Economy Alarm: Obama Breaks Middle Class Tax Pledge in New Budget Request

Obama Breaks Middle Class Tax Pledge in New Budget Request

President Backpedals on Promise, Calls for Tax Increase in Midst of Deep Recession

Democrats Promised to Ease the ‘Burdens on Middle-Class Families’

“’We are fighting every single day to put Americans back to work, create good jobs and strengthen our economy for the long term,’ Obama said Monday.

“He went on to say that the initiatives would ‘focus on easing the burdens on middle-class families who are struggling in this economy, and providing the help they need to get ahead.’ Well, they would ease them a little bit, perhaps, but not much.’” (Michelle Singletary, “President Obama proposals offer modest help to the middle-class,” Washington Post, 1/28/2010)

Credibility Crash: Once Again, Democrats Ignore Middle-Class Families While They Push to End Much Needed Tax Breaks

Grappling to contain record deficits, President Barack Obama is seeking to end a middle-class tax break he once said would be permanent.

The $3.8 trillion budget request rolled out by the White House on Monday would renew the Making Work Pay tax credit for fiscal 2011, but then would have it sunset.

That’s a switch from last year, when Obama’s budget called for making the tax credit permanent.

The cut costs the federal government about $63 billion in annual revenue while putting up to $400 in the pockets of workers making less than $95,000. It was approved for the first time in last year’s $787 billion stimulus package.

An administration official said the tax credit reflects changing realities in Congress on climate change legislation.

The tax initially was intended to compensate middle-class families for increased energy costs related to a cap-and-trade mechanism that would have capped greenhouse gas emissions by businesses while setting up a system allowing emissions credits to be bought and sold, the official said. The credit was to be paid for by revenue from the cap-and-trade system.

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The administration also proposes new taxes on banks and the wealthy, however, and curtails spending in some areas. It says it hopes that the combination of tax hikes, spending cuts and the implementation of recommendations from a bipartisan fiscal commission would halve this year’s $1.56 trillion deficit within four years.

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Pressed on how they could jumpstart the job market while reining in deficits, administration officials insisted the goals weren’t mutually exclusive.

Orszag said that deficits must be lowered, but that there’s a danger to acting too quickly.

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Even with a new jobs bill, the administration painted a gloomy unemployment picture. Its latest estimates project the unemployment rate to average 10 percent this year and remain at about 9 percent in 2011 and 8 percent in 2012. The jobless rate won’t return to the pre-recession level of roughly 6 percent until 2015.

Long-term deficit projections are just as daunting.

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House Majority Whip James Clyburn (D-S.C.) said that trying to find greater savings in the budget wouldn’t help alleviate the recession. Clyburn, on Fox News, instead called for more spending on education and job creation instead of immediate deficit-reduction moves.  (Walter Alarkon, “President Obama’s budget seeks an end to tax break for the middle class,” The Hill, 2/01/2010)

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