Jobs Report Becomes Latest Fodder in Fiscal Debate

Mr. Boehner, meeting with reporters, declined to rule out a rise in the top income tax rate below the level President Obama wants, only to reiterate later that his opposition to tax rate increases remained unchanged. That suggested a possibility that although he opposes higher tax rates, they could still end up in a final package, given enough compromise by the White House on spending.

“There are a lot of things that are possible to put the revenue that the president seeks on the table,” Mr. Boehner said when asked about an increase in the top tax rate short of the 39.6 percent level of the Clinton era. “But none of it’s going to be possible if the president insists on his position, insists on ‘my way or the highway.’ ”

Mr. Boehner later released a statement saying: “As I’ve said many, many, many times: I oppose tax rate increases because tax rate increases cost American jobs. That has not changed, and will not change.”

Publicly neither side indicated progress toward a deal ahead of the end-of-the-month deadline for averting a series of automatic tax increases and spending cuts. But talks continued. Representative Nancy Pelosi of California, the House Democratic leader, met with Mr. Obama at the White House for private consultations.

Mr. Boehner put the onus on the president to make the next move. “This isn’t a progress report, because there’s no progress to report,” he told reporters outside his suite of offices in the Capitol. “The White House has wasted another week.”

The jobs report gave both sides a new talking point to press for compromise. The Labor Department on Friday said the economy added 146,000 jobs last month, and the unemployment rate fell to 7.7 percent from 7.9 percent in October. Those numbers were unexpectedly bright, given the impact of Hurricane Sandy and business fears about the potential fiscal crisis next month.

Mr. Boehner continued to say that his opposition to allowing the top two rates to rise from 33 percent and 35 percent to 36 percent and 39.6 percent stems from fears of the impact on small businesses that pay ordinary income tax rates, not the corporate tax rate. About 97 percent of small businesses do not turn enough profit to be affected, but Republicans note that more than half of small-business income — from the most profitable businesses, partnerships and limited liability corporations — would be hit by the increases.

“The risk the president wants us to take with increases of tax rates will hit many small businesses that create 50 to 70 percent of the jobs in our country,” Mr. Boehner said. “That’s the whole issue.”

Ms. Pelosi countered that after 33 straight months of gains in private-sector jobs, employment was now threatened by Republican refusal to pass Senate legislation extending Bush-era tax cuts for 98 percent of American households — but not the top 2 percent.

“The only obstacle standing in the way of middle-income tax relief are Republicans’ unwillingness to ask the top 2 percent to pay their fair share,” she said.

Senior House Republican aides say they will not move an inch more toward Mr. Obama unless he spells out immediate spending cuts for 2013. Even if Republicans agreed to the president’s request on higher tax rates for the rich, a deal would still be about $42 billion short of the $110 billion “down payment” Republican leaders need to pass legislation canceling next year’s across-the-board spending cuts.

“It would be an embarrassment to move further when the president is moving the opposite way,” a senior Republican leadership aide said.

Meanwhile, cracks emerged in the pressure campaign the White House is trying to assemble. A coalition of philanthropies refused publicly on Friday to join White House-organized efforts to raise the heat on Republicans in a show of moxie that portends poorly for any effort next year to tackle one of the largest tax benefits for the rich, the charitable deduction.

The coalition, the Alliance for Charitable Reform, said in a statement that it “refuses to go along with the White House’s request for charities to insert themselves into the debate over tax rates.”

“Our priority is to preserve and protect the charitable deduction,” it said. “Throughout his first term, President Obama has proposed reducing itemized deductions, including the charitable deduction, in multiple budgets and other spending proposals, and never voiced concern over the impact of his plan on the charitable sector.”

Alison Hawkins, a spokeswoman for the alliance, said White House officials had asked nonprofits to publicly oppose a Republican proposal to cap tax deductions at $25,000 instead of raising rates, and instead to press for higher upper-income tax rates to save government programs that partner with charities. Administration officials wanted charitable organizations to write letters to the editor and opinion articles and mount social media campaigns to amplify Mr. Obama’s message.

Such a public unmasking of a White House request is highly unusual, but charities have been at odds with the president on taxes ever since his first year in office, when he proposed capping tax deductions at 28 percent. Taxpayers in the 35-percent tax bracket are currently allowed to deduct 35 percent of charitable giving from their taxes, a policy the White House maintains is unfair to middle-class taxpayers in a lower bracket.

The 28-percent bracket was part of the president’s deficit-reduction offer last month.

Article source: http://www.nytimes.com/2012/12/08/us/politics/jobs-report-becomes-latest-fodder-in-fiscal-debate.html?partner=rss&emc=rss