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Axelrod: Slowing economy won't deter tax cuts

A top adviser to President-elect Barack Obama said Sunday that the country's slowing economy won't keep the new administration from fulfilling its plans for a middle-class tax cut.
President-elect Barack Obama greets well-wishers on Sunday after his workout at the Kaneohe Bay Marine Corps Base in Kailua, Hawaii. Lawrence Jackson / AP
/ Source: The Associated Press

A top adviser to President-elect Barack Obama said Sunday that the country's slowing economy won't keep the new administration from fulfilling its plans for a middle-class tax cut.

"We feel it's important that middle-class people get some relief now," Obama adviser David Axelrod said.

Middle-class tax cuts will be part of the new administration's stimulus plan, Axelrod said. "This package will include a portion of that tax cut that will become part of the permanent tax cut that he'll have in his upcoming budget," Axelrod said.

The incoming administration is considering tax cuts of $1,000 for couples and $500 for individuals that will be delivered by reducing the tax withheld from paychecks. That plan has been estimated to cost about $140 billion over 2009-2010.

Rebates didn't boost economy
The lump-sum rebates issued earlier this year were used by many people to pay down debt, rather than spending the money and boosting the economy as the administration had hoped.

"People need money in their pockets to spend," Axelrod said. "That'll get our economy going again."

Congress should have a new stimulus plan ready for the new president to sign as soon as possible, Axelrod said.

He placed the cost of a planned Obama stimulus package at "$675 billion to $775 billion" but said "those numbers are not fixed."

"Obviously, the sooner the better. I don't think Americans can wait," he said. "People are suffering, our economy is sliding, and we need to act. And so our message to Congress is to work on it with all deliberate speed."

The slowing economy also means that it's more important than ever to eliminate President George W. Bush's tax cuts, Axelrod said. "It's something we plainly can't afford moving forward," he said. "Whether it expires or we repeal it a little bit early we'll determine later but it's going to go. It has to go."

Eliminating Bush's tax cuts while adding in new middle-class tax cuts doesn't mean that Obama is raising taxes, Axelrod argued.

"It'll just restore some balance," said Axelrod, saying the two moves will equal a "net tax cut for the American people."

Wants millions of new jobs
Axelrod also said Obama wants to create as many as 3 million jobs for work-starved Americans, but wants those jobs to be in areas that will help the nation's economy in the future. Obama's staff has talked about "creating or saving" millions of jobs with his economic program.

"We want to do it in a way that leaves a lasting footprint, by investing in energy and health care projects and refurbishing the nation's classrooms and labs and libraries so our kids can compete, and rebuilding our crumbling roads and bridges and waterways," Axelrod said. "And in this way, we're not only creating work, but we're laying the foundation for the future of our economy."

Axelrod refused to talk in detail about Israel's offensive against Islamic militant Hamas in the Gaza strip, saying Obama was in contact with Secretary of State Condoleezza Rice and President George W. Bush about the crisis. Some 280 Palestinians have died in the first 24 hours of the air campaign against Gaza rocket squads and Hamas members.

But, he said, "President Bush speaks for the United States until Jan. 20 and we're going to honor that."

Axelrod acknowledged that the United States has had a "special relationship" with Israel, calling it an "important bond, an important relationship."

Obama's "going to work closely with the Israelis. They're a great ally of ours, the most important ally in the region," Axelrod said. "And that that is a fundamental principle from which he'll work. But he will do so in a way that will promote the cause of peace, and work closely with the Israelis and the Palestinians on that."

Axelrod appeared Sunday on NBC's "Meet the Press" and CBS' "Face the Nation."