Obama targets middle class with new plan

President Obama trained his sights on the sagging economy Monday, outlining a series of proposals to ease the burden on middle-class families, such as expanding the child tax credit and easing student loan bills, that will be included in his second federal budget next week.

A week after Mr. Obama took on some of Wall Street’s biggest players, Monday’s announcement is another preview of the more populist tone expected to dominate Mr. Obama’s State of the Union address to Congress on Wednesday. Aides say the president will focus in his speech on ways to restore economic security for struggling families at a time of 10 percent national unemployment.

“Hopefully some of these steps will re-establish some of the security that’s slipped away in recent years,” Mr. Obama said, after a meeting of the White House’s Middle Class Task Force, headed by Vice President Joseph R. Biden Jr. “Because in the end, that’s how Joe and I measure progress — not by how the markets are doing, but by how the American people are doing.”

Separately, administration officials said Monday that Mr. Obama will ask Congress to freeze spending for some domestic programs for three years beginning in 2011, according to the Associated Press.

The spending freeze would apply to a relatively small portion of the federal budget, affecting a $477 billion pot of money available for domestic agencies whose budgets are approved by Congress each year. Some of those agencies could get increases, others would have to face cuts; such programs got an almost 10 percent increase this year. The federal budget total was $3.5 trillion, the AP reported.

The three-year plan will be part of the budget Mr. Obama will submit Feb. 1, senior administration officials said, commenting on condition of anonymity to reveal private details.

The Pentagon, veterans programs, foreign aid and the Homeland Security Department would be exempt from the freeze, the AP reported.

The focus on jobs and the economy comes at a politically difficult time for Mr. Obama and the Democrats, amid falling polls, electoral setbacks and new troubles for Mr. Obama’s signature health care plan in Congress.

The five-point plan would nearly double the child and dependent care tax credit for families earning less than $85,000 a year and provide a $1.6 billion boost in child care funding to help an additional 235,000 children, according to the White House. It would also increase by $102.5 million current federal aid to families caring for elderly relatives.

In addition, Mr. Obama called for capping federal student loan repayments at 10 percent of income above a basic living allowance and requiring employers who don’t offer retirement plans to enroll their employees in a direct-deposit IRA savings account. Individual workers would be permitted to opt out of the savings plan if they chose.

“Taken together, these and other middle-class proposals we believe will go a long way toward easing the strain on working families, allowing them to save more today to get further ahead tomorrow,” Mr. Biden said.

But as with Mr. Obama’s recent financial regulatory proposals, critics of the administration argued the ideas would do little to create jobs. Republicans have stepped up their criticisms of Mr. Obama’s domestic agenda as their political fortunes have risen in recent weeks.

“None of the proposals outlined by the White House today would, in fact, create jobs,” House Republican Minority Leader John A. Boehner said. “And they do nothing to protect Americans from the president’s job-killing agenda, including the government takeover of health care, the ‘cap and trade’ national energy tax, the reckless spending and new debt, and more taxes and regulations that make it harder for middle-class families and small businesses to save, invest and hire.”

Rep. Dave Camp, ranking Republican on the House Ways and Means Committee, said he saw little in Mr. Obama’s plan that will lead employers to boost their payrolls.

“Moreover, if these proposals are coupled with higher taxes or more mandates on small businesses, the president’s plan could end up making it tougher for middle-class families to find a job,” Mr. Camp said.

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