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September 12, 2011 3:25 PM Paying for the American Jobs Act

By Steve Benen

President Obama has spent a fair amount of time over the last few days emphasizing the fact that his American Jobs Act is paid for. It wasn’t quite clear, however, how.

Now we know.

During a Rose Garden appearance, Obama pledged to send Congress the American Jobs Act on Monday evening when the legislative body resumes its session. Aides revealed for the first time that the plan will include limits on itemized deductions for individuals who earn more than $200,000 a year and families that earn more than $250,000.

Eliminating those deductions will bring in an additional $400 billion in revenue, said Jack Lew, director of the Office of Management and Budget.

The administration also is recommending closing oil and gas loopholes and changing the depreciation rules for corporate airplanes. All of the new rules, which would take effect in 2013, would bring in an estimated total of $467 billion, more than enough to pay for the president’s jobs bill, Lew said during the White House’s daily press briefing Monday.

Among the highlights, the itemized-deduction measure would raise roughly $400 billion over 10 years; the “carried interest” fix would raise $18 billion, and ending tax subsidies to the oil industry would raise another $40 billion.

Republicans will, of course, balk at all of this, and many already have. But the Obama administration’s approach to financing is heartening anyway — there’s been all kinds of scuttlebutt about the White House proposing regressive policies to pay for the jobs bill, and the rumors were wrong. The president and his team are pushing the better — and incidentally, more popular — financing option.

And the more the GOP opposes this approach, the more Obama will pose the options the way he did on Thursday night:

“Should we keep tax loopholes for oil companies? Or should we use that money to give small business owners a tax credit when they hire new workers? Because we can’t afford to do both. Should we keep tax breaks for millionaires and billionaires? Or should we put teachers back to work so our kids can graduate ready for college and good jobs? Right now, we can’t afford to do both.

“This isn’t political grandstanding. This isn’t class warfare. This is simple math. These are real choices. These are real choices that we’ve got to make. And I’m pretty sure I know what most Americans would choose. It’s not even close. And it’s time for us to do what’s right for our future.”


Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

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  • fourlegsgood on September 12, 2011 3:31 PM:

    You know what? just to fix the odious "carried interest loophole" I'll go to the mat to support the president on this bill.

    Seriously.

    Obama has a winning argument here. I'm glad he's hammering it home.

  • slf on September 12, 2011 3:40 PM:

    Yes. Heartening. But will he stick to the line he's drawn in the sand and the commendable two paragraphs you cite from Thursday night?

  • Tony D. on September 12, 2011 3:41 PM:

    OT: anyone read the bullshit over at cnn.com? Angry electorate helping to sustain the Tea Party? Huhh?! Yeah, the electorate is angry alright...that the damn Teahadists are trying to destroy our country! When will the media wake up to the damage these assholes are trying to inflict on our nation! Protect the uber wealthy over providing for your average citizen? Time for all of us to get angry!

  • Josef K on September 12, 2011 3:45 PM:

    This is simple math. These are real choices.

    Sayeth the President, addressing a political party whose members refuse to believe the Earth moves around the sun, two plus two equals four, and humans evolved after the dinosaurs died out.

    We're such a stupid, suicidal species I've no idea how we've made it this long.

  • T2 on September 12, 2011 3:51 PM:

    well, the game is on. Let's see if Obama sticks to his plan. Listening to Cantor/Boner scream about this is fun. There is no question that the polls show overwhelming support for taxing the Rich and any claptrap from the GOP/TP to the contrary is B.S.
    I hope Obama calls them on it long and loud. He'd better.

  • DisgustedWithItAll on September 12, 2011 3:52 PM:

    I think it's brilliant to have the "job creators" actually help create some jobs, whether they want to or not.

  • Ian A on September 12, 2011 3:53 PM:

    It's time to start pushing a "tax surcharge" on income over half a million dollars. Start at 5%, and bargain down to 3%. Make the Repugs go on record even more clearly who their constituency is. And call it a "surcharge." That way the idiots who don't understand marginal tax rates won't get confused.

  • Old Uncle Dave on September 12, 2011 3:58 PM:

    Is there any chance Cantor's attempts to take money from the poor to give to the rich will hurt him at the polls? Will a challenger be able to paint him as a "reverse Robin Hood?" Or was his district gerrymandered in such a way as to ensure his reelection no matter what he does to hurt the country?

