Obama Tweaks Tax Plan to Rebut McCain

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Obama Tweaks Tax Plan to Rebut McCain

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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All you cooky Republicans out there who are calling Obama's tax plan Socialism..I have a question for you! Are you receiving social security or plan to get social security? I have news for you..social security is a tenet of the Socialist doctrine..so is medicare..you poopy, uneducated Republicans! you are losers because your man McCain is going to lose in November and lose big..most of you are going to crawl under a rag on November 5. Bill Clinton was called Socialist when he ran in 92' and he balanced two budget and left us with a surplus..how is your man George Bush doing? Since most of you Republicans don't read..let me educate you..we are in a big deficit and owe china trillions of dollars! McCain economics is similar to Bush.."trickle down" and nothing has trickled down to the middle class..hence the reason we are in this morass right now..10 Billion dollars a month to keep the troops in Iraq and Afghanistan..If you think that did not contribute to the economic slump that we are in right now..then you need schooling. You Republicans have run this country's economy into the ground and had the nerve to raise signs in your so called convention that read "Country first". Lets tax the rich and invest in the middle class..that is common sense economics and you can call it socialism all you like but the name calling is not going to work this time..you cooky Republicans! Get ready for President Barack Obama! Heaven help us all and save us from the Republicans

Posted by: Stanley | Oct 21, 2008 10:19:14 PM

I don't know why we are arguing about welfare when Sarah Palin is such a big-time welfare recipient herself by making the Alaskan state fund her kids' travel.

Regarding McCain/ Palin's socialism charge, they have to convince us that Warren Buffet, an Obama supporter and adviser, supports socialism too.

Posted by: teddymaniac | Oct 21, 2008 10:20:37 PM

Natasha, Obama isnt marxist. His agenda is truly America first.

Posted by Bobba

http://blogs.abcnews.com/politicalradar/2008/10/palin-invokes-s.html?cid=135660873
--------------------------------------

Reply to Bobba:

Obama's political ideology is shaped by the "Carl Marx Doctrine" - do you even know what that is?

You are deeply confused my friend. McCain's agenda is truly America first.

Obama's agenda is truly his "Big Ego" first. (common characteristic among Marxist leaders).

Posted by: Natasha | Oct 21, 2008 10:23:40 PM

Thank God for John McCain to get this snake Obama in check with his socialist plans.

Posted by: Smith | Oct 21, 2008 10:27:31 PM

The Republicans are good at calling people names..Socialists, Marxist, Liberal and others..When they don't have a plan they resort to name calling. The labelled Bill Clinton a socialist and liberal in 92' and he was a better president than George W! George W is the worst president we have ever had and if McCain is elected he will be just as bad because they both believe in the stupid trickle down voodoo economic theory..which does not work..No tax for the rich and taxing the middle class..One does not have to be a rocket scientist to know that that would not work..There are two kinds of Republicans 1. People who are very rich and 2. People who pretend to be rich. The pretenders are now flocking to vote for Obama because they are feeling the pinch and have realized the trickle down voodoo economics don't work. Heaven help us all and save us from the Republicans!

Posted by: Stanley | Oct 21, 2008 10:30:44 PM

Bingo. Mr. Welfare. Mr. Liar. Mr. Obama.

Posted by: young_voter | Oct 21, 2008 10:33:28 PM

You are deeply confused my friend. McCain's agenda is truly America first.

It has become increasingly apparent that McCain is for McCain first.

Posted by: d | Oct 21, 2008 10:33:33 PM

Nothing sticks to Obama. As a politician nothing gets tied to him. He has no fear of any mistakes because it just will not change anything. I am shocked that this Country could possibly put him in the White House with such a checkered past.

Posted by: Mark | Oct 21, 2008 10:34:36 PM

Smith, If Obama is a snake you must be a vermin..you pretender to be rich Republican! You don't have a clue..you are clueless like McSame! "My friends" McCain. You Republicans are jokers and need a vowel..well let me give you one to begin..O OBAMA OBAMA OBAMA OBAMA. Heaven help us all and save us from the Republicans!

Posted by: Stanley | Oct 21, 2008 10:35:36 PM

So Obama basically admits his tax plans reward people who dont even work!

What a joke!

Is Obama campaigning for US presidency or France?

Posted by: Greg h | Oct 21, 2008 10:41:00 PM

When you focus on the distribution of the pie and not growing the pie you will stifle the American economy.

