The Washington PostDemocracy Dies in Darkness

Obama’s plan doesn’t actually help the average middle-class taxpayer

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U.S. households with average incomes -- the 20 percent taking in between $49,086 and $84,055, to be exact -- would on average see an increase of $7 in their tax bill under President Obama's proposals, according to an analysis published this week by the Tax Policy Center. The editorial board at The Wall Street Journal wonders why Obama is calling his plan "middle-class economics":

In selling his proposals in Kansas the other day, Mr. Obama said that middle-class economics is about "lowering the taxes for working families by thousands of dollars, putting money back into their pockets so that they can have a little bit of cushion in their lives." Paying $7 more isn't much of a cushion.
The same goes for the second and fourth income quintiles. According to the think tank, the taxes of those groups would rise by 0.1% on average.

That last line is inaccurate -- the analysis finds that in the second and fourth quintiles after-tax income, not taxes, would increase by 0.1 percent on average. Those group's taxes would decline by $17 and $51 respectively.

Those figures still don't look like much of a "cushion," but it's important to keep in mind that these are averages which obscure a great deal of variation among members of these groups. Families, for example, would benefit greatly from the president's proposals, which extend and expand credits for child care and college tuition. A quarter of households with average incomes would see a tax cut of $549 on average, while half would see an increase of $289.

Broadly, though, the editorial board has a good point. There's no point in calling this tax plan "middle-class economics," since its main effect is to help the poor. After all, they're the ones who need it most, and there's no reason to shy away from policies that benefit them.


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What's in Wonkbook: 1) The president's budget 2) Opinions, including Carney on Ex-Im 3) Keystone XL passes the Senate, and more

Map of the day:  The percentage of toddlers who have received the full slate of recommended vaccinations, by state. Christopher Ingraham in The Washington Post.

1. Top story: Obama to propose budget increases

The proposal would mark an end to sequestration. "Obama's budget proposal represents a roughly 7 percent increase in 2016 discretionary spending over the levels that would trigger cuts under sequestration. The plan would provide $530 billion on the non-defense discretionary side, an increase of $37 billion over the spending caps, and $561 billion in defense spending, an increase of $38 billion over the caps." Steven Mufson and Juliet Eilperin in The Washington Post.

Obama sketched the plan in a speech to Democrats in Philadephia. "Declaring an end to 'mindless austerity,' President Barack Obama called for a surge in government spending Thursday, and asked Congress to throw out the sweeping budget cuts both parties agreed to four years ago... 'We need to stand up and go on offensive and not be defensive about what we believe in,' Obama said. Mocking Republicans for their leaders' newfound interest in poverty and the middle class, he questioned whether they would back it up with substance when it mattered." Josh Lederman and Andrew Taylor for the Associated Press.

Republicans had harsh words in response, but the party's fiscal conservatives and defense hawks are divided. "Though Republicans are eager to see the Pentagon fully funded, the prospect of lifting the spending caps runs up against another core GOP tenet — limiting government spending. An internal struggle centers on that split between defense and deficit hawks. 'There's debate going on,' said Sen. Jim Risch (R-Idaho). 'It's been a standoff, as you know. I have not seen either side running up the white flag.' " W.J. Hennigan and Lisa Mascaro in the Los Angeles Times.

VINIK: Republicans make hypocritical appeals to spending discipline. "As the Congressional Budget Office reported Monday, the debt is only forecast to rise slightly over the next 10 years. There's no reason to panic over it and make drastic spending cuts. But there's an even better reason to ignore Republican fear-mongering on the deficit: Last year, they passed legislation that would increase the deficit by nearly $1 trillion. The House GOP passed bills on a collection of corporate tax breaks (called the 'tax extenders') that would increase the deficit by more than $500 billion. Expansions of the Child Tax Credit and tax credits for education would increase the deficit by another $200 billion. Now that it's time to craft a budget, suddenly they care about the deficit again. In fact, House Republicans have already passed legislation this session that would increase the deficit. On January 9, they voted to change the definition of a full-time employee under Obamacare from 30 hours to 40 hours—a change that CBO projected will increase the deficit by $53 billion over the next decade." The New Republic.

CONDON: Finally, the White House discovers the power of the president's budget. "Few things set the Washington agenda more clearly than a president's budget done well and treated seriously by a White House. Unfortunately, that has been one of the problems for Democrats in the Obama years. Too often, this White House has treated the budget exercise as an inconvenience, openly flouting the law by submitting it weeks or months late, inadequately marketing its provisions, and shrugging off Congress's failure to actually pass a budget." National Journal.

2. Top opinions

CARNEY: The Export-Import Bank splits pro-business and free-enterprise Republicans. "You see, all that talk of lower taxes, less regulation, and less federal spending could fit sensibly in a framework of free enterprise and limited government. But support for Ex-Im — a federal agency that uses taxpayer dollars to subsidize American exporters and their banks — doesn't fit in such a free-enterprise frame. The mindset that can simultaneously advocate deregulation and export subsidies is the one that simply says, 'Listen to the business lobby.' " The Washington Examiner.

Big Brother is watching you run errands. "It appears a new reality is emerging in which simply leaving home in your car makes you a likely target of surveillance. But, as efficient and effective as license plate scanners appear to be, they carry huge costs as well. The auto industry -- which is already struggling to maintain its long-term marketing strategy of associating car ownership with that emotional touchstone personal freedom -- may find that these profound social shifts further erode its pitch that 'we don't sell cars, we sell freedom.' And without their appeal to freedom, automobiles will struggle to compete with more pragmatic (if nontraditional) alternatives such as car sharing and even public transportation." Edward Niedermeyer for Bloomberg View.

Our reliance on unpaid internships is short-sighted and exploitative. "Unfortunately, some businesses — facing shrinking payrolls and a swelling labor market — have exploited young workers desperate to augment a resume. At any one time, 500,000 to 1 million interns are working for free or minimal pay, too often shadowing executives or running errands instead of learning skills. Universities shoulder some of the blame by failing in their oversight role, awarding course credit for internships that weren't a meaningful step forward in their students' development. " John A. Fry in the Los Angeles Times.

3. In case you missed it

The Keystone XL bill passes. "In a 62-to-36 vote, 53 Republicans and nine Democrats approved a bill seeking to force completion of the 840-mile pipeline, a measure Obama has vowed to veto while federal environmental reviews continue." Paul Kane in The Washington Post.

Wisconsin Gov. Scott Walker, a possible G.O.P. presidential contender, is underrated as a candidate. "While Walker takes his lumps among Republican consultants and the national media for being, well, boring on stage, his Iowa speech showcased one of his overlooked yet sharpest rhetorical skills: spin. Unlike Rand Paul, Mike Huckabee or most other potential GOP contenders who hail from deeply conservative states, Walker has honed his ability to sell conservatives on his credentials without alienating a critical mass of moderates needed to win a general election." Michael C. Bender and John McCormick for Bloomberg.

Government parking regulations make everything more expensive. "There is a ton of 'free parking' in this world, and the costs of creating and maintaining it are baked into many expenses all around us — including expenses paid by people who never drive. ... Apartment buildings also frequently build more parking than they need, at the demand of regulation. And that additionally means that if you do pay for a parking spot, you probably also pay something extra for the empty spaces around it." Emily Badger in The Washington Post.

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