Iowa congressmen give Obama tax plan mixed reviews

Make that one “yes” and one emphatic “no” for President Obama's proposal to extend the Bush tax cuts for taxpayers earning less than $250,000 a year.

Eastern Iowa Rep. Bruce Braley introduced legislation July 11 to extend middle-class tax cuts through 2014, but let the Bush tax cuts for wealthier Americans expire at the end of 2012.

He's hoping to round up support for ending the tax cuts for Americans making more than $250,000 a year because they “are a big reason why we're facing record budget deficits today,” the Waterloo Democrat said Wednesday said in a conference call with reporters.

Republican Sen. Chuck Grassley says the plans advanced by Obama and Braley fall short of delivering the promised tax relief and incentives for job creation.

“What the president left out of his program that he announced in Cedar Rapids (July 10) is that there are dozens of expiring tax provisions ignored by the president that will mean much higher taxes for middle-income America,” Grassley said. That would include tax relief for teachers who spend their own money for classroom supplies and families paying for higher education. Nor did the president address the Alternative Minimum Tax that will hit middle-income taxpayers if not addressed.

Braley's bill would protect the $2,500 tax credit for college expenses, expanded child tax credits, and the Earned Income Tax Credit for low-income working families.

While Obama may be correct that his plan would affect only 3 percent of small businesses, Grassley said “raising their taxes is a bad idea when we have 8.2 percent unemployment and we're still struggling to have economic recovery.”

“It may be only 3 percent, but they operate on cash flow and when you take $85 billion out of cash flow how are you going to create jobs?” Grassley said. Small businesses create about 70 percent of new jobs and 25 percent of all jobs will get hit, Grassley added.

His plan makes sense for Iowa, Braley said, because according to the state Department of Revenue, 99.2 percent of Iowans would not be affected.

“Extending middle class tax cuts will keep money in the pockets of more Iowa families, helping to drive job creation and economic growth,” Braley said.

The Iowa congressmen also disagreed on the timing of the tax proposals. Grassley called it the latest in the “crisis-of-the-week” strategy to help Obama, who he called the “campaigner-in-chief.” Democratic Senate Majority Leader Harry Reid and the Obama re-election campaign seem to be coordinating a new crisis each week, such as student loan interest rates, the so-called war on women and the Buffet Rule for taxing millionaires, he said.

“We're going to have a crisis every week because the president travels around the country giving political speeches and then he can blame Republicans for not cooperating with him,” Grassley said.

Braley called it “absolutely preposterous” to suggest the tax extension discussion was an attempt to change the conversation from high unemployment numbers and other economic woes.

“It's timely now because House Republicans are going to be bringing a bill to the floor to extend all tax cuts,” he said. It's an opportunity to remind voters the same people calling for deficit reduction want to extend tax cuts to the wealthiest Americans, “which has had a profound effect on the deficit.”

“There's nothing at all political about it,” he said.