White House denies reversal on wealthy's tax cuts

David Axelrod, a senior aide to President Obama.

NPR (National Public Radio):

Either the Obama Administration has decided to relent to congressional Republican demands to extend the Bush tax cuts for the wealthy (Huffington Post) or the it hasn’t (National Journal.)

HuffPo appeared to have a big scoop. Howard Fineman and Sam Stein reported just before midnight that David Axelrod, a senior political aide to President Obama, indicated in a Wednesday interview that the president had decided to back away from his opposition to extending the Bush tax cuts to people with incomes above $250,000.

A HuffPo excerpt:

"We have to deal with the world as we find it," Axelrod said during an unusually candid and reflective 90-minute interview in his office, steps away from the Oval Office. "The world of what it takes to get this done."

But dawn had barely broken on the East Coast before a denial was made. The National Journal's Katy O'Donnell and Aamer Madhani reported:

Senior White House Adviser David Axelrod said this morning that President Obama has not caved to GOP demands on the extension of the Bush tax cuts, despite a report from the Huffington Post to the contrary.

“We're willing to discuss how we move forward,” Axelrod said in an e-mail to National Journal refuting the Huffington Post story, “but we believe that it's imperative to extend the tax cuts for the middle class, and don't believe we can afford a permanent extension of tax cuts for the wealthy.”

Obama has opposed extending the Bush cuts for taxpayers with adjusted gross incomes of more than $250,000. It was one of his campaign vows.

As he has tried to demonstrate his commitment to reducing the federal deficit and debt, he has argued that he opposes extending the tax cuts to the top tier of income earners because it would add $700 billion to the U.S. over ten years.

Congressional Republicans have argued that allowing the Bush-era tax cuts to expire on the wealthy would amount to a tax increase as the economy struggles to achieve higher growth.

They argue, as do many economists, that raising taxes during a weak economy only depresses economic activity.

House Republicans, who will assume control of that chamber in January, adamantly oppose allowing the tax cuts to expire for upper end tax payers.

They have linked continuing the middle-class Bush-era tax cuts to those for the wealthiest Americans, essentially engaging in a game of chicken with the administration.

All the Bush tax cuts expire at the end of the year. If they aren't renewed, either temporarily or permanently before than, income taxes are due to rise significantly.