[Vision2020] Obama Gives More Tax Cuts to Middle Class

[Kai Eiselein, Editor]

Maybe if our government was actually responsible with our money, rather than 
going on a spending spree like a hooker after a convention, we'd be in 
better shape.
--------------------------------------------------
From: <nickgier at adelphia.net>
Sent: Tuesday, September 09, 2008 10:39 AM
To: <vision2020 at moscow.com>
Subject: [Vision2020] Obama Gives More Tax Cuts to Middle Class

> Hi Bill,
>
> You may seen this AP story last night in the Daily News.  These figures 
> tally very nicely with Tom Trail's accountant and prove that Obama was 
> right about giving tax cuts to 95 percent of us.
>
> Of course my preference is a reasonable tax increase to pay for the 
> rebuilding of our infrastructure, huge tax credits for renewal energy, and 
> new funding for health care reform.  Our nation has no future if these 
> areas are ignored as our GOP friends have done.
>
> Nick
>
> Sep 8, 6:26 AM EDT
>
> Obama, McCain economic plans rely on tax cuts, but in sharply different 
> ways
>
> By MARTIN CRUTSINGER
> AP Economics Writer
>
> WASHINGTON (AP) -- Job No. 1 for the next president? In the minds of an 
> overwhelming number of Americans, it's fixing what ails the sick economy. 
> What the voters will have to sort out are very different approaches 
> offered by Barack Obama and John McCain.
>
> Both of their fix-up plans rely heavily on tax cuts, but in sharply 
> different ways that speak to the historic differences between Democrats 
> and Republicans.
>
> McCain, borrowing a page from Ronald Reagan and President Bush, would keep 
> tax rates low for higher-income taxpayers and slash rates for 
> corporations, arguing that this is the way to jump-start a lethargic 
> economy and create more jobs.
>
> Obama, focusing on a theme of many past Democratic campaigns, seeks to 
> target his help to the squeezed middle class and address the growing 
> income inequality between rich and poor. He would retain all of the Bush 
> tax cuts for families making less than $250,000 a year, but would do away 
> with Bush's cuts for people making more than that.
>
> The money raised from tax increases on the wealthy would be redirected by 
> Obama to tax relief for lower-income Americans.
>
> Unlike a lot of campaign debates where the promises of neither side get 
> enacted into law, this war of words will make a difference because all of 
> Bush's tax cuts are scheduled to expire at the end of 2010.
>
> Since neither party wants to go back to the tax rates in effect before 
> 2001, whoever wins will have to work with Congress to pass legislation 
> shaping how the tax code will look beyond 2010. At stake will be billions 
> of dollars.
>
> Under Obama, the wealthiest 1 percent of taxpayers, those making roughly 
> $600,000 or more, would see their taxes go up on average by $93,709 in 
> 2009, according to an analysis done by the Tax Policy Center, because 
> Obama would begin implementing his tax changes even before the scheduled 
> expiration of the Bush cuts.
>
> Under McCain, those same taxpayers would see an average reduction of 
> $48,860, reflecting in part additional cuts he is proposing.
>
> By contrast, the bottom 20 percent of taxpayers, those with taxable income 
> of roughly $19,000 per year or less, would see their taxes cut by an 
> average of $567 under Obama's program and $21 under McCain's plan, the tax 
> center estimates.
>
> For the 20 percent of taxpayers right in the middle of the income scale, 
> making roughly between $37,600 and $66,400, the tax break would be $1,118 
> under the Obama plan and $325 under the McCain plan in 2009, according to 
> the analysis done by the tax center, a joint venture of the Urban 
> Institute and the Brookings Institution, two Washington think tanks.
>
> In addition to tax cuts, both presidential candidates are out promising 
> voters a lot of programs in the areas of health care, energy and 
> education.
>
> But the outlook for the federal budget is much darker now than in 2000. In 
> that year, candidate Bush traveled the country promoting across-the-board 
> tax cuts as a way to fix what ailed America in the wake of a sudden 
> slowdown in growth and a bursting of the bubble in high-tech stocks.
>
> With the Congressional Budget Office and others forecasting 
> record-breaking surpluses totaling $5.6 trillion over the decade, it 
> seemed like a good idea to a lot of Washington policymakers to return a 
> part of those surpluses in the form of a $1.35 trillion tax cut passed in 
> 2001 and a follow-up measure in 2003.
>
> The problem was that the surplus forecast turned out to be wildly 
> inaccurate because of an unforeseen recession that began in 2001 just as 
> Bush was taking office and the soaring costs of fighting a global war on 
> terror that began in the wake of terrorist attacks on Sept. 11, 2001.
>
> The federal books were in the black in 2001 - for the fourth consecutive 
> year - but since then, the U.S. has returned to running huge deficits, 
> including the largest in history in dollar terms, a $413 billion imbalance 
> in 2004.
>
> Now, with the government pumping out $106.7 billion to Americans in 
> stimulus payments to keep all the problems in housing and the credit 
