Top Dems Question Tax Deduction Proposal

White House Plan To Drop Bush Tax Cuts On Wealthy, Use Funds For Health Care, Hits Democratic Opposition

(CBS/AP)  President Obama's proposal to limit itemized tax deductions for high earners is running into opposition from key Democrats in Congress who worry that charities and the housing market would be hurt.

Senate Finance Committee Chairman Max Baucus questioned Wednesday whether the proposal was viable, a day after his House counterpart also expressed reservations.

Treasury Secretary Timothy Geithner said tax increases on families making more than $250,000 a year are necessary to make a down payment on health care reform and to limit future budget deficits. But, he said, he was willing to work with lawmakers on proposals they objected to.

"We recognize there are other ways to do this," Geithner told the Finance Committee.

Baucus, a Montana Democrat, said he thought the administration would be flexible on the proposal. "They want health care reform as much as I do," he told reporters.

Geithner and White House budget director Peter Orszag returned to Capitol Hill on Wednesday for a second day of hearings on Obama's $3.6 trillion tax and spending proposal. Both faced tough questions about the tax package.

The White House has launched its battle to push the ambitious budget package through Congress during a week that has seen the economy's continuing erosion - particularly on the stock markets. Wall Street remained on edge with both the Dow Jones industrial average and the Standard & Poor's 500 index registering their lowest finishes in more than a decade.

Geithner and Orszag blame the Bush administration for creating a situation that makes the massive plan necessary, and stress that the new measures need time to work. (Read more on White House's defense of the budget.)

"It's way too soon to start judging success or failure here," White House Budget Director Peter Orszag said on CBS' The Early Show Wednesday. "We inherited a large mess."

Mr. Obama's budget calls for setting aside $634 billion over the next 10 years as a down payment on health care reform. Half the money would come from tax increases on upper-income earners; the other half from cuts to Medicare and Medicaid.

In an effort to keep the president's push for sweeping health care reforms moving forward, the White House was to host some 120 industry experts and lawmakers for a summit on the topic later Thursday.

The budget calls for two tax increases on couples making more than $250,000 and individuals making more than $200,000. Mr. Obama wants to increase the top tax rates from 35 percent to 39.6 percent by allowing a tax cut enacted under President George W. Bush to expire in 2011.

He also wants to limit the deductions those families can claim for charitable donations, mortgage interest and state and local taxes.

Without the new limits, a taxpayer in the proposed 39.6 percent tax bracket could save $396 in taxes from a $1,000 reduction in taxable income. Obama wants to limit deductions to the 28 percent bracket starting in 2011, meaning the same taxpayer would save only $280.

The higher tax rates are a good bet to become law because Obama campaigned on the change and Congress would not have to do anything to enact them. Once the Bush tax cuts expire at the end of 2010, the higher rates would take effect.

But some key Democrats are wary of limiting deductions.

"I don't want to prejudge anything, but it is certainly one that I am having difficulties with," said Sen. Robert Menendez, D-N.J.

On Tuesday, Rep. Charles Rangel, chairman of the tax-writing House Ways and Means Committee, said he, too, had reservations about the proposal.

"I would never want to adversely affect anything that is charitable or good," the New York Democrat said.

Republicans have been even more critical of the proposal, saying it would reduce charitable donations at a time when many charities are struggling.

"There are people with the means to help. Why would you make it harder for them to do it?" said Rep. Thaddeus McCotter, chairman of the Republican Policy Committee, who is from Michigan.

Geithner said the change would merely restore the same deduction limits that were in place when President Ronald Reagan left office.

[cheasntessa]

I have a question. Now that they are taking less FICA out of our weekly pay, will we end up owing more at the end of the year, or will the tax table be adjusted?

[drsuz]

**Any politician who took money form wall st. should be removed empty washington.
Posted by bumpedoff**

There would be no Politicans left !!

**All of our futures are at stake, only because of the Bush Cheney Administration's decision to lower the tax on the wealthy, and the greed, and big business have just took advantage, Posted by starleo146 **

Now remind me of whose Administration deregulated the Banking Industry?? Oh yeah, the Clinton Administration.

But we cannot put ALL the blame there. Former Sen. Phil Gramm (R) , nine years ago, as part of a decades-long anti-regulatory crusade, Gramm pulled a sly legislative maneuver that greased the way to the multibillion-dollar subprime meltdown. He is now reviled as the villain who bankrupted Middle America. Oh, but wasn't that during the Clinton Administration also??

[drsuz]

**"Geithner and Orszag blame the Bush administration..."
People are already beginning to notice that Obama spends more time blaming Bush for his problems than he does fixing them.**

If Obama would concentrate more on all those "Promises" he made his voters, maybe he could accomplish something. He KNEW what the siutation of the ecomony was and had all the answers. Maybe he should sit down and watch his campaign speeches.

[drsuz]

**The budget calls for two tax increases on couples making more than $250,000 and individuals making more than $200,000.**

And just how many in this country make that much money?? Come on Obama, get realistic...

[despido]

The threat of nationalization is a self fulfilling prophecy. Supporters be careful what you wish for. Nationalization must immediately br followed within months by privitazation or the problem will be even worse. By slamming banks and making threats Obama has in fact exacerbated the problem. If he intended this result, and he did, then he should never have supported the $700 Billion bailout. If you're going to trash talk a bank, don't by the damned thing first.