  • CDW on September 12, 2011 4:02 PM:

    $200k is a lot more disposable income for an individual than $250k is for a family. The difference should be $100k, at least. So, $150k for an individual and $250k for a family, and so on.

  • DenverRight on September 12, 2011 4:22 PM:

    First, the President says "This isnít political grandstanding. This isnít class warfare." Then his aides present revenue offsets to place "limits on itemized deductions for individuals who earn more than $200,000 a year and families that earn more than $250,000." Then CDW@ decides to one-up the President - "$200k is a lot more disposable income for an individual...So, $150k for an individual and $250k for a family, and so on." Fascinating.

    One thing the President said is puzzling: "THIS IS SIMPLE MATH". For it amazes me how the definition of "millionaires and billionaires" is so fluid.

    If certain tax deductions are evil, why not abolish those deductions altogether, for everyone? IF, AS SOME CLAIM, THIS IS NOT CLASS WARFARE?

  • Matt on September 12, 2011 4:22 PM:

    Not bad, taking a issue that polls moderately well with the public and attaching it to an issue that polls really well with the public, and combining it with a campaign to raise popular support. This might just box the GOP into a corner, as long as he doesn't back down on any of the provisions. If he does this well, and we help (as we should), people might just start wondering why the GOP won't pass the bill.

  • chi res on September 12, 2011 4:28 PM:

    @DenverWrong

    I'm afraid you've confused "class warfare" with "progressive tax system," the latter being something that sane republicans have supported for decades.

  • DisgustedWithItAll on September 12, 2011 4:31 PM:

    Denver doesn't seem to understand that the only class warfare that's going on is the Republican ideas of the last 30 years that have lead to the redistribution. Sad.

    Upset those who've gained by that class warfare might be asked to pay a little closer to the rates they did when the economy wasn't so screwed by failed Republican ideas?

    Cry somewhere else.

  • CDW on September 12, 2011 4:46 PM:

    I've thought for a couple of years now that Obama would not be a transformational president, but I was wrong. He is transforming the country into the conservative image that the conservatives have been trying to make happen for the last 30 years.

  • J. Paul Ghetto on September 12, 2011 4:49 PM:

    Should George W.'s visageto ever be carved in Rushmore, I will PERSONALLY lead the RPG-outfitted commando squad up the mountain to blast it off.

  • zandru on September 12, 2011 5:13 PM:

    Josef K asks "We're such a stupid, suicidal species I've no idea how we've made it this long."

    We breed fast. We can comfortably live under what Americans today would consider "squalid" conditions. (Heck, living conditions a century ago would be considered "squalid" today...) We work extraordinarily well in small groups. We kill efficiently and without mercy. We eat anything. We have endured and thrived after massive, truly massive die-offs, from war amongst ourselves, famine, disease, and natural disaster.

    Thus said, I'm not advocating returning to the way we lived a million years ago - just saying that we could. And I'm beginning to believe that this is what the reactionary right wing is working towards.

  • JayinOregon on September 12, 2011 5:13 PM:

    Hmmm. How to save 150 Billion/Yr.
    -
    STOP THE DAMN WARS!!!!

    Aghan war = $10 Billion per month. Per month.

    Not a dime was proposed save out of the sacred military cow. Incredible.

  • Scottie Up! on September 12, 2011 5:21 PM:

    I could list a litany of accomplishments that Obama has made. We forget so fast. When a president is being obstucted as mush as Obama, it's amazing anything was done. If we get Rick Perry or Mitt Romney or both in white house, Obama will seem like the liberal the media said he was when he was a canidate. It took at least 10 years if not the last 30 for the gop to screw things up, with the help of some dems I should add, throw in the financial crisis and the president has it bad. With the republicans purposely stalling the economy to get Obama out, Mcconell said it himself, now is the time for dems of ALL stripes to unite behind this presidents jobs bill and his reelection. There wont be any serious canidate that will try to primary Obama, get real! If Obama gets another 4 years he will not have an election to worry about and he can push more progressive agenda's like immigration reform.

    For the record I am a registered Independant.

    Dems unite 2012!

  • majun on September 12, 2011 5:41 PM:

    "...the plan will include limits on itemized deductions for individuals who earn more than $200,000 a year and families that earn more than $250,000."


