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Sunday, April 5, 2009

The Obama Plan – What It Includes

Whenever a new president takes office, the general populace worries about how things will change for social programs, the economy – everything. With the current state of the economy both here in the United States, and in the world, President-elect Barack Obama and his economic plan are already under many, many microscopes. We know his platform included talk of affordable health insurance and tax cuts for the middle class, but what is his economic plan, exactly, and how will it help the economy? Here's an overview.

Three Point Plan

Obama's initial strategy includes a three-point plan of key steps he believes are important to jumpstarting the economy, and ending the current recession. Those points are:

1. Tax relief for individuals. Key to this is a tax cut for working families. The goal is to provide tax relief to the vast majority of working Americans – 95% of the working population. Other plans include a tax credit of up to $1,000 per family ($500 per adult). Obama refers to this idea as "making work pay."
2. Tax relief for small businesses. Obama believes that successful small businesses are the foundation of a successful national economy. He plans to eliminate capital gains taxes on startups and small businesses, in the hope that this will encourage innovation and help create new jobs.
3. Fair trade. We live in a global marketplace, and foreign trade is important. Part of Obama's plan includes a fair trade policy that will not only open up foreign markets, but will also improve labor practices and environmental standards around the world.
These three points, of course, are mere highlights of an economic strategy that is, in its entirety, roughly the same length as a paperback novel. Even so, we can look at each point with a bit more depth:

Tax Relief

In addition to the specific cut mentioned above, the Obama plan also calls for the elimination of income taxes for senior citizens who earn less than $50,000 / year. About seven million senior citizens are included in this plan, and their average savings will be about $1,400 / year. In addition, about 27 million senior citizens would not need to file income tax returns at all.

The Obama strategy also calls for simplified income tax filings, with the goal of giving many of us the ability to do their taxes in five minutes or less, partly by requiring the IRS to use information it already receives from employers and banks to provide pre-filled tax forms that must merely be verified, signed, and sent in. Estimates say that this change in data processing will save us (collectively) about 200 million work hours, and as much as $2 billion in fees we used to pay to tax preparers.

Support for Small Business:

While the tax cut for 95% of working Americans is aimed at helping individuals, President-elect Obama and Vice President-elect Joe Biden believe it will also assist small businesses. This is because small business owners, as self-employed workers, pay both the employer and employee side of payroll tax. By eliminating capital gains as well, the burden of this "double taxation" will be greatly reduced.
The Obama plan also calls for the creation of "private business incubators," which are combinations of the public and private institutions working together to encourage entrepreneurship and spur job growth by helping start-up companies move from ideas on paper to actual companies hiring actual people.
Of course, Obama wants big business to be successful as well, and his plan also includes improvement in technology usage and distribution, educational offsets, and labor practices across the country.

Fair Trade

As part of a global community, fair trade is important in getting America back on its financial feet, and Obama's economic plan involves a lot of change in this area. His ideas include:

• Amending NAFTA (the North American Free Trade Agreement) to improve the benefits for American workers, as well as making it a better deal for Canada and Mexico.
• Take away tax breaks that are currently being given to corporations who outsource their jobs to foreign countries. Instead, companies that keep good jobs, with good benefits on American soil will be rewarded. As well, Obama and Biden want to ensure that public works contracts are awarded to companies that are committed to using American workers. Further, there would be a tax credit for corporations that maintain their corporate headquarters in the United States (if they were ever here), prepare workers for retirement, provide health insurance, offer competitive, fair wages, maintain or increase the number of employers they have within the U.S.A. (as compared to outside it), and support their employees who are part of the military.
• Transition Assistance Improvements: The Obama plan calls for an update to the existing Trade Adjustment Assistance system by extending it to service industries, and helping to create flexible education accounts or other retraining assistance for workers in vulnerable sectors of the economy who face dislocation or obsolescence, before their jobs are destroyed, or given to others.

While these key points represent a significant portion of the Obama/Biden economic plan, it is important to remember that the President-elect cannot do anything until he takes office in January, and that many of his ideas must still be approved by Congress. It's also important to remember that change takes time. Pundits and analysts are currently predicting that our current recession will bottom out sometime in 2009, and only after that will we see a significant upswing. Still, history is on our side: whenever the sitting President and the majority of the sitting Congress have been representing the same party – whichever party it was at the time – the economy has improved.

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Name: Joe
Home: Niagara Falls, New York, United States

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