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Obama reportedly agrees to allow rich bigger tax cut than middle class

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Update at bottom: White House suggests that tax cuts for wealthy will not be permanent

David Axelrod, the senior adviser to President Barack Obama, says that the White House has conceded to Republicans in giving into tax cuts for the wealthy, a legacy of a Bush-era policy to reduce federal taxes for various income classes. He doesn’t, however, say that the rich should enjoy the tax cuts forever, but the decision to agree to a temporary extension of the cuts may be a moot point, because it likely will simply push the issue to a future presidential term.

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In an interview with the Huffington Post, which the website described as “candid,” Axelrod served news progressives will be less than excited to hear.

“We have to deal with the world as we find it,” Axelrod said during the interview. “The world of what it takes to get this done.”

Getting what done appears to mean extending tax cuts for those who make less than $250,000 by keeping the tax rate for those who make more nearly five percent less.

“There are concerns,” he added, that Congress will continue to extend the tax cuts indefinitely, and keep pushing the ball to the next president’s court by making the cuts temporary, as Bush did. “But I don’t want to trade away security for the middle class in order to make that point.”

Using Republicans’ language on the cuts, Axelrod referred to the ending of the tax cuts, which were designed to be temporary and expire at the end of this year, as a “tax increase.” Between 2001 and 2003, President George W. Bush, along with a Republican-led Congress, reduced income taxes across the board, though the decrease was more significant at the lowest and highest tax bracket.

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“Between 2001 and 2003, the Bush administration instituted a federal tax cut for all taxpayers,” Wikipedia notes, according to the Brookings Institution. “Among other changes, the lowest income tax rate was lowered from 15% to 10%, the 27% rate went to 25%, the 30% rate went to 28%, the 35% rate went to 33%, and the top marginal tax rate went from 39.6% to 35%.”

“We don’t want that tax increase to go forward for the middle class,” Axelrod was quoted as saying. He didn’t explain why the Administration believes that those in the highest income tax bracket should get more relief.

“Although the president ‘took the position he felt was the right position’ — favoring a continuation of the cuts only for families earning up to $250,000 — Axelrod portrayed this ‘optimal’ stance as unrealistic in the lame-duck Congress that begins next week,” Huffington’s Sam Stein and Howard Fineman wrote.

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Axelrod also dished on President Barack Obama’s new healthcare law, saying the president would veto any threats to repeal it.

“I’m not going to prejudge what they are going to do,” Axelrod remarked of Republican opposition. “But I will tell you this — we are firm in our commitment, we are willing to work with people to improve this plan we are not going to stand for those who want to undermine it and destroy it.”

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“The notion of spending the next two years fighting over this, I think, is a complete misreading of what the American people want,” he added. “They want us to focus on the economy. They don’t want us to fight the battles of the last two years. But we are not going to stand by and go back to allowing people with preexisting conditions to be discriminated against, go back to the situation where people can be thrown off their insurance simply because they become seriously ill or you can’t get on your parents’ insurance after the age of 20. There are so many things that are just central.”

Update: White House says no news in tax cut story, but won’t deny ending tax cuts for rich

In response to the earlier story, Axelrod says, “There is not one bit of news here. I simply re-stated what [Obama] and [his press secretary] have been saying. Our two strong principles are that we need to extend the tax cuts for the middle class, but we can’t afford a permanent extension of the tax cuts for the wealthy.”

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Via The Washington Post’s Greg Sargent:

The question remains, though, whether the White House will hold fast to Obama’s demand last week that the extension of the tax cuts for the middle class remain permanent while extending the high end ones temporarily. The main sticking point is that Republicans won’t allow the two categories to be extended for different durations, because that would force them to push for just an extension of the cuts for the rich later.


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