CLEVELAND — President Barack Obama strongly defended his opposition to extending Bush-era tax breaks for the wealthiest Americans Wednesday and delivered a searing attack on Republicans and their House leader for advocating “the same philosophy that led to this mess in the first place.”

Obama said the U.S. economy can’t afford to spend $700 billion to keep lower tax rates in place for the nation’s highest earners despite a call by House Minority Leader John Boehner and other GOP leaders to do just that.

As Obama made his statement Wednesday, Waco businesspeople said the business climate is freezing up because of an uncertain atmosphere, and an economist said continuing with higher taxes for the wealthy has dubious merits.

President Barack Obama delivers a speech on the economy Wednesday at Cuyahoga Community College West Campus in Parma, Ohio.
Pablo Martinez Monsivais/Associated Press

Changes in health insurance, taxes and regulation are making it difficult for business owners to plan, said Todd Moore, chief executive of Alliance Bank Central Texas.

“Businesses are hesitant to make plans because they don’t know what the future holds,” Moore said.

Waco Boom president Louis Haak said, “Just talking to suppliers and customers about it, there is a lot of nervousness. They don’t know what the future is going to be.”

Whether the money is better spent by the government or left with the well-to-do who will save it or invest it is the question, said Tom Kelly, an economist with Baylor University’s Hankamer School of Business.

Although some want to lower taxes on the middle class, the wealthy invest in ways that translate quickly into venture capital that can start and expand businesses and add jobs, Kelly said.

“If you tax it, how is it going to be used? And if you don’t tax it, how is it going to be used?” he said.

More said savings, including those of wealthier people, are used to help back bank loans, Moore said.

Obama’s stance on protecting educational investment is sound, Kelly said.

In the current situation where people are retooling their skills, education will be a key factor in building a strong economy, he said.

“We do have a structural problem with people who have to reinvent themselves,” he said.

Cuts for the rich

Speaking in the same city where Boehner, an Ohio Republican, recently ridiculed Obama’s economic stewardship, Obama said Boehner’s policies amount to no more than “cut more taxes for millionaires and cut more rules for corporations.”

Obama’s comments came as the administration rolled out new proposals designed to re-ignite a sputtering recovery, including new tax breaks for businesses and $50 billion for U.S. roads, rails and airports.

“Let me be clear to Mr. Boehner and everyone else. We should not hold middle class tax cuts hostage any longer,” the president said.

Actually, Obama and other Democratic leaders want to extend the tax cuts except for individuals making over $200,000 a year — or families earning over $250,000.

Obama gave one of his strongest pitches yet on allowing the Bush tax cuts to expire at the end of this year for wealthy Americans but allowing them to remain in place for everybody else.

Republicans, and even some Democrats, have suggested that it was no time to raise taxes on anybody, given the fragile state of the economy.

November elections

The debate is an unwelcome one for dozens of vulnerable Democratic incumbents just weeks before Election Day.

A handful of Democrats in conservative or swing districts, such as Reps. Gerry Connolly in Virginia, and Bobby Bright in southeastern Alabama, have come out publicly for extending all the cuts — at least temporarily.

Still other embattled Democrats, wary of alienating middle-class voters, are siding with Obama.

In central Ohio, for example, Rep. Mary Jo Kilroy has said the tax cuts for higher earners should be repealed, but middle-income people should see no tax increases.

“The middle class is still treading water, while those aspiring to reach the middle class are doing everything they can to keep from drowning,” Obama said.

Polls have shown a steady slippage in Obama’s approval ratings and an accompanying rise in Republican prospects for winning House and Senate seats in November.

In his speech, Obama outlined plans to expand and permanently extend a research and development tax credit that lapsed in 2009, to allow businesses to write 100 percent of their investments in equipment and plants off their taxes through 2011 and to pump $50 billion into the economy for highway, rail, airport and other infrastructure projects.

He also renewed a pitch for a small business package that has been stalled in the Senate because of Republican delaying tactics.

Of the debate over the expiring Bush tax cuts, Obama said, “I believe we ought to make the tax cuts for the middle class permanent.

“These families are the ones who saw their wages and incomes flatline over the last decade — and they deserve a break. And because they are more likely to spend on basic necessities, this will strengthen the economy as a whole.”

Tribune-Herald staff writer Bill Teeter contributed to this story.