Obama Plan Includes $300 Billion in Tax Cuts

January 5, 2009

5 January 2009

Obama Plan Includes $300 Billion in Tax Cuts

This article is excerpted from the 5 January 2009 edition of “The New York Times”.

President-elect Barack Obama plans to include about $300 billion in tax cuts for workers and businesses in his economic recovery program as he seeks to win over Congressional skeptics worried that he was too focused on government spending, advisers said Sunday.

The legislation Mr. Obama’s team is developing with Congressional Democrats will devote about 40 percent of the cost to tax cuts, including his centerpiece campaign promise to provide credits up to $500 for most workers, costing roughly $150 billion. The package will also include more than $100 billion in tax incentives for businesses to create jobs and invest in equipment or factories.

The overall package, of $675 billion to $775 billion, is taking shape as Mr. Obama arrived in Washington and planned to begin trying to build support in Congress and among the broader public for his approach to stimulating the economy….

Congressional Republicans continued to press for more public hearings and study, and some of their leaders threw out their own ideas for what should be in the plan. Senator Mitch McConnell of Kentucky, the Republican leader, proposed Sunday that any money distributed to the states be provided as loans rather than outright grants….

Mr. McConnell said Republicans were more likely to favor tax relief and tax credits as part of the economic measure and said Congress should consider reducing the 25 percent income tax rate to 15 percent. …

Other Congressional officials said House Democrats will consider a plan this week requiring a new audit of all federal agencies and mandating Congressional hearings whenever inspectors general identify potential waste or fraud.

Mr. Obama’s team argued Sunday that the short-term cost of its economic plan was not a priority in the face of the dire problems in the economy. “There is no short run, other than keeping the economy from absolutely tanking. That’s the only short run,” Vice President-elect Joseph R. Biden Jr. said….

The economic package under consideration by the president-elect and his Congressional allies would commit $675 billion to $775 billion over two years.

If the tax cuts represent 40 percent of that, as Mr. Obama’s advisers said Sunday, that would mean about $270 billion to $310 billion.

About half of that would go to workers under what Mr. Obama during his campaign called the Making Work Pay credit, worth up to $500 for individuals and $1,000 for families. The Obama campaign estimated that about 150 million Americans making less than $200,000 would qualify, including those who make too little to pay federal income taxes but would receive a check that would offset Social Security and Medicare payroll taxes.

Mr. Obama’s advisers said Sunday that they were searching for a way to get that credit into Americans’ pockets quickly to help stimulate spending, but would not duplicate the rebate checks sent last year as part of an economic package signed by President Bush. Instead, they said, they were discussing making the credit retroactive to the 2008 tax year and adjusting withholding formulas so that paychecks would start reflecting that right away.

Mr. Obama’s advisers said they were still discussing with Congressional leaders the precise plan for phasing out the credit for wealthier Americans. They said no tax increases were included in the plan because it is focused on measures that create jobs. Obama aides have signaled that they will wait to let Mr. Bush’s tax cuts for the wealthiest Americans expire in 2010, rather than try to repeal them right away….

To encourage businesses to expand their workfo


Topic(s): 
World Economy & Politics
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Canadian News Channel / International News Channel
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