this differently. But I really believe this will be a significant net-plus for the country. I also think that in general a lot of people are heaving a sigh of relief that there’s finally been some agreement on something. But don't minimize the impact of the unemployment relief for working families, of the payroll tax relief, and of the continuation of the incentives to grow jobs, which will trigger more credit coming out of the banks.”
Obama urged passage of the tax cut and unemployment extension agreement in his weekly address on Saturday.
“If Congress doesn’t act, tax rates will automatically go up for just about everyone in our country,” he said. “Typical middle-class families would end up paying an extra $3,000. That’s unacceptable to me. Not when we know that it’s the middle class that was hit the hardest by the recession. And not when we know that taking this money out of the pockets of working people is exactly the wrong thing to do to get our economy growing faster. Economists tell us that this tax hike on working families could actually cost us well over a million jobs.”
Obama admitted that the deal with Republicans was “by no means perfect.”
“As with any compromise, everybody had to live with elements they didn’t like,” he said. “But this is a good deal for the American people. The vast majority of the tax cuts in this plan will help the middle class, including a new cut in payroll taxes that will save the average family about $1,000. And as this plan is debated in Congress, what I want to make clear is the real difference it will make in people’s lives.”
Senior White House advisor David Axelrod predicted Sunday on ABC’s “This Week with Christiane Amanpour” that the bill would ultimately pass once Democrats unite behind it.
“I believe there will be a coming together around it,” he said. However, he cautioned against lawmakers making major revisions to the bill. “I’m not here to negotiate,” he said. “We have a framework, we have an agreement. I don’t anticipate it’s going to change greatly.”
Axelrod indicated that enough Republicans would vote for the bill to make up for Democratic opponents. “I think we’re going to get strong support on both sides of the aisle,” he said. “I respect people who are unhappy. We share their view on upper-income tax cuts and the estate tax that was a part of the deal, odious as it may be, in order to get all the good things that come with it. That’s the nature of compromise.”