President Obama today sought to refocus the White House's efforts to shore up the U.S. economy, with a pledge to extend tax cuts for Americans earning less than $200,000 per year. The president remained silent about the fate of Bush-era tax cuts to wealthier Americans, while also issuing a plea to Republicans to reach across the partisan aisle to ease passage of a small-business jobs bill he argues is crucial to the nation's recovery.
"I ask Senate Republicans to drop the blockade," Obama said during a Rose Garden address Monday. "I know we're entering election season. But the people who sent us here expect us to work together to get things done and improve this economy." Obama highlighted the small-business bill as one initiative among several aimed at promoting "growth and hiring in the short term" while increasing "competitiveness in the long term."
The administration indicated that the White House will be rolling out a series of new economic initiatives in the coming weeks. Here's a look at how these individual measures may affect your own economic bottom line:
• Extending tax cuts for the middle class. Though the president has been focused on allowing the Bush tax cuts to languish, he confirmed Monday that he does support extending tax cuts for the middle class. But defining who is and is not "middle class" is a thorny political dilemma — one that the White House and Democratic leaders aren't about to wade into during an election cycle in which voters are already sharply divided over how and whether government should aid an economic recovery. Nevertheless, some tax experts note that the $250,000 annual threshold for a middle-class household gives a wide berth to the upper end of the middle class — and that the existing scheme of middle-class tax cuts still disproportionately skews to the advantage of higher earners, an imbalance that will continue if the cuts are preserved in their present state. Citing an analysis from the Joint Committee on Taxation, Chuck Marr and Gillian Brunet of the Committee on Budget and Policy Priorities note that the existing middle-class cuts "benefit not only people whose incomes fall within the lower brackets but also those whose incomes exceed those brackets. In fact, high-income people actually receive much larger benefits in dollar terms from the so-called 'middle-class tax cuts' than middle-class people do." Joint Committee figures show that households earning more than $200,000 would get $6,300 on average under the extension of the present cuts, while families making between $50,000 and $75,000 would rate an average $1,132 cut.
[Video: Critics: President remains a mystery]
• Allowing Bush tax cuts to expire for high earners. The administration has repeatedly stressed that it would back the expiration of tax cuts for those making $200,000 or more (or whose families combined make $250,000 or more). White House officials argue that, once the cuts lapse, higher-earning Americans would help replenish government coffers by paying higher taxes. But opponents argue that this plan would indirectly affect everyone by raising marginal rates. Recently, the National Association for Business Economics found that a majority of their economists opposed allowing these cuts to expire. According to the IRS, 4 percent of Americans earn more than $200,000 a year.
• Small-business bill. This $30 billion legislation offers tax breaks to owners of small businesses and expands loan programs to such businesses. Democrats say the bill provides necessary incentives for small businesses to increase spending and hiring. Republicans oppose the measure, citing the harmful effect of another $30 billion added to the national debt. This past July, GOP senators also indicated that they were withholding support because Democrats would not allow Republicans to introduce some key amendments. Republicans also protest that Democrats have repeatedly set aside this bill and have not made it a priority. Some reports suggest that small businesses are holding back spending and hiring until the legislation clears Congress. Republicans such as House Minority Leader John Boehner have repeatedly argued that the administration is to blame for scaring small businesses.
• Investing in clean energy, infrastructure, R&D. A good chunk of money from the 2009 stimulus package went to clean-energy programs, infrastructure and research and development, with infrastructure investment alone making up more than $105 billion of the $787 billion total. Those expenditures were supposed to stimulate job growth — and haven't shown strong results in the struggling labor economy. These funds will also soon expire, leaving future prospects uncertain in labor-intensive industries such as construction and energy. Now the administration is pressing Congress to commit more money, so that the momentum built by the stimulus spending won't lapse.
— Rachel Rose Hartman is a politics reporter for Yahoo! News.
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