    As hard as it is to believe, that just won't sell. Fox News will convince the majority of Tea Partiers that Obama is going to raise their taxes to give their money away to a bunch of lazy good-for-nothings who have been soaking up society's gravy, living off of unemployment benefits for the past two years. And millions of Americans will buy that. Forget that the income levels we are talking about only apply to about the top 3% of earners in the US, and I would hazzard a guess that virtually none of them are in the Tea Party and none of them are in the top 3% of earners. But they will think that they are.

    There will be no raising of any marginal tax rates either, merely limiting tax breaks that are largely designed to help a struggling middle class. Limiting those tax breaks to the middle class. But the GOP noise machine will convince enough loudmouths to complain till the Dems start backing off.

    I just hope that Obama keeps pounding away in spite of the mass of low information (no information) voters out there.

  • bardgal on September 12, 2011 5:52 PM:

    @CDW

    If President Obama is so conservative, why do the conservatives want to repeal every single thing he has done?

    Spare me. Go watch this, or STFU - http://theobamadiary.com/2011/09/12/debunking-gop-lies/

  • sparky on September 12, 2011 5:58 PM:

    DenverRight--
    If it is class warfare, just remember that the first shots were fired by the republican puppet masters. There's a difference between class warfare and struggling to survive. If enough people feel their very survival is threatened, it could become real class warfare. Not a pretty thought.

  • jjm on September 12, 2011 5:59 PM:

    I have absolutely no doubt that the president will, as the doubters worry he won't, 'stick to his plan.' What's to lose?

    And what gain would there be in a half-measure intended by the GOP to fail?

    So the Tea Partiers won't go along.

    What about the VAST MAJORITY OF THE ELECTORATE?

    Obama is playing this to them--and for them.

    Cantor voted for BILLIONS for 'reconstruction in Iraq'. Nothing for America, Eric?

    No. Well then you fall into Obama's trap.

  • DenverRight on September 12, 2011 6:14 PM:

    @chi res: "I'm afraid you've confused "class warfare" with "progressive tax system..."

    There's nothing wrong with a progressive tax system. But I remember when tax rates went UP or everyone, or DOWN for everyone, in sync. Now suddenly, only the top 2% are targets for higher taxes.

    Example: ending the "Bush tax cuts" (now the "Obama tax cuts") for just the top 2% would have generated $800 billion in revenue over the next 10 years. But ending the same "Bush/Obama tax cuts" for the other 98% of wage-earners would have garnered $4 TRILLION (CBO scoring). Why is Obama only passionate about the $800 billion, about raising income taxes only on the top 2% ???

    It's no longer a progressive schedule when you rob Peter to pay Paul, but it's sure to win the support of Paul.

    It's spelled "C-L-A-S-S- W-A-R-F-A-R-E." And Obama is entitled to run on that principle.

  • DisgustedWithItAll on September 12, 2011 6:24 PM:

    Right over your head isn't it, Denver? The class warfare has been waged by Republicans with their ideas and policies over the last 30 years. Besides, let's save the rest of the Bush tax cuts for when those who've been screwed by the Republican fiscal mess and Great Recession are able to get going again. Timing important, crap-4-brains.

    Let's let the "job creators" create some jobs one way or the other.

  • topcathy on September 12, 2011 6:31 PM:

    Gosh, Denver, I'd have called it 'The class which has been the recipient of 30 years of GOP attacks returning fire.'

  • DenverRight on September 12, 2011 7:00 PM:

    @Disgusted: "...let's save the rest of the Bush tax cuts for when..."

    Sorry, Disgusted, but I won't be holding my breath for those "rest of the Bush tax cuts" to pass later, but thanks for at least acknowledging them. And for the epithets - which usually indicates surrender of argumentation.

    Fair tax structure: 1. eliminate ALL THOSE LOOPHOLES AND TAX DEDUCTIONS. I was never a fan of the government's micromanagement of behavior through the tax code. But eliminate them across the board. If the mortgage deduction is evil for the wealthy, why isn't it evil for ALL homeowners?
    2. Return to the tax rates of the Clinton era. ALL of the tax rates, not just those for the top 2%. If that golden era was so magical, I'm sure that the middle class would not mind the marginally higher tax rates, while the wealthy pay substantially more.

