Thursday, September 03, 2009

Obama Would Keep $85 Billion in Tax Breaks for Working Poor

In the latest news from Capitol Hill, Obama has proposed to adding over $85 billion to the national deficit in order to extend two tax breaks for the working poor over the next two decades. Critics are saying this comes as a direct violation of Obama’s promise to only support fiscally neutral policies.

The tax breaks were included in the economic stimulus package Obama signed soon after taking office in January and are scheduled to expire in 2011. But last week, in its midyear update of the federal budget, the White House said it plans to extend the tax cuts through 2019 without covering the cost by cutting spending or raising taxes elsewhere.

The reason? Technically, the stimulus amended a series of sweeping tax cuts enacted in 2001 during the Bush administration. Obama has repeatedly said he does not expect Congress to cover the enormous cost of maintaining the Bush tax cuts past their 2010 expiration date. And because the stimulus provisions are now part of the Bush tax cuts, Congress shouldn't have to pay for them, either, White House budget documents say.

"Since these two policies… represent expansions of tax cuts first enacted in the 2001 tax bill, extension of the policies are incorporated in the baseline projection of current policy," the documents explain in a footnote.

Continue reading at Washington…

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