Lets put it this way if you take 32,000 from a rich person they will not invest that amount into their business and they will not hire another employee. Now take that 32,000 and spread it out over 32 "poor" people, what are they going to do with it? Spend it at Walmart? Fill their gas tanks? In other words send the money to China or to OPEC? So in all the economy not only lost $32000 and sent it overseas, you have kept another job from being created.

Your argument? Why does the rich person get to spend that? Well people are greedy and when they have excess money they wanted to make more money out of it thats why people invest and save. When you hire a new employee you do it because you think you can "make" more money. The pie grows, maybe the rich slice got bigger faster but if the pie does not grow everyone is poorer, everyone.

Posted by: eric b | Oct 21, 2008 10:53:50 PM

"You Republicans have run this country's economy into the ground blah blah blah..."

Posted by Stanley
----------------------------------

The Last Two Years

By Randall Hoven

The Obama/Biden ticket's entire campaign theme is based on "the last eight years." Maybe we should really look at "the last two years," or the time period when both the House and the Senate were run by Democrats.

In December 2006, after six years of Bush and the last month before the Democrats took over both houses of the national legislature, a snapshot of our economy looked like this.

Unemployment stood at 4.4%.
Real GDP growth over the previous four years (under a Republican President, House and Senate) averaged 3% per year.
A gallon of regular gasoline cost $2.30.
The S&P 500 stock index stood at 1418, or 84% above its post-911 low and more than 7% higher than when Bush took office.

Every year of Bush's Presidency, real (inflation-adjusted) disposable income per person went up. By the end of 2006, the average person was making 9% more in real terms than before Bush became President .

If you recall, that 2006 election was considered a referendum on Iraq. The people wanted change, so they threw out the Republicans and replaced them with Democrats. Welcome Harry Reid and Nancy Pelosi.

Here is how they handled Iraq once in office: Harry Reid told us that the Iraq war was "lost" and the surge was not "accomplishing anything." Senator Obama introduced legislation that would have prevented the surge and would have taken all US troops out of Iraq by March 2008 (that would be seven months ago, as you read this) .

Were they right?

Barack Obama now admits that "the surge succeeded." So much for that change. And as the surge succeeded, Congress's approval ratings plummeted. The latest CBS/New York Times poll has it at 12%, well less than half of the already low level it stood at when the Republican Congress was being tossed out in 2006.

The Democratic Congress did a great job, if what you're looking for in a Congress is continual investigation of Republicans. Did the White House out CIA agent Valerie Plame? No, it was the anti-White House Richard Armitage at State, but Congress investigated anyway. Did Alberto Gonzalez, with White House urging, fire nine prosecutors for political reasons? Probably not, and it wouldn't be a crime anyway, but Congress investigated, and is still investigating. Did the CIA, under orders from the White House, "torture" prisoners? No evidence of that yet, but Congress is on the case.

What Congress would not investigate was anything about Fannie Mae and Freddie Mac. In fact, they fought against such investigations and cast aspersions against anyone who would even doubt the soundness of those institutions. Here is what Barney Frank said:

These two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.

You can also see on video (see video URL below) how Democrats treated the regulators trying to reign in Fannie and Freddie.

But now we know what happened. Fannie and Freddie were run corruptly and ineptly and went bankrupt. Their $1.5 trillion portfolios had to be rescued by the government this year. Franklin Raines, the Clinton-appointed CEO of Fannie Mae who was vigorously defended by Congressional Democrats, was sued by government regulators for cooking the books to the tune of $10 billion to increase his own bonuses to the tune of tens of millions. He settled his suit for an estimated $25 million.

On the other hand, here is what the New York Times had to say in 2003 .

The Bush administration is rightly pushing for the Treasury Department to regulate the two giants, along with the network of federal home loan banks. Freddie Mac and Fannie Mae provide financing to lenders by creating a secondary market for mortgages. All told, these two institutions' debt portfolio exceeds more than $1.5 trillion. Their current regulator is ill equipped to keep tabs on Freddie's and Fannie's sophisticated hedging strategies and the other financial moves they use to manage their huge investments.

And here is what John McCain said on the Senate floor:

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac... I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

So on the big things, the surge in Iraq and the failure of Fannie Mae and Freddie Mac that led to our recent financial mess, the Democrats were wrong. Dead wrong. One hundred eighty degrees out wrong.

On the other hand, who supported the surge? George W. Bush and John McCain.

Who tried to strengthen the oversight and regulation of Fannie Mae and Freddie Mac? George W. Bush and John McCain.

In the case of the surge, Bush and McCain got their way. The result? Apparent victory in Iraq, a country that is now a democracy, at peace with its neighbors, no longer a WMD threat, no longer a terrorist sanctuary, and no longer filling hundreds of mass graves with hundreds of thousands of its own citizens.