    But WAIT for rest of the tax hikes to be passed later? That would only "spread the wealth" further, on the whisper of a promise. Expecting that would be similar to an amnesty for illegal aliens, coupled to a PROMISE of tightening security to control the border. 25 years and still waiting for that one.

    Go ahead, run Obama on that "spread the wealth" campaign slogan again. This time we know how serious he really is.

  • DisgustedWithItAll on September 12, 2011 7:10 PM:

    "And for the epithets - which usually indicates surrender of argumentation."

    Lame.

    The tax code needs to be much, much more progressive and failed Republican ideas and policies of the last 30 years need to be abandoned to return from the redistribution of wealth from low to high. High income needs to pay at the rate that is proportional to the wealth they own. And if that means the wealthy end up paying MUCH more than during Clinton, then hey, I'm for it so that the class warfare Republicans have waged on the non-wealthy can be reversed.

    Jack-ass.

  • jimjinphx on September 12, 2011 7:36 PM:

    Of course the Repubs won't accept *simple math* since it is obviously a long term plot to have Sharia law in the USA, starting with those *Arabic* numbers!

  • Jnewto on September 12, 2011 8:32 PM:

    Hi,, evil rich guy here. Technically, i'm a 'thousandaire' making 120k and my wife 275k. I guess we never should have invested all that time and money on MBA'S and Medical degrees, something we are still paying for in more ways than you know, not just monetarily. I'd love to know from all you pundits what you think my tax rate should be so I won't be so hated.

    We're both under forty and haven't yet started hoarding our money in big piles of gold and jewels....we built a house, raise some dogs, pay a bunch of student loans, give about 10% away and employ some people. I guess you'd like us to stop all that greed and let the government decide what to spend our money on?

  • maryQ on September 12, 2011 9:03 PM:

    As a family making more than 250,000 per year, I say limit the friggin itemized deductions and pass the bill now. Oh, and please let the Bush tax cuts expire. Families like mine have enough money, and you know what? We also had enough money when we only made 200,000. I'd like to give my kid a decent country with roads, bridges and schools.

  • mudwall jackson on September 12, 2011 9:18 PM:

    denver right

    just so you know, the idea of cut-offs for certain deductions isn't new. they've existed in the tax code for years. and under your definition, the alternative minimum tax would be considered "class warfare." the amt dates back to the reagan administration.

    to whom much is given, much is expected. when the rich bleed and die for this country in the same proportions as the poor and middle class, maybe you'll have an argument when it comes to paying a little more in taxes.


  • maryQ on September 12, 2011 9:28 PM:

    Ok, look, in a stronger economy, I would say yeah, sure, if you are going to raise my taxes, go ahead and raise taxes on everyone else. But the economy sucks, people are unemployed or fearing for their jobs. Now, I don't spend money frivolously and I try to live somewhat frugally, but if I need a washing machine, I can buy it. If I need a car, I can put a bunch down and borrow the rest and make payments. And save and invest, all of which puts money in the economy. And if my marginal rate goes from 36 to 39, I will still do prettying what I do now, regarding spending, saving and investing. But if my household income were average, marginal rates would make a big difference in how much I spent and how much I stashed under the mattress. And forget investing. So an non-uniform tax increase is ok by me. I'll still have more than i did a few years ago.

  • chi res on September 12, 2011 11:32 PM:

    DenverWrong: But I remember when tax rates went UP or everyone, or DOWN for everyone, in sync.

    And I remember when the top marginal tax rate was 85%... under a REPUBLICAN President Eisenhower. How 'bout we reinstitute that? You TPers ain't seen nothin' yet! We gonna git us some Eisenhower Sosholism 'round here, you bet!! Gonna bleed you MFTPers dry!

  • chi res on September 12, 2011 11:36 PM:

    MaryQ: Families like mine have enough money

    How progressive of you! Please send all excess cash to:

    CHI RES
    PO Box 9966
    Chicago IL 60606

  • Anonymous on September 12, 2011 11:48 PM:

    Responding to Denver: raising taxes on the middle class, when wages have been stagnant or reduced the past 10 years, would hurt the economy as these are the folks that spend pretty much everything they bring home. And combining stagnant wages when everything else is going up makes it even harder. Realize that any tax increase only affects income that is over a certain amount ($200K, $250K, whatever), not the entire amount.

