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Obama to offer new tax breaks for workers in election year budget pitch

Obama To Offer New Tax Breaks For Workers In Election Year Budget Pitch

By Jeff Mason and Mark Felsenthal

WASHINGTON Tue Mar 4, 2014 3:38am EST

(Reuters) - President Barack Obama will propose an expansion of popular tax credits for middle class and working poor Americans on Tuesday in a fiscal 2015 budget designed to serve as a blueprint for Democrats in this year's congressional elections.

The budget, which would also create automatic retirement accounts known as IRAs for some 13 million workers, has little chance of getting enacted.

But it codifies the president's policy priorities ahead of the November race, in which Democrats hope to keep control of the U.S. Senate and Republicans hope to expand their majority in the House of Representatives.

The budget signals a shift away from last year's emphasis on deficit cutting to a more pronounced focus on poverty reduction, a legacy-oriented goal the president is highlighting as he faces less than three years left in office.

Obama will unveil the document during a visit to a local elementary school at 11:30 a.m. EST.

His proposal would expand the Earned Income Tax Credit, a government anti-poverty measure that is meant to encourage low-income Americans to work. The expansion would cover some 13.5 million people who do not have children.

It would also make the program available to younger workers who are not currently eligible, the White House said.

The expansion, which would cost $60 billion, would be funded by closing loopholes such as the tax break for "carried interest," profits earned by wealthy investors who run private equity and other funds.

The budget also puts an emphasis on saving for retirement. It proposes to create automatic Individual Retirement Accounts (IRA) for those who do not have access to savings plans sponsored by employers.

"About 13 million workers would begin contributing to retirement savings through auto-IRAs as a result of this proposal," the White House said.

DEMOCRATIC PRIORITIES

The White House signaled last month that its new budget would not extend the olive branch to Republicans that was offered in its proposal a year ago.

Officials said the president would drop a suggestion to change how the government calculates inflation for Social Security and other federal benefits that could have led to income drops for older Americans.

The change, which was unpopular with Obama's base, was meant to show Republicans the president was serious about deficit reduction. But the White House did not feel Republicans responded with a similar concession and dropped the idea.

Instead, the 2015 document will include proposals to boost spending on infrastructure projects, job training, and preschool education programs - all Democratic priorities.

It expands a tax credit to help parents pay for childcare, benefiting 1.7 million families, and makes permanent a tax credit related to paying for college educations.

"The president's budget will show in real terms the choices we can make to expand economic opportunity and strengthen the middle class," the White House said.

The budget outlines how some $1.014 trillion will be spent on government agencies' discretionary programs ranging from the military to national parks. That level, roughly in line with this year's cap of $1.012 trillion, was set by a recent budget deal hammered out by lawmakers.

That figure is less than a third of the approximately $3.5 trillion the government is likely to spend next year. The rest will be paid out automatically through federal benefits programs that mostly care for the elderly and poor, including Social Security, Medicare and Medicaid.

(Reporting by Jeff Mason and Mark Felsenthal; Editing by Lisa Shumaker)

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jjemder March 04 2014 at 8:34 AM

I have a couple of things that alert me about this plan: the automatic 401k plan- how will those funds be protected from being raided by the government? Second, where are the jobs?

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hi newpatch1951 March 04 2014 at 12:30 PM

You have to have a middle class that has jobs and is working first before you can give them a tax break.But Im sure there are a bunch of morons in this country that will fall for this snake oil salesmans bull

Flag Reply +5 rate up
tlakota35 March 04 2014 at 12:30 PM

Reading the headline "...tax breaks for workers..." I was anxious to see what my cut would be, but alas I'm left out of the tax breaks again. Guess I'd better head off to work.

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Mikie & Patty March 04 2014 at 12:27 PM

Sorry Barry, due to your record for telling the truth and scamming, I just can't go along with anything that you come up with. Every time you come up with something like this up the guise of helping the working man/woman I start getting cold chills and put my back to the wall. I have no confidence in your administration, Pelosi, Reid or even Biden. You people scare the hell out of me. The first thought that comes to my mind is what is in it for you. If it looks like a turkey, gobbles like a turkey and walks like a turkey, then by God it must be a turkey. I believe the democratic party is a abomination to our country and has done nothing but hurt us. Be glad to see all of you get out of office. You guys are bad news.

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1 reply
sooten7422 Mikie & Patty March 04 2014 at 12:47 PM

Everyone is saying I can wait till he gets out of office...This is still away's off and there has been enough damage done that already cannot be undone. Why not enforce the Laws that this man and Party has broken including Treason and get rid of him now before he cause's more damage...What will that take? I would say a Million man March on Washington asking for their heads would do it.

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partsautomall March 04 2014 at 9:09 AM

IT'S EASY TO SELL GIVEAWAYS.OBAMA IS LIKE THE COOL PARENT IN HIGH SCHOOL THAT LETS KIDS DO WHAT THEY WANT AND THEN WONDERS WHY THEY WIND UP ON THE STREETS OR IN JAIL.TIME FOR PERSONAL RESPONSIBILITY

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gageenakah March 04 2014 at 9:11 AM

END the income tax entirely. Switch over to a consumption based tax. The economy will boom and the IRS will go the way of the dinosaur...............WAKE UP AMERICA

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jgesselberty March 04 2014 at 9:12 AM

It is quite obvious that this is an attempt to curry the favor of the working class in the upcoming mid-term elections, since they have been used as the cash cow for all the giveaways in the past and are seeing through the smoke and mirrors.

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2 replies
stevenjonessales jgesselberty March 04 2014 at 9:20 AM

As if the super rich have not had any "favors" given to them for the past three decades.

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Randy jgesselberty March 04 2014 at 9:22 AM

Not the "working class" - the gimme gimme gimme brigade. The working class (in a society where there are not supposed to be "classes") only ask the flaming leftists to get the heck out of their pockets and out of the private sector.

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joanne March 04 2014 at 9:12 AM

For heaven's sake - there are not enough millionaires and billionaires to cover out of control govt spending - especially under the massively irresponsible obama reign.

If you want big ugly destructive govt you have to tax ALL the people. obamas approaching 8 TRILLION new debt in his 6th year proves that.

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1 reply
stevenjonessales joanne March 04 2014 at 9:19 AM

Yes, by paying all of W's bills.

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1 reply
Randy stevenjonessales March 04 2014 at 9:57 AM

Really? Which of "W's" bills are you referring that have added $7,200,000,000,000.00 to the "recognized" deficit? The $5,285,000,000,000.00 in QE (I, II, III, IV) imaginary funds out of thin air? or perhaps the $30,000,000,000,000 added to the unfunded entitlements since 2009? Tell us steve... which of those are "W's" bills????????

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The Canoli King March 04 2014 at 12:26 PM

Dem Party,Rep Party,and we're not invited. We are here only to flip the tab for it.

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bisari March 04 2014 at 8:59 AM

Obama and the Democrats definition of the middle class is totally different than what you and I think.

Taxpayers, don't be fouled.

He is going to tax you so he can give free money away to the people that are keeping the Democrats in office.

Flag Reply +6 rate up
1 reply
bisari bisari March 04 2014 at 9:00 AM

That is fooled!

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