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Barack Obama unveils plan to cut tax for middle class but who pays?

 
 
 
 
 
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Obama’s $450 billion employment package to save ONE job: his! Struggling President unveils plan to cut tax for middle class but who pays?

Facing a barrage of criticism over his handling of the economy, President Obama last night unveiled a massive $450bn plan to combat the country’s unemployment crisis – and try to save his own job.

In a rare address to a joint session of US Congress at what is being seen as the lowest point in his presidency, Mr Obama tried to inject fresh confidence that he can still turn the dire jobs outlook around.

Unusually impassioned, the president demanded a truce in the political bickering that could still sabotage his much-vaunted American Jobs Act.

With a slew of polls this week showing his approval rankings have slumped to new lows and the jobless figures anchored at 9.1%, the make-or-break speech was supposed to breathe new life into his faltering re-election hopes.

But within minutes of the end of the televised 30-minute address, Republicans were already on the attack, lambasting the president for splashing out yet more taxpayer billions in a bid to spend his way out of the downturn

Republican presidential contender Michele Bachmann claimed Mr Obama’s approach amounts to more ‘failed gimmicks.’

The Tea Party darling said that the jobs plan will fail even if it is passed by Congress.

She claimed the president was ‘politically paralyzed’ and ‘philosophically incapable of doing what needs to be done.’

Mr Obama’s proposed package includes a payroll tax cut for all workers, a payroll tax cuts for most business, and billions in extra spending on construction projects.

He peppered the speech with the demand that Congress should pass the plan ‘right away’, a phrase he used 15 times.

But his hectoring tone suggested he was far from sure they would.

‘The people of this country work hard to meet their responsibilities,’ he said. ‘The question tonight is whether we’ll meet ours. The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy.’

‘This plan is the right thing to do right now. You should pass it and I intend to take this measure to every corner of this country,’ he added

Another Republican presidentila candidate Ron Paul predicted a backlash from the public over the plan that adds hundreds of billions more public spending just weeks after the country was taken to the brink of defaulting on its loans in a Washington deadlock over the ballooning national deficit.

But Mr Obama proposed his bill would be paid for in part by tax increases for wealthy Americans.

How is it fair that billionaires like Warren Buffet, one of the world’s richest men, pays a lower tax code than a secretary, he asked.

He insisted that the wealthiest Americans and biggest corporations should ‘pay their fair share.’

Fired up over the political bickering in the lead up to the speech, he insisted his plan had nothing to do with ‘class warfare.’

‘It is just simple maths,’ he added.

‘I am sending this Congress a plan that you should pass right away. It’s called the American Jobs Act. There should be nothing controversial about this piece of legislation. Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans – including many who sit here tonight. And everything in this bill will be paid for. Everything,’ he said.

‘The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working. It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for the long-term unemployed.

‘It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business.

‘It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and hire, there will be customers for their products and services.’

The newest and boldest element of Mr Obama’s plan would slash the Social Security payroll tax both for tens of millions of workers and for employers, too. For individuals, that tax has been shaved from 6.2 percent to 4.2 percent for this year but is to go back up again without action by Congress. Mr Obama wants to deepen the cut to 3.1 percent for workers.

Mr Obama did not venture an estimate as to how many jobs his plan would create. He promised repeatedly that his plan would be paid for, but never said how, pledging to release those details soon.

The president also would apply the Social Security payroll tax cut to employers, halving their taxes to 3.1 percent on their first $5 million in payroll. Businesses that hire new workers or give raises to those they already employ would get an even bigger benefit:

On payroll increases up to $50 million they would pay no Social Security tax.

The president also proposed spending to fix schools and roads, hire local teachers and police and to extend unemployment benefits. He proposed a tax credit for businesses that hire people out of work for six months or longer, plus other tax relief aimed at winning bipartisan support in a time of divided government.

Tax cuts amounted to the broadest part of Mr Obama’s proposal – in essence, a challenge by the Democratic president to congressional Republicans to get behind him on one of their own cherished economic principles or risk the wrath of voters for inaction. The tax cuts alone would amount to roughly $250 billion.

The president said deepening the payroll tax cut would save an average family making $50,000 a year about $1,500 compared to what they would if Congress did not extend the current tax cut.

‘I know some of you have sworn oaths to never raise any taxes on anyone for as long as you live,’ he said, a reference to the right wing Tea Party influence on many House Republicans. ‘Now is not the time to carve out an exception and raise-middle class taxes, which is why you should pass this bill right away.’

Politics shadowed every element of Obama’s speech. He implored people watching on TV to lobby lawmakers to act. He did the same thing before his speech in an email to campaign supporters, bringing howls of hypocrisy Republicans who wondered why Mr Obama was telling them to put party above country.

The American public is weary of talk and wary of promises that help is on the way.

In one striking sign of discontent, nearly 80 percent of people think the country is headed in the wrong direction. That’s about the same level of pessimism as when Mr Obama took office. It reflects both persistently high unemployment and disgust with Washington infighting.

No incumbent president in recent history has won re-election with the unemployment rate anywhere near the current 9.1 percent.

Mr Obama’s jobs plan put a special emphasis on the long-term unemployed – those who have been out of work for six months or more. He repeated his calls for a one-year extension of unemployment insurance in order to prevent up to 6 million people from losing their benefits, and he proposed a $4,000 tax credit for businesses that hire workers who have been out of work for more than six months.

A key part of Obama’s approach was to appeal to the lawmakers in front of him to pass a deal, and to position them for blame for inaction should the jobs plan fall short.

‘The next election is 14 months away,’ he said. ‘And the people who sent us here – the people who hired us to work for them – they don’t have the luxury of waiting 14 months. … They need help, and they need it now.’

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