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Home arrow Leading The News arrow Senate Dems doubt Obama’s tax credit idea
Leading The News PDF Print E-mail
Senate Dems doubt Obama’s tax credit idea
Posted: 01/08/09 01:06 PM [ET]

Several Democrats on the Senate Finance Committee voiced skepticism Thursday of President-elect Obama’s proposal to give employers a $3,000 tax credit for every new worker hired.

“I don’t think it works,” said Sen. Kent Conrad (D-N.D.), a member of the Finance panel and chairman of the Senate Budget Committee. “I don’t think it will give much lift to the economy.

“If someone offers you several thousands of dollars in tax credits when your product is not selling, are you going to hire someone?” Conrad asked rhetorically.

Obama surprised his colleague earlier this week by floating the idea of combining several hundred billion dollars' worth of tax cuts with the economic stimulus.

Conrad said economists learned from the Great Depression that marginal incentives are not effective “when the economy is falling away from you.”

“People use it to pay debt or to save — that’s human nature,” he said.

Sen. John Kerry (D-Mass.), another member of Finance, voiced skepticism.

“I’m not that excited about it,” Kerry said. “The creation of a tax credit for hiring isn’t going to make up for the lack of goods being sold."

Sen. Ron Wyden (Ore.), another Democrat on the Finance panel, which has primary jurisdiction over the stimulus package, said that infrastructure spending is more important.

“In tough times, people don’t respond that well to marginal changes,” Wyden said.

Democratic and Republican senators have expressed dissatisfaction with the tax rebate Congress passed last year to stimulate the economy. Economists have calculated that taxpayers devoted 12 percent of the rebate to new spending and put the rest of it into savings accounts or toward old debts.

Obama has sought to load his proposed stimulus plan with tax breaks to attract Republican support. Early this week he pitched a proposal to Congress that included $300 billion in tax cuts, making tax cuts about 40 percent of the entire package.

While Republicans have applauded the heavy emphasis on tax reduction, Democrats are beginning to voice concern. 

 
 
 
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