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Obama Tweaks Tax Plan to Rebut McCain

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October 21, 2008 9:21 PM

ABC News' Teddy Davis, Hope Ditto, Arnab Datta, and Ferdous Alfaruque Report:

Facing criticism from John McCain that his tax plan constitutes "welfare," Barack Obama recently added a work requirement to one of his proposals.

"They started saying this was welfare," said Obama adviser Austan Goolsbee. "So, just so they would absolutely not be able to say that, we decided that for the last two percent we'll simply add a work requirement."

Goolsbee discussed the change to Obama's universal mortgage credit while debating McCain adviser Douglas Holtz-Eakin at the Council on Foreign Relations on Tuesday.

The purpose of Obama's 10 percent universal mortgage credit is to aid taxpayers who do not itemize when filing taxes. The Obama campaign estimates that it would provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.

Watch the video here.

Goolsbee referred to the number of non-working Americans who would benefit from the original understanding of Obama's plan as an insignificant "sliver" when compared to the much larger number of working Americans who would benefit from Obama's plan.

Although the number of non-working beneficiaries would have been just a "sliver" under the original understanding of Obama's plan, Goolsbee said the Democratic nominee's economic team decided to add a work requirement to it in order to block McCain from being able to characterize any aspect of his plan as "welfare."

"When did this change? I'm just curious," an incredulous Holtz-Eakin asked Goolsbee.

"About two weeks ago," replied Goolsbee, adding that when the proposal was announced in September 2007, 98 percent of its benefits went to workers.

The work requirement on Obama's universal mortgage credit was never announced publicly, prompting Holtz-Eakin to suggest that it was just made up for purposes of the CFR debate.

"I think they just made it up," Holtz-Eakin told ABC News. "They will say anything in the moment. This is like trying to pin Jello to the wall."

During a Tuesday conference call with reporters, Holtz-Eakin mocked Goolsbee's claim that Obama could have changed his plan two weeks ago in response to McCain attacks that did not start until after Obama met with Joe "The Plumber" Wurzelbacher nine days ago.

"What we saw today was just another example of the Obama campaign being willing to say potentially anything in order to avoid the tough questions of the moment," said Holtz-Eakin.

Goolsbee told ABC News that he was not exactly sure when the conversation among Obama economic advisers took place. He said it's possible that it did not take place until a week ago when McCain started hammering Obama on the issue. Goolsbee said it was also possible that it happened earlier since some conservative columnists were criticizing Obama on this point before the Republican nominee started making the line of attack himself.

Goolsbee argued that his Tuesday reference to adding a work requirement referred not to a change in policy but rather a change in what the Obama campaign was making explicit.

"Our thing has never been welfare," said Goolsbee. "It was always our intention that there was a work requirement."

Asked how the Obama campaign made its work requirement on the mortgage credit explicit before Tuesday, Goolsbee said, "We made it explicit among ourselves," adding that he thinks Obama economic adviser Jason Furman might have made this point to reporters in recent interviews conducted on background.

Goolsbee suggested that one of the reasons why the Obama campaign did not previously feel a need to make its work requirement explicit is that the refundable tax credits which exist in current U.S. tax law -- the Earned Income Tax Credit, the child credit, and the health coverage for displaced workers credit -- are all tied to either current work (in the case of the first two) are recent work (in the case of the third).

Goolsbee correctly noted that Obama's other refundable tax credits were clearly tied to work. An individual must work in order to qualify for Obama's making-work-pay credit, an individual must have earnings from a job in order to benefit from Obama's saver's credit, parents must work in order to benefit from Obama's refundable child care tax credit, and college students must perform community service in order to benefit from Obama's college tax credit.

Goolsbee also said McCain's criticism smacks of "hypocrisy" since a refundable tax credit -- with no work requirement -- is a core component of the Arizona senator's health plan.

Now that Obama has made clear that all of his tax credits are work-related, Holtz-Eakin contends that Obama has to defend the decision to strip the universal mortgage tax credit from workers who lose their jobs.

"That puts him in a position of having policies which say, 'You get laid off . . . good luck,'" said Holtz-Eakin.

Goolsbee rebutted Holtz-Eakin's criticism by saying that someone who lost his or her job would not immediately lose the universal mortgage credit. The worker could still qualify by working any time in the last taxable year or by having a spouse who works.

A tax expert with an organization which has scored the candidates' proposals said he was unaware of the work requirement on Obama's mortgage tax credit. At the same time, he agreed with Goolsbee that Obama's other refundable tax credits, as well as ones in existing law, are clearly work-related.

"They might have been thinking this all along," said Roberton Williams, a principal research associate at the non-partisan Tax Policy Center. "But anytime you clarify something in a way that protects you, you are bound to draw criticism from your opponent."

