- The Washington Times - Sunday, November 2, 2008

Barack Obama’s middle-class rescue plan is turning into the incredible shrinking tax cut because its original beneficiaries have been reduced in the past few months from taxpayers making less than $250,000 to those earning much less.

The freshman senator, who has made his “middle-class tax cut” the core of his economic agenda, has used differing qualifying income figures in his speeches and ads to identify which income group would see its taxes cut under his proposal. In one TV ad, he reduced the plan’s $250,000 threshold by as much as $50,000.

Then, in an interview last week, Sen. Joseph R. Biden Jr. of Delaware, his vice presidential running mate, appeared to cut the income eligibility figure to $150,000, followed by Obama campaign surrogate Bill Richardson, the tax-cutting governor of New Mexico, who further lowered the definition of middle class to $120,000 or less.

“At this rate, it won’t take long until Obama is again raising taxes on Americans making as little as $42,000 a year,” said Alex Conant, the Republican National Committee’s spokesman, referring to Mr. Obama’s vote for a Democratic budget resolution that would have let most of President Bush’s tax cuts expire, effectively raising income taxes on Americans making $41,500, according to FactCheck.org.

The Obama tax plan’s descending income thresholds has not escaped the notice of Sen. John McCain’s campaign, nor the RNC’s army of researchers, who were sending out a drumbeat of press releases all week, monitoring the time and place of the Obama campaign’s changing numbers. Among those changes:

— In July: “If you make $250,000 a year or less, we will not raise your taxes. We will cut your taxes,” Mr. Obama said in remarks at Powder Springs, Ga.

— In October: “If you have a job, pay taxes and make less than $200,000 a year, you’ll get a tax cut,” Mr. Obama said in a TV ad titled “Defining Moment” that has been running across the country.

— Last week: “What we’re saying is that [Mr. Bush’s tax cuts to the wealthy] … should go to middle-class people - people making under $150,000 a year,” said Mr. Biden in an interview with WNEP in Scranton, Pa.

— Friday: Mr. Obama “is basically looking at $120,000 and under [as] among those that are in the middle class and there is a tax cut” for them, Mr. Richardson said on KOA-AM in Denver.

The Obama campaign’s varying words on who would be eligible for Mr. Obama’s tax cuts left economists Friday scratching their heads and wondering just who would benefit and who would not.

“Every time we look, his plan changes. Anything is possible,” said McCain economic adviser Kevin Hassett at the American Enterprise Institute.

The Obama campaign denied moving away from the senator’s original tax-cut plan. It said Friday that Mr. Richardson “simply misspoke” when he used the $120,000 figure and “meant to say people making less than $250,000 won’t see their taxes increased.” The statement said: “Senator Obama wouldn’t raise taxes on families making less than $250,000.”

However, other economic analysts said that the Obama campaign’s declining income eligibility levels for his tax cuts raises troubling questions about Mr. Obama’s promise to give tax cuts to 95 percent of all taxpayers.

“A lot of people may vote for Obama thinking they are going to get a tax cut are going to get a tax hike,” said Phil Kerpen, director of policy at Americans for Prosperity, a free-market advocacy group.

“What is clearly going on here is the changing definition of what constitutes the middle class,” said economist Bruce Bartlett, adding that “the vast majority of Americans say they are middle class and very few think of themselves as either rich or poor.”