Obama is working to justify "tax and spend" label of our party: He is proposing to add $85 billion to the budget deficits with no way to pay for.
President Obama is proposing to add more than $85 billion to the nation's budget deficits over the next decade to extend two tax breaks for the working poor, a move critics on Wednesday blasted as a violation of Obama's pledge to pay for new policies.
The tax breaks were included in the economic stimulus package Obama signed soon after taking office in January, and are scheduled to expire in 2011. But last week, in its midyear update of the federal budget, the White House said it plans to extend the tax cuts through 2019 without covering the cost by cutting spending or raising taxes elsewhere.
Deficit hawks are appalled. Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, called the move "outrageous" at a time when the nation is facing record budget deficits and the national debt is soaring toward a 50-year high. In addition to breaking Obama's pledge to pay for his policies, she said, it undermines confidence in Democrats' claim that the $787 billion stimulus package was truly a temporary measure aimed solely at reviving the slumping economy.
"Certainly, when the stimulus discussion was going on, we were very worried there was going to be some kind of bait-and-switch to make the tax cuts permanent," MacGuineas said. "This is a dead-of-night move to very technically slip them into the baseline and have no discussion about whether the country can afford to make these tax cuts permanent without offsetting the costs."
At issue are two provisions that affect some of the nation's poorest working families. One expands the availability of the $1,000 child credit to families earning as little as $3,000 a year. Under the 2001 tax measure, the credit was available to families earning as little as $12,000 a year. Because those families are unlikely to have a tax bill that could be reduced by the credit, both the 2001 law and the stimulus legislation permitted the government to send them the money.
The White House proposal has yet to pass the Senate, but the House quietly adopted it in July as part of a measure that specified which policies Congress could extend and which would be subject to strict new pay-as-you-go rules. At the time, House leaders questioned the rationale for extending stimulus provisions without paying for them.
Expanding the child credit through 2019 would cost about $9 billion a year, according to the nonpartisan Joint Committee on Taxation, adding a total of $74 billion to future deficits. The other stimulus provision, which is much less costly, made similar changes in the availability of the Earned Income Tax Credit for married couples.