October 21, 2008 in Biden, Joe, McCain, John, Obama, Barack, Palin, Sarah, Vote 2008: Democrats, Vote 2008: Republicans, White House | Permalink | User Comments (868)

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"They started saying this was welfare," said Obama adviser Austan Goolsbee. "So, just so they would absolutely not be able to say that, we decided that for the last two percent we'll simply add a work requirement."

---

Can't fault the reporting, because Goolsbee said it.

But I'm confused. I seem to remember the work requirement always being there. And Obama for much longer than two weeks has actually been saying the tax cuts are for "95 percent of working Americans."

I even remember in the first debate he said 95 percent of Americans and then corrected himself.

Posted by: Paul | Oct 21, 2008 9:33:53 PM

Obama Alters Tax Plan to Rebut McCain
----------------------------------

Ahahaha! Another flip-flop by Barack Obama. This can certainly be classified as the "mother of all flip-flops"!!

Barack Obama is a closet Marxist!

America wake up.

Posted by: Natasha | Oct 21, 2008 9:35:51 PM

Questions:

Would you support a candidate who distributes money set aside for education to organizations that have little to do with education rather than to programs that show that they have helped students improve their math and science scores?

Would you support a guy that will increase taxes on elderly retired citizens.

Would you support a guy who has proven to have incorrect judgment on recent foreign policy issues?

Would you support a guy who has spent millions, yet there was no increase in the standard of living or improvement in the crime rate?

Would you support a guy who through his tax plan that may keep you from getting a raise and possibly getting you laid off?

Would you support a guy who financially supports those who support terrorism and racism?

Posted by: Mikah | Oct 21, 2008 9:43:08 PM

The mother of all flip flops? Really, Natasha.

How about John McCain opposing and then supporting the Bush tax cuts?

That wasn't bigger than Obama's tinkering around the edges?

And as I said above, I'm not sure I buy its a change, as I remember the tax plan always being like this.

Now as for the closet Marxist claim, is that because - oh my gosh - Obama's plan has progressive rates? Please explain yourself if you can.

Posted by: Paul | Oct 21, 2008 9:44:28 PM

Obama admits he supports Marxism during an interview with Bill O’Reilly on Fox News...


***The Obama [KGB] Squad has blocked the video but the text of the interview is still posted.


By Scott Miller

Karl Marx, author of The Communist Manifesto, penned the recap of his basic economic philosophy below:

“From each according to his ability, to each according to his needs”

Barack Obama, in an interview with Bill O’Reilly on Fox News, admits that he shares the above Marxist economic theory. Watch this (5:47 into the clip, but watch the whole clip):

“If am sittin’ pretty, and you’ve got a waitress who is making minimum wage plus tips, and I can afford it and she can’t, what’s the big deal for me to say I’m going to pay a little bit more… that is neighborliness”

No Senator, that is Marxism. What kind of dementia makes these liberal Marxists think they have the right to tell someone else, another free human being, how much money they should or should not have? It’s none of your damn business Barack… but the hell out!

And some of you thought I was exaggerating when I said this clown was a Marxist…


Obama Admits He Supports Marxism
http://theconservativepost.com/WordPress/?p=550

Posted by: Natasha | Oct 21, 2008 9:44:39 PM

Mikah - John McCain financially supports terrorism? I didn't know that.

Posted by: Paul | Oct 21, 2008 9:45:49 PM

Natasha, by that definition, every politician who supports progressive rates is a Marxist.

Bush? Marxist.

His dad? Marxist.

Reagan? Marxist.

... at least according to Natasha.

Posted by: Paul | Oct 21, 2008 9:47:39 PM

The Wall Street Journal


Obama's Tax Plan Is Really a Welfare Plan


Barack Obama's tax plan is the opposite of supply-side economics. He proposes to raise marginal rates for just about every federal tax. He also proposes a raft of tax credits that taxpayers can receive if they engage in various government-specified activities.

Moreover, the tax credits would mostly go to those who pay little or nothing in federal income taxes. His trick is to make the tax credits "refundable." Thus, if the tax credit is for $1,000, but the taxpayer would otherwise only pay $200 in taxes, the government would write a check to the taxpayer for $800. If the taxpayer pays nothing in federal income taxes, the government would pay him the whole $1,000.

Such credits are not tax cuts. Indeed, they should be called The New Tax Welfare. In effect, Mr. Obama is proposing to create or expand a slew of government spending programs that are disguised as tax credits. The spending on these programs is then subtracted from the total tax burden, in order to make the claim that his tax plan is a net tax cut overall.

