Obama, Republicans jostle over tax-break policies

President Obama discusses the economy at the Cuyahoga Community College in Parma, Ohio.

President Obama challenged Republicans on Wednesday to join him in expanding business tax breaks, building roads and rails, and cutting taxes on the middle class-policies he ascribed to past Republican presidents.By pushing business tax breaks once heralded by Ronald Reagan and George W. Bush, Obama sought to do what Bill Clinton did as president after Republicans took control of Congress in 1995: steal their thunder.

He also put pressure on Republicans to support his proposals or explain their opposition-particularly in light of their past support for similar tax breaks and infrastructure repair.And he called for immediate passage of a small-business lending bill stalled by Republicans in the Senate."On issues like this one, a tax cut for small businesses supported by the Chamber of Commerce, the only reason they're holding this up is politics, pure and simple," Obama charged.

His speech outside Cleveland came 15 days after House Republican leader John Boehner of Ohio outlined his party's economic platform there. Obama referred to Boehner 10 times, accusing him and the GOP of blocking efforts to boost the economy and create jobs.Throughout the day, White House aides made the same point. "The Republicans were for these initiatives before they were against them," said White House chief of staff Rahm Emanuel. "It exposes the crass political motive of their opposition."

Boehner used the day of Obama's speech to propose a two-step economic recovery plan: reducing most government spending to 2008 levels and extending the Bush-era tax cuts for all Americans for at least two years. He noted the latter proposal was backed this week by Peter Orszag, the former Obama White House budget director, even though it includes tax cuts for the wealthy that Obama opposes."If the president is serious about finally focusing on jobs, a good start would be taking the advice of his recently departed budget director and freezing all tax rates, coupled with cutting federal spending to where it was before all the bailouts, government takeovers and 'stimulus' spending sprees began," Boehner said.

Several of the president's latest proposals have been offered by Republicans. Obama's plan to let businesses deduct 100% of their new equipment investments through 2011 is similar to one offered by John McCain during the 2008 presidential campaign. The president's plan to expand and make permanent the tax credit for research and development is similar to a proposal backed by Texas Sen. John Cornyn, who heads the Republican Party's Senate campaign committee.The president is "trying to have it both ways," said Douglas Holtz-Eakin, McCain's top domestic policy adviser in 2008. "I believe this is a purely political maneuver."

The White House made clear that for the eight weeks until Election Day, Obama will defend the same economic policies and make the same political points. That's disappointing to liberal Democrats who wanted a more dramatic fiscal stimulus plan."I don't know what his people are thinking," says Dean Baker, co-director of the liberal Center for Economic and Policy Research. "You have nothing that even comes close to being like a traditional Democratic measure."Clinton employed a similar policy strategy after Republicans took control of Congress in 1995, pushing issues such as a welfare-to-work initiative more closely identified with Republicans. Early in 1996, he declared that "the era of big government is over."In this case, Obama didn't wait for Republicans to claim gains at the polls in November. "I've never believed that government's role is to create jobs or prosperity," he said. 

"I believe it's the private sector that must be the main engine of our recovery."But the GOP and its business allies aren't buying it, particularly because of how Obama suggests paying for his tax breaks and $50 billion in infrastructure repairs — with new taxes on the oil and gas industry and on companies that send jobs overseas."I'd first ask how's he going to pay for it, which is the real issue here," said Bruce Josten, an executive vice president of the U.S. Chamber of Commerce. "Robbing Peter to pay Paul mitigates the overall impact of the proposals."