Barack Obama to unveil $300bn tax cuts

Click to follow

Barack Obama will today put his support behind $300bn (£196bn) of business tax cuts, the latest in a blizzard of policy announcements designed to show the US has not run out of ideas for stimulating its disappointingly sluggish economy.

The new tax plans come on the heels of the President's proposal for $50bn in new infrastructure spending, putting engineers and building contractors to work on the public dime in the hope of cutting the country's 9.6 per cent unemployment rate.

But members of the opposition Republican party immediately traduced a number of Mr Obama's suggestions, and the window for pushing new stimulus measures through Congress is narrowing as the US heads towards bitter mid-term elections on 2 November.

The latest White House plan, to be unveiled by the President at a rally in Cleveland, Ohio, today, would enable business to write off 100 per cent of their capital investments against tax until the end of next year. The plan, which is expected to cost the federal government $200bn in lost revenue over two years, would not only free up money that businesses might spend on hiring new workers, but would also improve revenues for manufacturers of big-ticket items such as factory equipment and IT.

The President will also put his weight behind an extension of a tax credit for research and development, which would be worth $100bn over 10 years.

At rallies over the Labour Day bank holiday weekend, Mr Obama pushed another stimulus measure, a $50bn programme of government works that would upgrade 150,000 miles of roads, 150 miles of airport runways and 4,000 miles of railways. The hope is that the plan could be appended to a routine transport bill going through Congress.

A standalone stimulus bill, pulling together all the ideas for stoking economic activity, seems impossible in the polarised political atmosphere of the moment. Last year's $787bn economic stimulus bill, which included a mix of tax and spending programmes, has become wildly unpopular as opponents argue it did little to improve the employment picture, even though economists largely agree that the US recession would have been markedly worse without it.

Corporate tax breaks appear more likely to win cross-party support, but even their passage could be complicated by the looming debate over how best to extend personal tax cuts enacted by former president George Bush, which are set to expire at the end of this year.

"The White House is missing the big picture," the Republican minority leader in the House of Representatives, John Boehner, said yesterday. "None of its plans address the two big problems that are hurting our economy: excessive government spending, and the uncertainty that its policies are creating for small businesses."

The Republican National Committee added: "Washington Democrats are ready to put Americans on the hook once again for wasteful spending with another desperate political ploy."