Obama Takes the Economic Fight to Republicans

(Sept. 8) -- It is still the economy, stupid.

In case the American electorate forgot that bellicose mantra, which helped Bill Clinton win the presidency in 1992, it has re-emerged as the most resonant political truth this midterm election year.

Republicans are slamming the governing Democrats for the country's persistently high unemployment, and President Barack Obama is hitting back with charges that the GOP caused the recent recession in the first place and is blocking the economic remedies he wants to get through Congress.

Today, Obama plans to introduce a new slate of job-creation proposals in Cleveland, making no secret of the fact that this is where the House Republican leader, John Boehner of Ohio, laid out the Republican economic agenda last month.

And though the White House, like the nonpartisan Federal Reserve, has been scrambling for months for ways to get American businesses to hire more, the sudden urgency of new measures rolled out this week seems unmistakably linked to the Democrats' tumble in the polls -- a connection uncomfortable for the White House.

"Look, we're in the political season, we get that," White House spokesman Robert Gibbs said Tuesday as he was repeatedly asked about the timing of the new plans. But "the president isn't here to solve the nation's problems on a political calendar. He's here to solve the nation's problems as they exist."

Still, the job-creating proposal Obama offered on Labor Day, a $50 billion plan to amplify federal funding for roads, rail lines and runways, came fused with repeated references to Boehner and a jab at Republicans as a party more interested in scoring political points than solving problems.

The centerpiece of today's proposals is expected to be a "research and experimentation" tax credit for businesses that would let them write off most equipment purchases and development costs through the end of next year. The idea is to generate capital spending that in turn will generate new jobs. Though it would cost $180 billion to $200 billion up front, the cost in lost tax revenue would drop to $30 billion over 10 years as it catches up with normal depreciation deductions, making it an easier sell amid the current heightened political importance of the budget deficit.

Moreover, it's an idea Republicans have embraced in the past and aren't likely to oppose now.

"These aren't necessarily bad proposals," Boehner said Tuesday. But he accused the Obama administration of "missing the big picture," especially when it comes to differences over extension of the George W. Bush-era tax cuts.

Those tax cuts loom as one of the biggest campaign issues as Congress comes back from its summer recess: Obama and Democratic leaders on Capitol Hill want to extend the cuts for nearly all taxpayers, but want to let the tax cuts for households earning more than $250,000 a year expire. Republicans argue that all the Bush tax cuts should be extended.

Absent from both parties' arguments is mention that the expiration for these tax cuts was only put in place to get around deficit objections when they were first enacted. But if Congress doesn't act on them now, taxes will rise across the board starting next year.

Asked if Obama might be willing to compromise on the tax cuts for the wealthiest Americans, Gibbs noted that "roughly, for a millionaire, that's $100,000 tax cut. I don't think the president believes that we are a $100,000 tax cut from a millionaire away from an economy that works for families that are making $40,000 a year."

And this is likely to be a major theme for Obama today, and on the campaign trail through the Nov. 2 vote.

The notion that the wealthiest Americans are thriving at a time when a malaise grips much of the economy is one that worked for Obama earlier this year as he built support for Congress' overhaul of banking regulation by tying Republicans to Wall Street.

A study from the Center for Responsive Politics released today could help Obama's argument: It finds that political donations from Wall Street, banks, insurance companies and the real estate sector have "dramatically" favored Republican candidates this year, in a switch from last year when Democrats took control of the White House and Capitol Hill.

But that may be a less-resonant argument than Republicans' insistence that Obama has had his chance to turn the economy around and has fallen short. Surveys suggest American voters have run out of patience.

The latest Wall Street Journal/NBC poll indicates approval for Obama's handling of the economy has fallen to 39 percent, and that 61 percent think the country is generally on the wrong track.