President Obama met with the Congressional leaders of both parties today to discuss what could be done in the near-term legislatively. I wasn't a fly on the wall, or anywhere close to it, but here's the speech I would've given if I were he.
Good morning Speaker Pelosi, Speaker-elect Boehner, Majority Leader Byrd, Minority Leader McConnell, and all the rest of you in the current and future Congressional leadership. I welcome you to the White House and thank you all for coming here, and I will be eager to hear your thoughts on getting the economy going and taking the right steps to make our nation more secure.
I would encourage you to take up the debate of tax policy in this closing session of the current Congress, just as you are planning to do. I know that the Senate Republicans have the ability to block an extension of the middle-class tax cut that I want, but I have a similar capability to block an extension of tax cuts for the wealthy. So, let's end this Mexican standoff and move forward.
I will promise to sign a tax cut extension for the rich folks under the following conditions:
1) it must come to my desk before December 15; and
2) it must be separate from the tax cut extension bill for the middle class, which must be approved before the end of the session, and about which my requirements are more specific.
I know it is not my place to write the legislation, but I would recommend that the best elements to retain from the tax cuts are the lower rate on capital gains, the savings of which are more likely to be re-invested in our economy, and on dividends, which will help the stock market. We all know that stock market success by itself will not bring down the level of the unemployed, but it is important in bringing back consumer confidence, which, combined with other favorable developments will bring the necessary resurgence in investment.
I have a further suggestion: since many of you seem to believe that these lower taxes for the wealthy somhow promote jobs, let's put our money where our mouths are, and make the tax cuts for the wealthiest income groups dependent on the growth of jobs: if the net job growth over the next year meets targets, the tax cuts would be extended automatically; if they fail to produce the jobs, they would end. Our Labor Department will be glad to work with you to set those job-growth targets at achievable levels if the cuts are working.
As for extending the tax cuts for the first $250,000 of taxable income, I am less flexible, but I am cognizant of the need to reduce budget deficits. I ask you to pass a bill which permanently resolves the problem of downward-creeping Alternative Minimum Tax levels, and which extends the tax cuts for two years. This bill should contain provisions for the tax cuts to be renewed under reconciliation procedures with a simple majority of both Houses.
If you pass this bill, I will sign the bill for the tax cut extension for the rich folks that you come up with; if you don't I will use my power of the pocket veto to kill that extension. I would encourage my Democratic colleagues to work with the Speaker-elect and Majority Leader to come up with a sensible compromise.
But let me advise you: I will have no hesitation in vetoing any and all retroactive tax cut extensions in the next Congress, or any passed now that do not meet the tests I have provided you. It is a great honor to serve the American people in this position, but, having done it for about two years now, I can tell you that it is not much fun most of the time--I will not miss it.
The time while the House puts together the bills for tax policy would be a great opportunity for the Senate to debate, and then to ratify, the START2 treaty with Russia. When you review the committee proceedings and what we have done since then, you will see that we have answered with clear progress all the objections which were raised, whether for cost of modernizing our nuclear weapons or arranging for the best possible, most economical missile defense program--one that has the full support of our allies and even the agreement of Russia. The consequences of failing to ratify the treaty would be grave, in so many areas, and failure to ratify in this session would be a major setback for our security. I trust you to do the right thing.
Finally, I ask all members to review the report coming out today on the military's "Don't Ask, Don't Tell" policy. You will see that a change in this policy, overdue in the minds of the public, will have only positive effects on our military readiness. By all means, bring in the Defense Secretary, the Joint Chiefs, but take the action that they are recommending. This is one more area in which we owe the American people prompt action, working together.
I trust that this is only the first of many meetings to work together for our country's benefit. Thank you again.