JAY CARNEY: How could it be a reaction to something that happened a few days ago when it’s been the president’s position all along that these tax cuts should be extended for middle-class Americans?
NORAH O’DONNELL: On that very point that it’s been the president’s position all along, in Dec. 2010, when he advocated an extension of all of the Bush tax cuts including those for the wealthiest Americans, he argued that raising taxes would be a “blow to our economy.” So what’s different now from then?
CARNEY: The president’s position has always been that we should permanently extend the tax cuts for middle-class Americans and that we should no longer extend the tax cuts for the wealthiest Americans. At the time, from the question, there was a package of proposals that passed that helped the economy at a time it was very vulnerable that the president signed into law. What he made clear at the time was that he would not in the future support a measure that would extend tax cuts for the wealthiest Americans. And it was a point made by independent economists and others at the time—and they’re making it again now—that when we’re talking about positive effects on the economy, it is tax cuts to middle-class Americans that produce that positive effect. It is not tax cuts to the wealthiest Americans, who tend not to spend that money as quickly or as readily as hard-working, middle-class Americans, and the cost of extending those tax cuts is $65 million—I’m talking about the high-end–$65 million for one year, close to a trillion over ten, is prohibitive, we can’t afford it, and it does not work as a matter of macroeconomic policy. We’ve seen what happened in the period from 2001 to 2008. We saw the impact of those policy decisions—
O’DONNELL: The president said that raising taxes on entrepreneurs—he said then, that when entrepreneurs have money it frees up other money to hire workers. So why was the argument then that raising taxes on entrepreneurs would be bad and now it’s okay.
CARNEY: Well, first of all, you’re comparing apples and oranges. As I just made clear—
O’DONNELL: In Dec. 2010, he said it would be a blow to the economy to raise taxes on individuals. Now he says it’s not.
CARNEY: As I just said, 98 percent of the tax cuts—98 percent, for 98 percent of the American people—he has always supported extending. He supported it then; he supported it now.
O’DONNELL: But in 2010, he was worried about entrepreneurs. He’s not now worried about entrepreneurs?
CARNEY: Of course he is. That’s why he has passed small-business tax cuts and signed into law small-business tax cuts 17, or 18, or 19 times, that’s why he’s put forward a proposal that Republicans can join Democrats in supporting this very week that would extend another tax break to small businesses if they make new hires or expand the wages of their employees. He’s very concerned about that. You’re buying into the red herring argument that just isn’t true—because they can’t back it up—that somehow the top 2 percent of America’s earners are all a bunch of small businesses, when in fact the people who would be affected by this are—that would identify themselves as small businesses under that definition—are largely hedge-fund managers and lawfirm partners and others who file that way who tend to be doing much better than average, hard-working Americans.
O’DONNELL: [unclear] Republicans have pointed out that about a million businesses would be affected by this that file as Sub-Chapter S corporations.
CARNEY: Again, I can repeat it and I will: 97 percent of small businesses—97 percent—would not be affected.
O’DONNELL: Where is that coming from?
CARNEY:I’ll get you that. I don’t have it in front of me.