On the tax side of the ledger, the details released by his campaign last week confirm what a President Obama has in mind for our most productive citizens. The top individual income tax rate, for example, would be increased by 13%, to 39.6%; the next-highest rate would be raised to 36%. The top rates on capital gains and dividends would rise by a third, to 20%

The Social Security payroll tax would be raised between 16% to 32% for families making over $250,000 a year. This means that the real returns these people get from their lifetime payments into the retirement program will be driven below 0%, according to my own previous research, which was published by the Cato Institute and elsewhere.

Mr. Obama also wants a permanent federal estate tax, with a top rate of 45%; his health-insurance plan includes a new payroll tax on employers; and he also contemplates several increases in the corporate income tax, including a new so-called windfall profits tax on oil companies.

Then there is the spending side of the ledger. Mr. Obama proposes a fully refundable Making Work Pay Tax Credit, which would have the government pay out $500 to each worker and $1,000 to couples -- reminiscent of George McGovern's 1972 election proposal for the government to send a $1,000 check to everyone.

His American Opportunity Tax Credit would provide a $4,000, fully refundable tax credit for college tuition expenses. His Mortgage Interest Tax Credit would provide a 10% credit -- refundable -- to offset mortgage interest payments for lower- and middle-income families. His Health Care Tax Credits, which the campaign says "will ensure that health insurance is available and affordable for all families," include "a new refundable 50 percent health tax credit on employee premiums paid by employers."

Currently existing tax credits would also become spending programs in the Obama tax program. The Savers Credit would be made fully refundable, and would be expanded, according to the campaign, "to match 50% of the first $1,000 of savings for families that earn under $75,000." The Child and Dependent Care Tax Credit would be made refundable and expanded to allow "low-income families to receive up to a 50 percent credit on the first $6,000 of child care expenses."

The Earned Income Tax Credit is already refundable. Mr. Obama would expand it to "increase the number of working parents eligible for EITC benefits, increase the benefits available to noncustodial parents who fulfill their child support obligations, increase benefits for families with three or more children, and reduce the EITC marriage penalty, which hurts low-income families." In short, welfare spending is to be increased by paying more money out to low-income income tax filers.

The latest Congressional Budget Office data shows the bottom 40% of income earners already pays no income taxes. Indeed, they receive a net payment from the federal income tax system -- meaning from the taxpayers -- equal to 3.8% of all federal income taxes, because of the refundable tax credits under current law. The middle 20% of income earners, the true middle class, pays 4.4% of federal income taxes.

Overall, the bottom 60% of income earners pay less than 1% of federal income taxes on net. When "tax credits" primarily go to this group in the form of checks from the government (rather than a reduction in their tax burden) it is simply an abuse of the language to call the spending a tax cut.

Consequently, to say, as the campaign does say, that the candidate's tax plan is a tax cut on net -- and that it would limit taxes to 18.2% of GDP -- is grossly misleading. The Obama tax plan would sharply increase real taxes. It also would come nowhere near to paying for the massive increases in federal spending he has proposed, including the spending that is disguised in the form of refundable tax credits.


The Wall Street Journal

http://online.wsj.com/article/SB121910303529751345.html?mod=most_emailed_day

Posted by: Natasha | Oct 21, 2008 9:48:05 PM

And, frankly Natasha, if we're going to indict all Americans, isn't that really an indictment of our entire way of life?

Well, I'm not going to sit here and listen to you badmouth the United States of America.

Posted by: Paul | Oct 21, 2008 9:49:10 PM

Hope Ditto, Arnab Datta?

Please tell me this is a joke.

Or maybe just a bad dresm! Please wake me up!!!!

Posted by: Jim | Oct 21, 2008 9:50:02 PM

All politicians run by saying they will cut taxes. Nothing new. It's a meaningless promise. Congress writes the tax bills. Congress will raise taxes providing the cover for Obama to say he never wanted it, but will sign the bill into law.

Posted by: uncle Mo | Oct 21, 2008 9:51:15 PM

this is good; I would be comfortable with an Obama Presidency if he promises to take his marching orders from Sen. McCain throughout his term.

Posted by: Obamacrat for McCain | Oct 21, 2008 9:53:18 PM

The campaign has come down to this, putting aside all the silliness about Marxism, communism, socialism, Ayersism, etc.

The McCain campaign is privately acknowledging that Colorado, New Mexico and Iowa are "gone." They account for 21 electors.

McCain is desperately trying to compensate for that by winning Pennsylvania, which also has 21 electors.

In addition to winning Pennsylvania, McCain also needs to hold everything else Bush won four years ago.

So that's the race. Obama has a solid lead in Pennsylvania (maybe double digits) but McCain is making an all-out effort there.

