Obama frames tax breaks as key election issue

President Barack Obama drew sharp election battle lines between himself and rival Republicans on Monday by pressing Congress to maintain tax breaks for most US families but end them for the wealthy. "We don't need more top-down economics. We have tried that theory. We have seen what happens," Obama said in a White House speech reminding voters of the trillion-dollar tax breaks instituted during president George W. Bush's administration that "benefited the wealthiest Americans" more than others. "That is why I believe that it is time to let the tax cuts for the wealthiest Americans -- folks like myself -- expire," he added. "I'm not proposing anything radical here. I just believe that anybody making over $250,000 a year should go back to the income tax rates we were paying under (president) Bill Clinton, back when the economy created nearly 23 million new jobs, and the biggest budget surplus in history." With Bush-era tax cuts set to expire at the end of 2012, taxes will rise for virtually all US households if Congress does not pass new legislation. Obama gave his remarks amid a fierce 2012 campaign in which his strategy for bringing the economy into fuller throttle in the aftermath of a devastating recession differs sharply from that of his Republican adversary Mitt Romney. Taxes will play a crucial role in November, and Obama acknowledged as much Monday. "In many ways the fate of the tax cut for the wealthiest Americans will be decided by the outcome of the next election," he said. "My opponent will fight to keep them in place, and I will fight to end them. But that argument shouldn't threaten you," Obama added, suggesting Democrats and Republicans should work together now to extend the tax cuts for some 98 percent of Americans. Such a move would be unlikely in the Republican-controlled House unless it was part of broader legislation to extend all the tax breaks. Republicans have made the argument for months that Congress should approve a full extension, and use 2013 as an opportunity to focus on comprehensive tax reform outside the furnace of election-year politics. "Many members of the other party believe that prosperity comes from the top down, so that if we spend trillions more on tax cuts for the wealthiest Americans, that that will somehow unleash jobs and economic growth," Obama said. "I disagree. I think that they are wrong. I believe that our prosperity has come from the economy that is built on a strong and growing middle-class." Even before Obama's speech, Republicans were assaulting his plan as a massive tax hike that would hurt small businesses and snuff out job growth. "Unlike President Obama, governor Romney understands that the last thing we need to do in this economy is raise taxes on anyone," Romney campaign spokeswoman Andrea Saul said in a statement. Romney, she said, "has a plan to permanently lower marginal rates, help middle-class Americans save and invest, and jumpstart economic growth and job creation." Obama insisted that his proposal would extend tax cuts for 97 percent of small business owners, a move the president argued "is about helping job creators." Republican Senate minority leader Mitch McConnell insisted "it simply isn't true." "Today's proposal is clearly based on a political calculus, not an economic one. But in the Obama economy, we need policies that are designed to create jobs, not designed to protect his," he added. "No one should see an income tax hike next year -- not families, not small businesses and other job creators."