President Barack Obama said he plans to offset the $447 billion cost of his new jobs plan by abolishing tax breaks for wealthy Americans, prefiguring a clash with Republicans who have opposed similar measures in the past.
During a Monday afternoon appearance in the White House Rose Garden, Obama exhorted Congress to put aside partisan differences and pass the American Jobs Act. But aides also revealed that the plan would cap itemized deductions for individuals who earn more than $200,000 a year and families that earn more than $250,000, close oil and gas loopholes, tax the interest earned by hedge fund managers as regular income rather than at lower capital gains rates, and change tax rules on corporate jet depreciation.
Office of Management and Budget Director Jack Lew said that those measures would cover the cost of the American Jobs Act, with the limit on tax deductions alone generating some $400 billion in savings. Lew said the 12-member congressional supercommittee, tasked as part of the debt ceiling negotiations with finding $1.2 trillion in savings, could adopt Obama's proposals to pay for the jobs plan or come up with an alternate way to cover the cost.
By tethering the job creation proposal to increased tax revenue, Obama is executing a risky political maneuver. Republicans have steadfastly opposed raising taxes on the wealthy, but appear tentatively ready to work with the president on job creation after the dysfunction that paralyzed Congress during the debt ceiling negotiations and sent voter disapproval ratings soaring.
It would be fair to say this tax increase on job creators is the kind of proposal both parties have opposed in the past, Brendan Buck, a spokesman for House Speaker John Boehner, R-Ohio, told Reuters. We remain eager to work together on ways to support job growth but this proposal doesn't appear to have been offered in that bipartisan spirit.
Republicans had signaled their support for discrete pieces of the jobs bill, including measures to free up infrastructure improvement funding and tax relief for small businesses. But they also expressed misgivings about supporting the bill, calculating that it could squander their election-year advantage of faulting Obama for an ailing economy.
Obama is on the ropes. Why do we appear ready to hand him a win? an anonymous senior House Republican aide told Politico. I just don't want to co-own the economy by having to tout that we passed a jobs bill that won't work or at least won't do enough.
The president denounced that sentiment on Monday, characterizing it as the notion that they are not going to try to do what's right for the American people because it's not convenient for their politics.
The next election is 14 months away, Obama said. The American people do not have the luxury of waiting 14 months for Congress to take action.