In the case of Fannie and Freddie, Bush and McCain did not get their way - Barney Frank did. The result? The failure of Fannie and Freddie, law suits against their executives and the spark that sent banks failing and stocks falling across the globe to the point of threatening a Great Depression.

Let's vote for change. Let's undo what we did in 2006.

The Democrats’ Coverup Of The Fannie Mae & Freddie Mac Crisis (Video)

http://vodpod.com/watch/1038839-dems-refuse-to-reform-freddie-fannie-in-2004-video

American Thinker
http://www.americanthinker.com

Posted by: Natasha | Oct 21, 2008 10:54:06 PM

You know whats so funny? 40% of WORKING americans make so little they pay no taxes or write it all off so they pay no taxes.

Saying you have to WORK means NOTHING because they will still pay no taxes and then get the credit refund which is STILL welfare.

Obama has to come out and say if you pay no taxes you get no check. Whats so difficult about that?

Posted by: infoseeking | Oct 21, 2008 10:54:23 PM

OBAMA IS A FLIP FLOPPER.. IM NOT SURE HE UNDERSTANDS ANY OF THIS..
IF MCCAIN HAD FLOPPED LIKE THIS, IT WONT BE HEADLINED AS "OBAMA REVISED.". THE MEDIA HEADLINES WOULD SCREAM FOUL.
OBAMA IS STILL MAKING IT UP AS HE GOES
ANYTHING THAT WORKS..NOT READY TO LEAD
ADD SOME MORE BIG GOVERNMENT TO MAKE SOCUIA;ISM GO AWAY.
DOES OBAMA HAVE A PLAN?
OBAMA 'S SPIKED KOOLAID.
HE RENEGED ON THE CAMAPIGN FINANCING AND NOW THIS..

Posted by: TJ, THE CLINTONITE | Oct 21, 2008 10:57:21 PM

Natasha, Social Security is not welfare in it's strictest form. I paid into the system for 25 years, on a 6 figure income, and the government made interest on MY money all those years. I was stricken with MS, and became disabled. I weighted what I had paid in, plus interest, and what I draw, and the government is still ahead. Oh, and I opted out of all other hand-outs, and went BACK TO WORK! I don't mind sorting things for a charity for a few bucks an hour, because I am tired of Senator Government telling me how they can run my life better than I can. Oh, and my Medicare premium of $97/month reflects the crappy coverage I get, and you guessed it, I pay the difference.

Posted by: sybilll | Oct 21, 2008 11:03:04 PM

Is Obama campaigning for US presidency or France?

Posted by: Greg h
-----------------------------------

Ahahaha! Poor Obama... he has no prayer in France either!

Even France has learned her lessons from years of FAILED SOCIALISM and elected a right wing conservative - CAPITALIST Nicolas Sarkozy!

The French call him...

"Sarkozy l'Americain"!..... :-)

Posted by: Natasha | Oct 21, 2008 11:03:39 PM

hey jimmy boy...read the news. my president is going to tax you silly and give me and everyone else your "hard earned " money.

you selfish a55. do you like that idea? listen up moron...

i will be buying LOTS of new toys (new computer/ ps3 /etc ) with YOUR tax dollars....hey if that bothers you THEN YOU MOVE ,take your money with you(and dont forget your fat racist family).

bye...

Posted by: bah | Oct 21, 2008 11:04:09 PM

Obama said that 95% of WORKING AMERICAN WILL RECEIVE A TAX CUT!!!!!

Now, McCain want to inject WELFARE!!!

When Bush sent out stimulus check to WORKING AMERICAN WASN'T THAT WELFARE??

Posted by: sisterdearest09 | Oct 21, 2008 11:06:20 PM

http://taxcut.barackobama.com/?source=sem-pm-fts-jtp-search-us&gclid=CMLx94XsuZYCFQNHFQodFUhiLQ

see for self what the tax would be. Currently the tax on 250,000.00 is already 36% Obama's tax plan would raise it to 39%, and that is only on the amounts over 280,000.00, the 250,000.00 will be taxed at the original 36% the 30,000.00 will be taxed at 39%. Get your facts straight and stop reading reports from republicans they are all lies.

Posted by: bb | Oct 21, 2008 11:06:40 PM

Palin receiving Welfare for her children and billing the taxpayers in Alaska!!!!

Nov. 4th = Obama\Biden08

Posted by: sisterdearest09 | Oct 21, 2008 11:12:00 PM

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