Dem Leader Says Government Can't Afford Lower Taxes On The Middle-Class

Hoyer Says Middle-Class Tax Cuts May Be Unaffordable
By James Rowley
Bloomberg
Jun. 22, 2010

June 22 (Bloomberg) -- U.S. House Majority Leader Steny Hoyer said permanently extending former President George W. Bush’s tax cuts for middle-class wage earners may no longer be affordable as the U.S. tries to curb its growing debt.

Bush’s 2001 and 2003 tax cuts for all income levels expire at the end of this year. For those applying to middle-class earners, lawmakers must discuss “whether we can afford to permanently extend them before we have a real plan for long-term deficit reduction,” Hoyer said today in a speech in Washington.

Still, Hoyer, a Maryland Democrat, predicted that Congress wouldn’t raise taxes on “working Americans” until the economy improves.

In February, President Barack Obama said he was “agnostic” about raising taxes on households making less than $250,000 a year as part of a broad effort to rein in the budget deficit. He repeatedly promised during the 2008 presidential election campaign not to raise taxes on individuals making less than $200,000 and households earning less than $250,000 a year.

Hoyer said tax increases were part of deficit-reduction plans enacted by Congress during the administrations of both presidents George H.W. Bush and Bill Clinton. The tax increases that Clinton proposed “faced predictions of disaster, but he helped to unleash historic prosperity and budget surpluses,” Hoyer said.

It’s ‘Official’

On the Senate floor, Republican Leader Mitch McConnell of Kentucky said, “It’s now official. Top Democrats are signaling their intention to raise taxes on the middle class” that would “break” Obama’s campaign pledge not to raise taxes for households earning less than $250,000.

In his speech, Hoyer said Congressional Budget Office Director Douglas Elmendorf had predicted that extending the Bush tax cuts without other policy changes would “put us on a path towards a publicly held debt equal to 90 percent” of the economy by the end of the decade.

“Raising revenue is part of the deficit solution, too,” in addition to reducing spending, Hoyer said. “At a minimum, the House will not extend the tax cuts benefiting taxpayers” with household incomes of more than $250,000, he said.

Later, at his weekly news conference, Hoyer said that with the economy still in a recession, “I don’t think this is a time to increase taxes on working Americans. I don’t think we will do that.”

Temporary Extension

Hoyer’s comments left open the possibility that Congress would vote to temporarily extend the Bush tax cuts for middle- class Americans. “No decision has been made on exactly what to do,” he said. He wouldn’t say whether Congress would act before or after the November elections.

During his speech, Hoyer said a budget agreement this year must include “permanent solutions” to the estate tax, which lapsed last year, the alternative-minimum tax for middle-class wage earners and Medicare reimbursements for doctors.

A commission Obama appointed to study ways to curb the growth of government debt should produce a plan later this year “that cuts spending and looks at revenue when the economy recovers,” Hoyer said. The commission is not scheduled to make its recommendations until December, a month after the congressional midterm elections.

“It isn’t possible to debate and pass a realistic long- term budget until we’ve considered the bipartisan commission’s deficit reduction plan,” Hoyer said.

The non-partisan Congressional Budget Office projected that the budget deficit will reach $1.35 trillion this year, more than 9 percent of the economy.

Hoyer said he was pleased that Obama “made clear that everything, revenues included, should be on the commission’s table.”

--With assistance from Rich Miller in Washington. Editors: Laurie Asseo, Don Frederick

To contact the reporter on this story: James Rowley in Washington at [email protected]

To contact the editor responsible for this story: Mark Silva at [email protected]