Aide: Middle-Class Tax Cut a Priority

By Michael A. Fletcher
Washington Post Staff Writer
Monday, November 10, 2008

President-elect Barack Obama plans to push ahead with a middle-class tax cut soon after taking office, his choice for White House chief of staff said yesterday.

Rahm Emanuel also hinted that Obama would not postpone a tax increase for families earning more than $250,000 a year despite the deepening economic gloom. He said Obama's proposals would reduce taxes for 95 percent of working Americans by an average of $1,000 each, resulting in "a net tax cut" for the overall economy.

"The middle class must be the focus of the economic strategy," Emanuel said on ABC's "This Week." Over the past eight years, he noted, median household incomes have decreased, when adjusted for inflation, while the costs for essentials -- including education, energy and health care -- have soared.

Once the new administration takes over Jan. 20, Emanuel said, Obama would act quickly to expand health-care coverage, revamp energy policy and make education more affordable. But just how boldly he will move in each area, given the nation's ballooning budget deficit and worsening economic downturn, is something that transition officials are weighing.

Saying Obama's decisive election victory amounts to a mandate, many of the president-elect's staunchest supporters, including labor leaders, are looking for strong, swift action on many of the sweeping proposals -- including reforming health care and increasing the minimum wage and indexing it to inflation -- that he pushed on the campaign trail.

But at the same time, Obama will be under pressure from fiscal conservatives and others to restrain spending, which could cause him to move slowly on his most ambitious plans.

Emanuel offered no clues on Obama's thinking. But the congressman said broadening access to health care and implementing an economic stimulus plan are part of Obama's overall goal of shifting federal policy to address the mounting economic concerns of working Americans.

The economic crisis "provides the opportunity, as the president-elect has said repeatedly, to do things that Americans have pushed off for years," Emanuel said.

In the short term, Emanuel said, Congress should extend unemployment benefits and help states pay health-care costs when it returns for a lame-duck session this month. He added that any economic stimulus package passed during the session should not be coupled with a free-trade agreement with Colombia.

"You don't link those essential needs to some other trade deal," he said.

Emanuel also suggested that Obama, who remains a member of the Senate, would not take part in negotiations over a stimulus plan. In the coming weeks, Emanuel said, Obama will focus on picking members of his Cabinet and White House staff and identifying his immediate presidential priorities.

Valerie Jarrett, co-chairman of Obama's transition team, said he is reviewing potential candidates for Treasury secretary and other crucial posts, but she offered no predictions as to when selections will be made.

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