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Obama Adviser to Maddow: They're 'Obama Tax Cuts' Not Bush Tax Cuts

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"Obama's 95% Illusion."

Obama's chief economic adviser Austan Goolsbee wants you to remember that Obama cut taxes. In fact, he even went as far as to scold Rachel Maddow for calling them "Bush tax cuts" on her show last night:

It seems odd that Goolsbee would try to assuage Maddow and Democrats' anger by claiming that many of the Bush-era tax cuts are actually Obama tax cuts.  That doesn't seem like a good move. Additionally, the claim is debatable, and only technically true at best.

Goolsbee seems to be referring to tax cuts that went into effect this year as part of the stimulus package. Those cuts were part of a campaign promise by Obama to "cut taxes for 95 percent of Americans." PolitiFact looks into that claim:

"We cut taxes. We cut taxes for 95 percent of working families. We cut taxes for small businesses," Obama said. "We cut taxes for first-time homebuyers. We cut taxes for parents trying to care for their children. We cut taxes for 8 million Americans paying for college."

Democrats applauded, while Republicans were silent for the most part. In one of the unscripted moments of the night, Obama looked at the Republican side of the room, smiled and said, "I thought I'd get some applause on that one."

Here, we wanted to check Obama's statement that he cut taxes for 95 percent of working families.

The key word in his statement is "working." Obama's claim is based on a tax cut intended to offset payroll taxes. Under the stimulus bill, single workers got $400, and working couples got $800. The Internal Revenue Service issued new guidelines to reduce withholdings for income tax, so many workers saw a small increase in their checks in April 2009.

The tax cut was part of Obama's campaign promises. During the campaign, Obama said he wanted $500 for each worker and $1,000 for working couples. Since the final number was a bit less than he promised, we rated his promise a Compromise on our Obameter, where we rate Obama's campaign promises for fulfillment.

During the campaign, the independent Tax Policy Center researched how Obama's tax proposals would affect workers. It concluded 94.3 percent of workers would receive a tax cut under Obama's plan based on the tax credit to offset payroll taxes. According to the analysis, the people who wouldn't get a tax cut are those who make more than $250,000 for couples or $200,000 for a single person. Obama said he intended to raise taxes on those high earners, a promise he reiterated during the State of the Union, and that revenue would offset the stimulus tax cut. [Emphasis added]

But if you look back at the campaign promise, it wasn't that the president would cut taxes for 95 percent of working Americans, it was 95 percent of all Americans. The American Spectator covered the story back in 2008:

"We are going to cut taxes for 95 percent of Americans," Barack Obama's campaign manager, David Plouffe, said in the spin room here at Hofstra University following the final debate of the 2008 presidential election.

Plouffe was repeating one of the boldest claims made by the Obama campaign. It's a claim that the Wall Street Journal editorial board dubbed "Obama's 95% Illusion," noting that more than a third of Americans don't pay any income taxes, and that what Obama's plan does do is offer a raft of subsidies and government payments to individuals and families that he redefines as "tax cuts." His proposal looks more like a redistribution scheme than an honest effort to reduce taxes -- as he revealed on Monday when he told a now famous Ohio plumber that his plan aimed to "spread the wealth around."

So when Plouffe reiterated the 95 percent claim, I asked him a simple question aimed at clarifying whether Obama's tax plan was about cutting rates, or merely handing out government checks. "What rates would actually go down"? I asked.

"Middle class people are going to see, systemically, their taxes reduced, and small businesses," Plouffe responded.

"But what rate would go down for lower-income Americans?" I persisted, seeking more information.

"We'll have to get you the exact details on that," Obama's campaign manager told me.

I followed up, recapping the claim he had just made moments ago: "Well, you said that there's going to be a tax cut on 95 percent, so what rate would go down?"

He replied, "I'll have to get you the exact rate differential."

And to add insult to injury, the Associated Press fact-checked this spring the administration's claim that Obamacare would cut taxes for businesses. That got hit with the old "bait and switch" tag:

WASHINGTON (AP) - Zach Hoffman was confident his small business would qualify for a new tax cut in President Barack Obama's health care overhaul law.

But when he ran the numbers, Hoffman discovered that his office furniture company wouldn't get any assistance with the $79,200 it pays annually in premiums for its 24 employees. "It leaves you with this feeling of a bait-and-switch," he said.

When the administration unveiled the small business tax credit earlier this week, officials touted its "broad eligibility" for companies with fewer than 25 workers and average annual wages under $50,000 that provide health coverage. Hoffman's workers earn an average of $35,000 a year, which makes it all the more difficult to understand why his company didn't qualify.

Lost in the fine print: The credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages.

It's an example of how the early provisions of the health care law can create winners and losers among groups lawmakers intended to help—people with health problems, families with young adult children and small businesses. Because of the law's complexity, not everyone in a broadly similar situation will benefit.

Maybe Goolsbee shouldn't be so proud of those "Obama tax cuts."

(H/T: Business Insider)

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