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01-25-2010, 01:15 PM
http://online.wsj.com/article/SB10001424052748703808904575024772877067744.html?m od=WSJ_WSJ_US_PoliticsNCampaign_2
Obama Unveils Tax Initiatives to Help Middle Class
By HENRY J. PULIZZI And MARTIN VAUGHAN
WASHINGTON—Previewing some of the main themes of this week's State of the Union address, President Barack Obama proposed Monday an expansion of the child-care-tax credit, a cap on student-loan payments and other initiatives designed to help the middle class.
At a meeting of the White House's Task Force on Middle Class Families, Mr. Obama and Vice President Joe Biden announced their support for a near doubling of the child- and dependent-care tax credit for families that make less than $85,000 a year. The tax-credit rate would be boosted to 35% from 20% of qualifying expenses.
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President Barack Obama and Vice President Joe Biden at a meeting of the Middle Class Task Force on Monday.
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Faced with continuing double-digit unemployment and public unease over his handling of the economy, Mr. Obama is expected to zero in on economic issues during Wednesday's State of the Union and ahead of November's midterm congressional elections. The proposals he unveiled Monday will be included in the administration's fiscal 2011 budget proposal, set for release in a week.
"Joe and I are going to keep on fighting for what matters to middle-class families," Mr. Obama said at the White House. "None of these steps alone will solve all the challenges facing the middle class... but hopefully some of these steps will reestablish some of the security that's slipped away in recent years."
Under its proposal, the White House says all eligible families making under $115,000 a year would see a bigger dependent-care-tax credit. Families could claim up to $3,000 in expenses for one child or $6,000 for two children. Families making less than $80,000 annually could claim a maximum credit of $2,100, up $900 from current law.
Mr. Obama also proposed limiting a student's federal loan payments to 10% of his or her income above a basic living allowance, requiring all employers to give employees the option of enrolling in a direct-deposit IRA, expanding the "saver's tax credit," and adding $52.5 million to a program that helps families care for aging relatives.
It's unclear how much the series of initiatives would add to the federal deficit, which is expected to top $1.5 trillion this fiscal year. Mr. Obama, who has endorsed a bipartisan congressional panel to address fiscal issues, is expected to address deficit fears in the State of the Union speech.
Under the administration's student-loan proposals, remaining debt would be forgiven after 10 years of payments for those in public service work and 20 years for others. The White House said the monthly payment for a single borrower earning $30,000 who owes $20,000 in loans would be $115 a month, compared to $228 a month under the standard 10-year repayment plan.
The proposed changes to the saver's credit would provide a government match of 50% of the first $1,000 of contributions by families earning up to $65,000 and provide a partial credit to families earning up to $85,000. The tax credit would be refundable under the administration's plan.
The automatic IRA enrollment and saver's credit, were included in last year's budget proposals, though the new version of the saver's credit is more generous.
Republican opposition to the plans is likely to center on the impact of the automatic-enrollment proposal on small businesses, and the overall cost of the measures. House GOP Leader John Boehner complained that none of the initiatives would boost jobs.
"The American people don't need more photo-ops; they need new policies that create jobs. Republicans have been offering common-sense solutions to help create jobs for struggling families and small businesses," Mr. Boehner said in a statement.
Treasury Secretary Timothy Geithner, appearing at the White House with Messrs. Obama and Biden, said the proposals are needed to help people rebuild their savings after the debt-fueled financial crisis.
"This crisis did a huge amount of damage to people's confidence in their job security," Mr. Geithner said.
"Right now, the middle class is nowhere near as strong as it needs to be," Mr. Biden said.
Write to Henry J. Pulizzi at henry.pulizzi@dowjones.com
Obama Unveils Tax Initiatives to Help Middle Class
By HENRY J. PULIZZI And MARTIN VAUGHAN
WASHINGTON—Previewing some of the main themes of this week's State of the Union address, President Barack Obama proposed Monday an expansion of the child-care-tax credit, a cap on student-loan payments and other initiatives designed to help the middle class.
At a meeting of the White House's Task Force on Middle Class Families, Mr. Obama and Vice President Joe Biden announced their support for a near doubling of the child- and dependent-care tax credit for families that make less than $85,000 a year. The tax-credit rate would be boosted to 35% from 20% of qualifying expenses.
View Full Image
0125task
Getty Images
President Barack Obama and Vice President Joe Biden at a meeting of the Middle Class Task Force on Monday.
0125task
0125task
Faced with continuing double-digit unemployment and public unease over his handling of the economy, Mr. Obama is expected to zero in on economic issues during Wednesday's State of the Union and ahead of November's midterm congressional elections. The proposals he unveiled Monday will be included in the administration's fiscal 2011 budget proposal, set for release in a week.
"Joe and I are going to keep on fighting for what matters to middle-class families," Mr. Obama said at the White House. "None of these steps alone will solve all the challenges facing the middle class... but hopefully some of these steps will reestablish some of the security that's slipped away in recent years."
Under its proposal, the White House says all eligible families making under $115,000 a year would see a bigger dependent-care-tax credit. Families could claim up to $3,000 in expenses for one child or $6,000 for two children. Families making less than $80,000 annually could claim a maximum credit of $2,100, up $900 from current law.
Mr. Obama also proposed limiting a student's federal loan payments to 10% of his or her income above a basic living allowance, requiring all employers to give employees the option of enrolling in a direct-deposit IRA, expanding the "saver's tax credit," and adding $52.5 million to a program that helps families care for aging relatives.
It's unclear how much the series of initiatives would add to the federal deficit, which is expected to top $1.5 trillion this fiscal year. Mr. Obama, who has endorsed a bipartisan congressional panel to address fiscal issues, is expected to address deficit fears in the State of the Union speech.
Under the administration's student-loan proposals, remaining debt would be forgiven after 10 years of payments for those in public service work and 20 years for others. The White House said the monthly payment for a single borrower earning $30,000 who owes $20,000 in loans would be $115 a month, compared to $228 a month under the standard 10-year repayment plan.
The proposed changes to the saver's credit would provide a government match of 50% of the first $1,000 of contributions by families earning up to $65,000 and provide a partial credit to families earning up to $85,000. The tax credit would be refundable under the administration's plan.
The automatic IRA enrollment and saver's credit, were included in last year's budget proposals, though the new version of the saver's credit is more generous.
Republican opposition to the plans is likely to center on the impact of the automatic-enrollment proposal on small businesses, and the overall cost of the measures. House GOP Leader John Boehner complained that none of the initiatives would boost jobs.
"The American people don't need more photo-ops; they need new policies that create jobs. Republicans have been offering common-sense solutions to help create jobs for struggling families and small businesses," Mr. Boehner said in a statement.
Treasury Secretary Timothy Geithner, appearing at the White House with Messrs. Obama and Biden, said the proposals are needed to help people rebuild their savings after the debt-fueled financial crisis.
"This crisis did a huge amount of damage to people's confidence in their job security," Mr. Geithner said.
"Right now, the middle class is nowhere near as strong as it needs to be," Mr. Biden said.
Write to Henry J. Pulizzi at henry.pulizzi@dowjones.com