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UPDATE: Senate Finance Panel Democrats Scornful Of Obama Tax Cut Plan
UPDATE: Senate Finance Panel Democrats Scornful Of Obama Tax Cut Plan
WASHINGTON -(Dow Jones)- President-elect Barack Obama's tax cut proposals have fallen flat with a number of key Senate Democrats, who Thursday heaped scorn on some important parts of Obama's plan to revive the economy.
Following a closed-door meeting of the Senate Finance Committee, panel Democrats say they want to direct more stimulus dollars to infrastructure spending, instead of tax cuts for individuals, which they said might not help spur the economy.
"I'd rather spend the money on infrastructure, direct investment, and energy conversion," said Sen. John Kerry, D-Mass.
When asked about specific tax cut proposals made by Obama, Kerry said, "I think there are cuts that are not going to stand the test of whether they will create jobs."
Coming in for specific criticism were an Obama plan to give companies a $3,000 tax credit to offset the cost of new hires, and a $500 tax credit for workers that would be spread out over a period of time in take-home pay.
"Is a $3,000 tax credit going to get you to hire somebody to build cars that nobody's buying?" asked Sen. Kent Conrad, D-N.D., speaking to reporters after the committee meeting.
Conrad also said he believes the tax credit for individuals will not produce the greatest benefit for the economy, because people will sock the extra paycheck money away rather than spend it.
Sen. Judd Gregg, R-N.H., echoed those concerns Thursday during a Senate Budget Committee hearing. "People are in such a shell with their concerns about the future that they're just going to save it," he said.
However, Sen. Dick Durbin of Illinois, the second-ranking Democrat in the Senate, praised Obama's worker tax credit and said he believes it will be part of the stimulus package.
"I think President-elect Obama is committed to that. We believe that you ve got to give working families, middle income families something to fight for," said Durbin. "They need to have a restoration of confidence, and a tax cut that they can see with frequency in their paychecks can do that."
Obama proposed a $500-per-worker tax credit, or $1,000 for married couples when both partners are working, that would be delivered by reducing paycheck withholding, for an increase between $20-$40 in take-home pay.
Obama first proposed the worker tax credit during the presidential campaign, but transition aides this week said including it in the stimulus package for a temporary period would serve as a quick "down payment."
The proposal for a $3,000 tax incentive for firms to hire or retain workers also originated during the campaign, and was put forward by the Obama team to Congress for inclusion in the stimulus package.
The full Senate Democratic caucus also met Thursday with Larry Summers, Obama's pick for director of the National Economic Council, and Obama economic adviser Jason Furman, to discuss stimulus proposals.
Finance Committee Democrats said that part of their skepticism is because there is a higher bar to ensure stimulus spending will really help the economy, after the troubled implementation of the $700 billion financial rescue bill.
"This is the first bill post-bank bailout," said Sen. Ron Wyden, D-Ore. "Congress is really going to have to use a sharp pencil to make sure that this money is not frittered away."
"People are pretty skeptical. I don't care who is in the administration, there's going to be a lot of pushback," added Conrad.
Business tax breaks proposed by Obama, including extending faster depreciation and broadening net operating loss carryback rules, appear to have more support among Finance Committee members for inclusion in the stimulus package.
Finance Committee Chairman Max Baucus, D-Mont., stressed that discussions on the package are just beginning, and that he hopes the Finance Committee can take formal action on the stimulus package the week of Jan. 19.
"I would say that, when all is said and done, we'll pass something that's pretty close to the proposal that's been discussed here," Baucus said at a press conference after Democrats' meeting with Summers. "However, it will be improved upon. But it's going to take a lot of intense, vigorous discussion back and forth in a mutual search for what's right."
-By Martin Vaughan, Dow Jones Newswires; 202-862-9244; [email protected]
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=4UlX2dQXxJ0qonPM5nmxhA%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
January 08, 2009 18:40 ET (23:40 GMT)
Copyright 2009 Dow Jones & Company, Inc.
By Martin Vaughan and Patrick Yoest Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- President-elect Barack Obama's tax cut proposals have fallen flat with a number of key Senate Democrats, who Thursday heaped scorn on some important parts of Obama's plan to revive the economy.
Following a closed-door meeting of the Senate Finance Committee, panel Democrats say they want to direct more stimulus dollars to infrastructure spending, instead of tax cuts for individuals, which they said might not help spur the economy.
"I'd rather spend the money on infrastructure, direct investment, and energy conversion," said Sen. John Kerry, D-Mass.
When asked about specific tax cut proposals made by Obama, Kerry said, "I think there are cuts that are not going to stand the test of whether they will create jobs."
Coming in for specific criticism were an Obama plan to give companies a $3,000 tax credit to offset the cost of new hires, and a $500 tax credit for workers that would be spread out over a period of time in take-home pay.
"Is a $3,000 tax credit going to get you to hire somebody to build cars that nobody's buying?" asked Sen. Kent Conrad, D-N.D., speaking to reporters after the committee meeting.
Conrad also said he believes the tax credit for individuals will not produce the greatest benefit for the economy, because people will sock the extra paycheck money away rather than spend it.
Sen. Judd Gregg, R-N.H., echoed those concerns Thursday during a Senate Budget Committee hearing. "People are in such a shell with their concerns about the future that they're just going to save it," he said.
However, Sen. Dick Durbin of Illinois, the second-ranking Democrat in the Senate, praised Obama's worker tax credit and said he believes it will be part of the stimulus package.
"I think President-elect Obama is committed to that. We believe that you ve got to give working families, middle income families something to fight for," said Durbin. "They need to have a restoration of confidence, and a tax cut that they can see with frequency in their paychecks can do that."
Obama proposed a $500-per-worker tax credit, or $1,000 for married couples when both partners are working, that would be delivered by reducing paycheck withholding, for an increase between $20-$40 in take-home pay.
Obama first proposed the worker tax credit during the presidential campaign, but transition aides this week said including it in the stimulus package for a temporary period would serve as a quick "down payment."
The proposal for a $3,000 tax incentive for firms to hire or retain workers also originated during the campaign, and was put forward by the Obama team to Congress for inclusion in the stimulus package.
The full Senate Democratic caucus also met Thursday with Larry Summers, Obama's pick for director of the National Economic Council, and Obama economic adviser Jason Furman, to discuss stimulus proposals.
Finance Committee Democrats said that part of their skepticism is because there is a higher bar to ensure stimulus spending will really help the economy, after the troubled implementation of the $700 billion financial rescue bill.
"This is the first bill post-bank bailout," said Sen. Ron Wyden, D-Ore. "Congress is really going to have to use a sharp pencil to make sure that this money is not frittered away."
"People are pretty skeptical. I don't care who is in the administration, there's going to be a lot of pushback," added Conrad.
Business tax breaks proposed by Obama, including extending faster depreciation and broadening net operating loss carryback rules, appear to have more support among Finance Committee members for inclusion in the stimulus package.
Finance Committee Chairman Max Baucus, D-Mont., stressed that discussions on the package are just beginning, and that he hopes the Finance Committee can take formal action on the stimulus package the week of Jan. 19.
"I would say that, when all is said and done, we'll pass something that's pretty close to the proposal that's been discussed here," Baucus said at a press conference after Democrats' meeting with Summers. "However, it will be improved upon. But it's going to take a lot of intense, vigorous discussion back and forth in a mutual search for what's right."
-By Martin Vaughan, Dow Jones Newswires; 202-862-9244; [email protected]
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=4UlX2dQXxJ0qonPM5nmxhA%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
January 08, 2009 18:40 ET (23:40 GMT)
Copyright 2009 Dow Jones & Company, Inc.
