The president’s $447 billion plan for tax incentives and infrastructure spending to create new jobs would be paid for by adjusting the tax rates of wealthy Americans, such as hedge funds managers and corporate jet owners, laying the burden of continued economic recovery at the feet of those who’ve seen its only benefits over the last two years.
That’s according to Office of Budget Management Director Jack Lew, who told reporters at the White House briefing room on Monday that several of President Barack Obama’s previous budgetary proposals could be combined to pay for the plan.
The proposals would set tighter limits on individual deductions for single earners making over $200,000 a year and families with combined incomes over $250,000 a year, drawing their exempt income down from 35 percent to 28 percent.
It would also adjust how hedge fund managers’ incomes are taxed and eliminate tax deductions for corporate aircraft. Additionally, all subsidies for the oil and gas industries would be eliminated.
Director Lew said these adjustments would add up to $467 billion over the next decade, covering the jobs bill and wiping an additional $20 billion off the nation’s deficit.
The proposals are not new: President Obama has sought to make these changes in his past two budget requests, and in the Affordable Care Act. They have been repeatedly blocked by Republicans in Congress, who claim that raising tax rates on wealthy Americans would deter them from creating jobs.
However, in this case, President Obama’s proposals are largely made up of Republican ideas such as tax credits for small businesses that hire new workers. It remains unclear how Republicans will be able to use their ostensibly pro-jobs argument to resist their own proposals for creating jobs.
What is clear is that President Obama’s jobs proposals will face stiff Republican opposition in Congress thanks to the path the administration has chosen to secure funding, giving more rhetorical fire to those who say it is intended to support his reelection efforts as much as it is meant to boost the economy.
Still, it leaves the president in a politically strong position, as even the majority of Republican voters support raising the top-tier tax rates, which have been at historic lows since President George W. Bush’s first term.
Obama is also backed up by economic reality: As the president noted in his speech last week, corporate profits have indeed come “roaring back,” up 29 percent just from 2009-2010, yet hiring has not risen in tandem.
Recent polling shows an increased appetite for tax fairness among the American public, with a large majority agreeing that wealthy Americans should pay more to ensure the nation’s economic stability.
When the historic-low tax rates were extended for two more years in 2010 after a political battle that saw Republicans threaten to raise taxes on the poor and middle class, the president promised to make taxing the wealthy part of his reelection campaign.
While it does not directly touch upon the Bush tax cuts, the president’s jobs bill seems to be a clear step in this direction.