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Pelosi parts from Obama on Bush tax rates, urges extension for those making under $1M

 

House Democratic Leader Nancy Pelosi just pulled her caucus well to the right of President Obama, as she dramatically broadened the scope of her proposal for extending the Bush-era tax cuts. 

The White House, since Obama took office, has called for those tax rates to be extended only for households making less than $250,000 a year. The president wants the rates to expire for everybody else. 

But Pelosi, in a letter to House Speaker John Boehner, upped that threshold to $1 million. She urged Boehner to schedule a vote "as early as next week" to extend the "middle-income tax cuts" -- which she apparently is defining as those affecting households that make less than $1 million. 

"We must ask the very wealthiest Americans to pay their fair share. Democrats believe that tax cuts for those earning over a million dollars a year should expire and that we should use the resulting revenues to pay down the deficit," she wrote. "By ensuring that the middle-income tax cuts do not expire, we will put money into the pockets of American consumers, saving the typical middle-income family thousands of dollars per year." 

The letter marked a split between how Pelosi and how Obama define middle class. 

One senior Republican aide noted "how big a shift this is" after the letter was made public. It's a shift that could make it easier for Democrats from wealthier areas to support the party position. 

The president came under fire from Republicans in the last Bush tax cut debate for describing households making $250,000 as wealthy and threatening to let their cuts expire. Ultimately, the rates for everybody were extended -- but that extension expires at the end of 2012 if Congress does not act. 

Pelosi's letter adds renewed urgency to that debate, particularly after the Congressional Budget Office warned the country could hit a "fiscal cliff" if the tax cut expiration and other sweeping changes go into effect as scheduled in 2013. 

The White House, though, is standing by its position on the tax cuts and its definition of middle class. 

"The president has been clear that Congress must extend the tax rates for all families making less than $250,000 a year and let the rates for the very wealthiest expire at the end of the year," White House spokeswoman Amy Brundage said. "The question now is whether Republicans in Congress will vote to give millions of middle-class families the confidence that they won't see their taxes go up at the end of the year, or whether they will continue to hold the middle class hostage so they can extend big tax cuts for the very wealthiest Americans that our nation can't afford." 

House Republicans also aren't backing off their position -- that the tax rates should be extended for all. 

"Speaker Boehner has already announced that the House will act to stop the tax hike on every American taxpayer," Boehner spokesman Michael Steel said.

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