> markets from pushing the country into a deep recession, the deficits are 
> surging again.
>
> The CBO predicts a $400 billion imbalance this year, and the 
> administration is forecasting that the deficit for the next budget year 
> that begins Oct. 1 will hit an all-time high of $482 billion.
>
> That forecast doesn't include the cost of the government takeover 
> announced by the administration on Sunday of mortgage giants Fannie Mae 
> and Freddie Mac. That effort, which has the potential of adding tens of 
> billions of dollars to the deficits in the short run, won the qualified 
> backing of both Obama and McCain.
>
> The CBO's current forecast for the next decade doesn't look that bad on 
> paper, projecting the budget will go into the black in 2012, giving the 
> country a small surplus of $270 billion over the next 10 years.
>
> However, that forecast comes with a warning label. The CBO has to make its 
> estimates based on current law, which has the Bush tax cuts expiring after 
> 2010 and makes no provisions for further outlays to keep the Alternative 
> Minimum Tax on the wealthy from hitting millions of middle-income 
> taxpayers, a huge expense every year.
>
> The economic plans that McCain and Obama have put forward do include the 
> billions needed to deal with the AMT plus extending the Bush tax cuts. 
> McCain would extend all of them except the total elimination of the estate 
> tax, while Obama would extend only the cuts for individual taxpayers 
> making less than $200,000 annually or couples making less than $250,000.
>
> With those big-ticket tax cuts plus the impact of other changes in the tax 
> code included, McCain's plans would slash revenues by $4.2 trillion over 
> the next decade while Obama's reduction would be a slightly smaller $2.9 
> trillion. Both would transform the CBO's small surplus over the 10-year 
> period into big deficits, according to the tax center.
>
> The two campaigns argue that it is not fair to hold them to the 
> unrealistic CBO baseline. Rather, the campaigns like to compare their 
> proposals to a current policy baseline which assumes the Bush tax cuts are 
> extended and the AMT is patched every year. Under that baseline, according 
> to the tax center, McCain's plan would cut taxes by $596 billion over the 
> next decade; Obama's would increase taxes by $627 billion during the same 
> period, reflecting the fact that Obama is raising tax rates on the wealthy 
> and boosting the taxes they pay on dividends and capital-gains earnings. 
> Obama is also not embracing McCain's proposal to cut the top rate on 
> corporate taxes.
>
> Regardless of the baseline used, the government's debt would go up 
> sharply - by $3.5 trillion under the Obama plan and by $5 trillion over 
> the next decade under McCain's plan, the tax center estimates.
>
> While both campaigns argue they are not getting enough credit for their 
> plans to cut spending, history shows that campaigns always pledge to pay 
> for their tax cuts but seldom achieve that goal because spending cuts 
> prove much more difficult to get through Congress.
>
> And how about the overall goals - McCain's effort to give the country a 
> boost by cutting taxes on the wealthy and corporations and Obama's efforts 
> to narrow income inequality?
>
> Economists say there are things to like in both programs. They generally 
> favor reductions in top rates as a way to spur new investment and job 
> creation, so on that point McCain's program gets good marks. However, 
> there are worries that the higher deficits that are expected because of 
> the tax cuts could drive up interest rates, raising the cost of money for 
> businesses and result in less investment, not more.
>
> For Obama, the concern is that all of his new and expanded tax credits, 
> such as his "Making Work Pay" refundable credit which would provide 
> low-income workers with a maximum of $500 per individual and $1,000 per 
> family, will further complicate an already complex tax system and won't 
> make a very big dent in the problems of income inequality.
>
> And neither candidate is talking very much about tackling what all experts 
> see as the biggest budgetary challenge facing the next president - the 
> explosion in the government's big benefit programs for Social Security and 
> Medicare as the baby boomers retire.
>
> Obama has proposed levying a 2 percent to 4 percent tax on payroll 
> earnings above $250,000 a decade from now to deal with Social Security, 
> but experts say that would fix only a small part of the problem with the 
> pension program. And neither campaign has put forward any proposals that 
> experts say would make a meaningful dent in fixing Medicare, the far 
> bigger entitlement problem because of soaring health care costs.
>
> Some experts see tax increases, not cuts, in the country's future 
> regardless of who wins the presidency.
>
> "We are starting out with very big deficits, and the demographics are 
> turning more unfavorable with all the baby boomer retirements," said Nigel 
> Gault, senior economist at Global Insight, a Lexington, Mass., forecasting 
> firm. "The deeper you get into the next presidency, the more likelihood 
> that taxes will have to be raised."
>
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Kai Eiselein
Editor, Latah Eagle