- The Washington Times - Monday, September 12, 2011

ANALYSIS:

At its root, President Obama’s jobs stimulus plan pays for spending and tax cuts now by promising tax increases that wouldn’t kick in until 2013 — after next year’s elections — and would last through the rest of the decade.

His bill, which the White House submitted to Congress on Monday afternoon, amounts to $194 billion in spending and $253 billion in tax cuts in the next couple of years, all of which is funded by raising taxes by $467 billion over the rest of the decade.

Combined, it amounts to a net tax increase of $214 billion to pay for the spending.


Although many of the spending and tax-cut items have had bipartisan support in the past, the tax increases Mr. Obama proposed Monday instead have faced bipartisan opposition and have been rejected by Congress even when it was controlled by Mr. Obama’s own party.

Vice President Joe Biden looks on as President Barack Obama makes a statement on his proposed American Jobs Act legislation, Monday, Sept., 12, 2011, in the Rose Garden of the White House in Washington. (AP Photo/Pablo Martinez Monsivais)
Vice President Joe Biden looks on as President Barack Obama makes a ... more >

The White House said that this year is different because the economy needs a boost, and the need opens the path for proposals that just a few years ago seemed impossible on the tax-increase side.

“We have choices to make. In order to invest in jobs and growth, we’re going to have to pay for it. And we’re going to have to look at quite a few things that we’ve looked at before and ask the question: Should we do this in order to add to growth and create jobs?” said Jacob J. Lew, director of the White House Office of Management and Budget.

Mr. Obama said the spending and the tax cuts he proposes in the 155-page bill are items that have had bipartisan support in the past.

But the ways he offsets those benefits have faced bipartisan opposition.

The bill calls for $467 billion in tax increases overall over 10 years, which would fund $447 billion in spending and tax cuts in 2012. Most of the tax increases — $400 billion — would come from limiting tax deductions to the 28 percent level, which hits those who fall into higher income-tax brackets.

Mr. Obama has proposed that tax increase in previous budgets only to have it stripped out by Congress.

His bill also would remove tax breaks for oil companies, rewrite rules on taxes for corporate jets and tax some investment earnings at income-tax rates, rather than as capital gains.

“This would literally be tax and spend. That’s what this is — literally raise $450 billion and spend it,” said Douglas Holtz-Eakin, a former director of the Congressional Budget Office who now runs the conservative-leaning American Action Forum. “It’s one thing to say they’re paid for. It’s another thing to say I’m going to spend it now and pay for it after the election.”

Mr. Holtz-Eakin said the president’s plan appears to go after politically vulnerable targets such as oil companies and high-income taxpayers, but does not take a thought-out approach to a pro-growth tax policy.

“It’s an incoherent mishmash — it has no philosophy other than, ‘Let’s get some money,’ ” Mr. Holtz-Eakin said.

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