  • flyonthewall on September 13, 2011 6:54 AM:

    @Jnewto-using your numbers, you earn $195,000 over the $250,000 threshold. At a 3% increase you would pay $5850 more. You claim to employ "some people". Do you pay them each $5850 per year?

    I'd love to know from all you pundits what you think my tax rate should be so I won't be so hated.

    This shows you have not been paying attention. The discussion amounts to 3 cents on a dollar. As stated above, rates back in the 50's were closer to 85%. As chi res noted to Denverwrong, rates have decreased much more for higher earners. I suggest you find a part time job if you can't afford 3 cents on any dollar over $250,000.

  • MNTN on September 13, 2011 8:28 AM:

    I'm with Jnewto... I'm 28, started my grown up life $86k in debt for my education and now owe less than $30k b/c I chose to NOT buy a house and be responsible with my, now, $102k paycheck. Oh, and I picked up a home based biz for an extra $1k/mo. So that should say &114k/yr.

    What should MY tax rate be? I'm not over the $200k qualifier, but ALL deductions in our complicated-as-crap tax code should be scrutinized. Those deductions are what make it possible for Warren to pay a 17% overall tax rate (incl cap gains) and what make it possible for a sngl mom of 4 who makes $9k/yr to get a $12k REFUND on top of it as long as baby daddy claims 1. Eliminate deductions for EVERYONE. I'll volunteer up my cell phone and Internet and rent too...

    This country needs to get back to promoting creativity and hard work and entrepreneurs... Not entitlement and easy breaks. People move away from pain faster than they move towards pleasure.

    I think Obama has good intentions for creating jobs, but he IS spurring class separation and reverse discrimination through this bill whether he wanted to or not. I'm all for creating jobs and building schools and roads, but why *more* for disabled people and vets? I'm a woman, and it would piss me off to know I got a job b/c of my lady parts...

    Yeah, I know, 28yo woman who makes >$100k... I'm in the minority. Never gonna win this one.

  • DenverRight on September 13, 2011 1:31 PM:

    Anon@11:48 - "...raising taxes on the middle class, when wages have been stagnant or reduced the past 10 years, would hurt the economy as these are the folks that spend pretty much everything they bring home."

    Of course, your logic suggests that higher taxes ONLY ON THE TOP 2% won't affect spending. According to Moody's Analytics (reported in WSJ, 2010), consumer spending accounts for roughly two-thirds of U.S. GDP. Here's the kicker: the top 5% of Americans by income account for 37% of all consumer outlays. The bottom 80% by income account for only 39.5% of all consumer outlays.

    So raising tax rates ONLY on the top income earners creates not only creates a MORE PROGRESSIVE tax schedule, but almost certainly DOES IMPACT consumer activity and the economy. Impacting the economy might be unavoidable while dealing with the second problem - our debt crisis. But when the American Dream becomes income redistribution, I think we have lost something important and special in our society.

    And "Disgusting@7:10", "High income needs to pay at the rate that is proportional to the wealth they own. And if that means the wealthy end up paying MUCH more than during Clinton, then hey, I'm for it...Jack-Ass...". (income taxes tax income, not wealth). Keep the epithets coming. I don't expect civility from all - you only prove my case on class warfare, and the desperation of your argument.

  • Jnewto on September 13, 2011 11:59 PM:

    flyonthewall -

    Sorry to get so technical, but here's how a basic business works. You create a product or service and market it. Customers pay you money. With all that money, you pay all the expenses like employee payroll, raw materials, rent, and taxes. HOPEFULLY, I can then pay myself a salary.

    The fact that you think I divide my salary to pay my employees tells me I'm talking to wall here. But I will continue.

    The proposal is actually to go from 35 cent/dollar deductions to 28. Yes, "7 cents" is how they sell life insurance to seniors b/c it doesn't sound like much, however it adds up in my case to around $5500 dollars in capital a year I won't spend, the charity I would support or the services I woun't purchase. Then there's me times everyone else.

    So taking $400 billion out of the economy, for the government to put $400 billion back in to the economy anyway way they see fit is my issue.

    What galls me is you just see 7 cents and you get to decided what isn't too much, and you think government knows more than the citizens they work for government and should spend it any way they want.

    Did everyone forget how we get $2000 toilet seats in the Pentagon???? I would buy the $20 seat, so you decide who's more thoughtful with where best to spend money.

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