Daily Policy Digest

Economic Issues

February 21, 2008

OBAMA'S ECONOMIC PLAN

In an effort to add a larger dose of substance to his rhetoric, Barack Obama unveiled a detailed economic plan last week.  In doing so, he provided unmistakable proof of why he's one of the Senate's most liberal members.

On the spending side, for example:

  • Obama proposed a 10-year, $60 billion "National Infrastructure Reinvestment Bank," which is a haughty name for a scheme to fund dubious pork-barrel projects that can't pass Congress.
  • The $60 billion is just a down payment; it will be used to leverage "almost half a trillion of additional infrastructure spending."
  • His nearly universal health care plan, which he implausibly asserts will reduce the average family's insurance premium by $2,500 per year, is projected to cost between $50 billion and $65 billion per year.

Beyond the pork projects, Obama has gone hog wild over "refundable tax credits":

  • He promises a $4,000 refundable tax credit to finance college tuition for students who spend 100 hours performing community service.
  • There will be a refundable 10 percent mortgage-interest tax credit for married couples who take the $10,900 standard deduction because their itemizable deductions (including mortgage interest) fall below that level.
  • Taxpayers will also finance a $500 refundable tax credit to augment a $1,000 savings-account deposit made by families earning up to $75,000.

In addition, Obama also promises to triple the EITC benefit for minimum-wage workers:

  • For a married couple with two children working full-time and earning the minimum wage, their refundable EITC would rise from $3,225 to $9,675.
  • He would increase their refundable child-care tax credit to $3,000 and offer a refundable $1,000 tax credit to partly offset their $1,500 Social Security taxes, which had already been more than offset by their nearly $10,000 refundable EITC.
  • If they put that $1,000 in the bank, they would get another refundable tax credit of $500.

Source: Editorial, "Obama's economic plan," Washington Times, February 20, 2008.

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