And McCain also needs to defend Virginia, North Carolina, Nevada, Missouri, Florida and Ohio.

At this point, barring some shocking news development, its down to a ground game - who can more effectively make the closing local arguments in those states, and who can more effectively get out the vote.

Posted by: Paul | Oct 21, 2008 9:58:06 PM

Not welfare!

Posted by: Nancy | Oct 21, 2008 9:58:08 PM

omg!!! SOCIALISM!!

listen you retards... i dont care if you call it dogpoop, its better than ANY republican proposal i have heard in 40 years.

i am ALL FOR 100% SOCIALISM if thats what this country needs to get back some of its inertia and momentum that the rich elites have eating into with their overt greed.

as a nation ,if the obama/democratic agenda doesnt work then we can always go back to something more conservative or go forward to something just new and different but right now , ITS TIME FOR A CHANGE AND SATAN HIMSELF WOULD BE PREFERABLE TO THE REPUBLICANS....'

GO GO GO !!!!OBAMA OBAMA OBAMA!!!
DEFEAT THE REPUBLICANS AND THEIR WAR MONGERING ELITIST AGENDA!!!!!

Posted by: bah | Oct 21, 2008 9:58:26 PM

The Chicago Tribune
Editorial


Problems with endorsing Obama
October 21, 2008

My, my. In their dumbfounding endorsement of Barack Obama, it seems to me that members of the Tribune's editorial board must not have first read some pages in their own paper. Obama's negatives have been cited ad nauseam, so I won't repeat all of them. But there are some downsides in his candidacy that were not addressed in the unpersuasive endorsement statement, and they are a big deal to me. They include:

• The senator is a radical socialist with stated preferences for the Marxist notion of redistributing the wealth. Does the editorial board want the U.S. to morph into the socialist model of a dying Europe? Does it want our culture destroyed?

• With the likely veto-proof Democrat majority in Congress, a President Obama will have the opportunity to name justices to the U.S. Supreme Court. Is it the desire of the editorial board to have a leftist majority on that bench to creatively rewrite the Constitution and restructure society without regard to what citizens may think?

• Much closer to home, the editorial board has observed the wonderful things that happen in Illinois when one party controls Chicago, Cook County and the state. Does the editorial board want the entire nation governed as miserably as is Illinois with Democrats controlling the White House, Congress and the judiciary?


I don't advocate any of these destructive directions for our country.


—Charles F. Falk, Schaumburg


http://www.chicagotribune.com/news/nationworld/chi-1021vplettersbriefs0oct21,0,3600252.story

Posted by: Natasha | Oct 21, 2008 10:04:00 PM

Hey bah, it took the Russians 70 years to go back.

Look, there a plenty of socializt countries in the world. Why don't you go there.

Oh but perhaps maybe you like all the consumer goods and quality health care we have here.

Hey bah, ow many flat screen TV's do you have. I wonder how many flat screens Venezuelans have? Better do yoru home work.

Oh that's right you probably never did your homework. You probably spent too much time hanging out and gettign high so now you watnt to live off my acrifice and success.

Screw you, buddy, and all your ilk. You aren't entilted to a dime of my success!

Posted by: Jim | Oct 21, 2008 10:10:53 PM

I love that they really do listen!

Posted by: Truth Matters | Oct 21, 2008 10:12:00 PM

Mr. Falk,

You must realize the pleasure we will have when we see all the talking head anchors signing off from their propaganda pulpits with "Ala Akbar"!

(That AK pointed at their head from behind the set will be a big motivator for them!)

Posted by: Jim | Oct 21, 2008 10:16:33 PM

Marxists/Socialists/Communists for Obama


America wake up! The American Marxists/Socialists/Communists have posted this proclamation right on Barack Obama's official website (see link below)


Marxists/Socialists/Communists for Obama

"This group is for self-proclaimed Marxists/Communists/Socialists for the election of Barack Obama to the Presidency. By no means is he a true Marxist, but under Karl Marx's writings we are to support the party with the best interests of the mobilization of the proletariat. Though the Democratic Socialists of America or the Communist Patty of America may have more Socialististic values, it is pointless to vote for these candidates due to the fact that there is virutally no chance they will be elected on a National level. The members of this group are not Leninists, Stalinists, etc. and do not support or condone the actions of North Korea, China, Cuba or any other self-procalimed "Marxist States." They do not in anyway represent the Marxist philosophy nor do they represent Socialism/ Communsim. We support Barack Obama because he knows what is best for the people!"


Source:

BarackObama.com

http://my.barackobama.com/page/community/group/MarxistsSocialistsCommunistsforObama

Posted by: Natasha | Oct 21, 2008 10:17:53 PM

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