Obama invokes Clinton in push to raise taxes on top earners despite weak economy

President Obama is shifting his justification for raising taxes on America's top earners, and he's latching onto two words: Bill Clinton.

Obama previously agreed to extend the lower Bush-era tax rates to everyone at a time when the economy was growing at 2.3 percent, arguing the economy was too weak for an increase on anyone.

"Potentially, you'd see a lot of folks losing business, more folks potentially losing jobs," he said in January 2010. "That would be a mistake when the economy has not fully taken off."

Now, with the economy growing more slowly, at 1.5 percent this quarter, he is adamant that the top rates should return to pre-Bush levels.

Obama has frequently argued that top earners need to pay their "fair share" of taxes, but now he is invoking Bush's predecessor to discount the economic impact of such a tax hike.

"All I'm asking is that we go back to the rates that were paid by wealthy individuals under Bill Clinton," Obama said Thursday at a campaign stop in Orlando. "And if you remember, that's when our economy created nearly 23 million new jobs. We created the biggest budget surplus in history. And here's the kicker: it was good for everybody."

He also calls that "our plan," meaning the Democrats' plan of higher taxes on the rich, and said that's the record he is running on.

"We've tried our plan and it worked," Obama said. "That's the difference. That's the choice in this election. That's why I'm running for a second term."

But critics of Obama's plan dispute that the economic landscape of today is comparable to the one in the 1990s.

"There are times when you can raise taxes and have it not hurt the economy. Unfortunately for Barack Obama, this is not one of those times," said Greg Valliere, the chief political strategist at Potomac Research Group, a nonpartisan firm that advises investors. "I think to raise taxes now, as opposed to ... during the Clinton years, would be very ruinous for the economy."

Analysts of all stripes note that the Clinton economy was on fire because of a high-tech and dotcom boom, which eventually burst. But until it did, the economy grew at an average of 3.5 percent a year. The unemployment rate dropped to the 4 percent range, and tax revenues were pouring in.

"We aren't in the 1990s anymore," says Chad Moutray, the chief economist at the National Association of Manufacturers. "We don't have a huge technological boom that's going to continue to propel the economy forward."

And Valliere adds that during the Clinton years, "We had a balanced budget, we had a very accommodative Fed easing rates. Right now, we have no new tech boom, we do not have a balanced budget and the Fed can't cut rates anymore."

Nevertheless, contrary to Obama's earlier warnings, the White House now insists higher tax rates would do nothing to hurt economic growth.

Spokesman Jay Carney told reporters last week that "under President Clinton, marginal rates at that level were in place when we saw this substantial economic growth and job creation."

Officials concede, however, that this economy is different from the Clinton economy.

"The economy is not growing fast enough," Carney said last week. "The economy is not creating jobs fast enough. And the president says that, every time he speaks about the economy."

But Valliere and many others offer a somber warning. "I think to raise taxes now runs the risk of taking a weak economy and making it a totally flat economy," Valliere said.