WASHINGTON — President Barack Obama will call on Congress to pass new tax breaks that would allow businesses to write off 100 percent of their new capital investments through 2011, the latest in a series of proposals the White House is rolling out in hopes of showing action on the economy ahead of the November elections.
An administration official said the tax breaks would save businesses $200 billion over two years, allowing companies to have more cash on hand. The president will outline the proposal during a speech on the economy Wednesday in Cleveland.
Amid an uptick in unemployment to 9.6 percent, and polls showing that the November election could be dismal for Democrats, Obama has promised to propose new steps to stimulate the economy. In addition to the business investment tax breaks, he will also call for a $50 billion infrastructure investment and a permanent expansion of research and development tax credits for companies.
The proposals would require congressional approval, which is highly uncertain given Washington’s partisan atmosphere and the approaching midterm elections — a reality that’s not lost on the White House.
“We understand what season we’ve entered in Washington,” White House spokesman Robert Gibbs said today. “We certainly hope that there are measures, including some of the ones that the president will outline, that Congress will consider. If they don’t do that prior to the election, the president and the economic team still believe that these represent some very important ideas.”
Republicans were quick to attack the president’s proposals for missing the mark.
“The White House is missing the big picture. None of its plans address the two big problems that are hurting our economy: excessive government spending, and the uncertainty that their policies….are creating for small businesses,” House Minority Leader John Boehner said.
With the public growing increasingly concerned about the mounting federal deficit, the White House has been careful to avoid labeling their proposals as a stimulus program, hoping to avoid drawing comparisons to the massive $814 billion stimulus Obama signed last year.
“I don’t think this is anything near the level of what was enacted near the beginning of the administration,” Gibbs said.
Even if legislators could pass some of the proposals in the short window between their return to Capitol Hill in mid-September and the elections, it’s unlikely the efforts would significantly stimulate the economy by November.
The tax breaks for capital investments Obama is proposing would build on stimulus measures enacted in 2008 and 2009 that allowed businesses to depreciate 50 percent of their capital investments. A separate small business bill the White House is urging the Senate to pass would extend that tax break through the end of this year.
If Congress passes the administration’s proposal to expand the tax breaks to 100 percent, several million people and 1.5 million businesses would benefit, said the administration official, who spoke on the condition of anonymity because the formal announcement has not been made.
The official estimated the ultimate cost to taxpayers over 10 years would be $30 billion, with most of the money lost in tax revenue being recouped as the economy strengthens.