[habu99-2009]

The first domino is about to fall citi bank trading at $1.00 per share what will the
Fearless leader obama do when when citi bank go's worthles
Posted by bumpedoff at 11:48 AM : Mar 5, 2009

I hope he lets Citi roll under the waves and die. Depositors are insured, the management obvioiusly screwed the pooch by getting greedy and mismanaging their books, they don't deserve taxpayer assistance to reinforce their bad decisions. Free market economics at work, right? Sometimes businesses fail and others move into their place, a sort of corporate Darwinism at work.

[bumpedoff]

The first domino is about to fall citi bank trading at $1.00 per share what will the
Fearless leader obama do when when citi bank go's worthles

[despido]

The problems were NOT caused by tax cuts - that's ludicrous. The problems we face were caused by deregulation written by a Republican, voted on & passed by both Republicans & Democrats, and signed into law by a Democrat. ALL WERE INVOLVED and THAT'S HISTORY. You'd better worry about what is happening NOW. Obama proposed and supported and voted for a $150 Billion stimulus last year that did nothing - money sent to China via WalMart. The $750 Billion bailout put togehther by Reid & Polosi and supported by Obama was money wasted - it accomplished NOTHING. The Trillion dollar 'stimulus' just passed without ever being read is obese with pork and Obama just signed a 3.4 Trillion dollar package with 8000 earmarks - more pork. Our treasury is being raided while Americans sing praises to someone who is obviously in over his head. Billions given away to keep people in homes the never actually qualified for in the first place, nationalizing banks, auto companies and health care while rewarding deadbeats and penalizing successful families. Stop pointing fingers and start asking questions.

[creeper00]

"Geithner and Orszag blame the Bush administration..."

People are already beginning to notice that Obama spends more time blaming Bush for his problems than he does fixing them.

It wasn't as though he knew the economy was bad or anything. It wasn't as if he didn't beg for the job. /snark

We have elected an incompetent.

[TheMasses]

there are some bad greedy democrats as well but we will weed them out and all republicans after all this is over.
Posted by starleo146
-------------
Hahahahahaha!
Political hack.

[starleo146]

Reagan did it eliminated all deductions but the interest on your mortgage What <Saint Reagan's as you republicans think of him as, Just a republican can do anything,never let a democrat do anything, yes, there are some bad greedy democrats as well but we will weed them out and all republicans after all this is over.

[starleo146]

Any politician who took money form wall st. should be removed empty washington.
Posted by bumpedoff at 10:22 AM : Mar 5, 2009
+ report abuse + perm

To think they put Martha Stewart in prison only because she is a democrat and these crooks are getting our tax money ,and paying billions to there CEO'S who failed all these companies.failed the country as well.AIG these guys should be put under the prison.

[starleo146]

All of our futures are at stake, only because of the Bush Cheney Administration's decision to lower the tax on the wealthy, and the greed, and big business have just took advantage, put us in a hole so deep, we are all in jeopardy of losing everything, every time this country gets in a bad way it was a republican that did it to us, Why are you condoning what they did to us?

[bumpedoff]

Any politician who took money form wall st. should be removed empty washington.

[djeanne007]

Republican, Democrat, far-left, far-right, lib, ultra-lib, conservative, right-wing nut, etc., Christian, non-Christian -- it doesn't matter...

WE ARE ALL GOING DOWN TOGETHER.

Sarcasm, name-calling, finger-pointing -- it does no good.

Sadly, the "U" in USA is all but gone, and (I believe) this will ultimately be a major factor in our undoing.

Who was it that said, "...America will be destroyed from within..."? Or, "...United we stand, divided we fall..."?

From 11 pages of comments here, could we put together just 1 or 2 pages of civil, thoughtful, constructive and to-the-point submissions? I don't think so.

We'd better wake up and UNITE as citizens (regardless of party/religion and so on), while we still have the freedom to speak our minds in a forum such as this.

[TheMasses]

Here's to old times sake Joe:
I will be wolfsbanes12 for a post or two:

"Hey Josephine, struck a nerve did I? Perhaps it is that your obese taco burritto has come to America illegally? Republican jewbercons like Madoff have ruined what's left of your pathetic country Clem".

Of course themasses meant none of that.

[architekker-2009]

What the heck did President Doofbag Urkel say this time? Every time he speaks, the stock market declines deeply! DDDOOOFFFFBBAAAAAAGGGG pres!

[TheMasses]

Hagey Stew was it?

[TheMasses]

maybe he's vacationing to "Lock Ness"
Posted by Joe-NY-3
----------------
LOL.
What's that stuff he eats again?

[habu99-2009]

So resetting the tax on those who have profited handsomely under Bush the Lesser to the levels of taxes they paid during the Clinton years (where they still made lots of money) is somehow a socialist end-of-the-world scenario for conservatives? Gimme a break, there are a bunch of studies from economists (who aren't underwritten by the Republican Party) that show the erosion of the middle class in America during Jabbering Junior's years with the super wealthy being the only beneficiaries. This isn't liberalism taking money away from hard working wage earners to give to the lazy, it's simply making those who have profited at the expense of everybody else pay more of their fair share.

Anyone not making $250k or more a year who objects to this tax increase on wealthy people can go stand outside a country club or a gated community and offer to sponsor a poor wealthy family hard hit by this tax increase. Those helpful people can give the wealthy the extra money they have in their wallets because of the lowering of taxes for everybody else who makes an honest living. That way the wealthy won't be inconvenienced by not being able to buy a new Jaguar or Gulfstream Jet this year.

Oh and the article above puts the lie once and for all to the argument that the wealthy are the engines of the economy. Apparently most rich people only give to charities because of the tax deduction, not out of any sense of helping those less fortunate. 'Let them eat cake', 21st century style.