Opportunity For All: Middle Class Tax Cuts In The President’s FY 2015 Budget

The President’s FY2015 budget released today will show how to achieve real, lasting economic security and expand opportunity for all so that every American who is willing to work hard can get ahead.   The President’s budget will show in real terms the choices we can make to expand economic opportunity and strengthen the middle class, like closing unfair tax loopholes so we can invest in the things we need to help the middle class and those striving to get into it, grow our economy, and provide economic opportunity for every American. It invests in infrastructure, job training, and preschool; cuts taxes for working Americans while closing tax loopholes enjoyed by the wealthy and well-connected; and reduces the deficit.

In the State of the Union, the President called for an expansion of one of those tax cuts for working Americans, the Earned Income Tax Credit (EITC).  The President’s budget will lay out the details of this proposal, which would cut taxes for 13.5 million working Americans, while also proposing to expand tax cuts to help middle-class and working families afford child care, send their kids to college and retire with dignity. These pro-growth and pro-opportunity tax cuts would be fully offset by closing tax loopholes, including the so-called “Gingrich” and “Carried Interest” provisions that let high-income professionals avoid the income and payroll taxes other workers pay.    

The White House also released a report on the economic benefits of expanding the EITC.  To read the report, click HERE.

DETAILS - HOW THE PRESIDENT’S BUDGET CUTS TAXES FOR AMERICAN FAMILIES

The President’s highest priority is to ensure economic opportunity for all Americans.  In his first term in office, he cut taxes by $3,600 for a typical middle-class family, and in 2012 he fought to keep taxes low for 98% of households while asking the wealthy to pay the same rates as in the 1990s.  But the President believes there is much more to be done. This year’s Budget would:

• Strengthen the Earned Income Tax Credit (EITC) and Child Tax Credit: The EITC and refundable Child Tax Credit are among our most effective tools for reducing poverty and rewarding work. This year’s Budget proposes to:
  • Significantly Strengthen the Childless Worker EITC: The President’s Budget significantly strengthens the childless worker EITC, benefiting 13.5 million workers. This expansion would address an important missed opportunity in the EITC – identified by economists of both parties – to provide support and an additional incentive to work to childless adults, while also making it available to younger workers who are currently excluded. This expansion – which would lift about half a million people above the poverty line – would be paid for by closing tax loopholes that let high-income professionals avoid the income and payroll taxes everyone else has to pay.
  • Make Permanent Important Improvements the President Has Already Achieved: The Budget also makes permanent important EITC and Child Tax Credit improvements that help 16 million families with 30 million children, and have helped lift 1.4 million Americans out of poverty.
• Expand and Improve Tax Benefits that Help Middle-Class and Working Families:
  • Pay for Child Care:  Families with young children know how high the cost of childcare can be – and how it often keeps a parent from full-time work.  The Budget proposes a significant expansion of the Child and Dependent Care Tax Credit, targeted to families with children under the age of 5.  About 1.7 million families would benefit from this expansion in 2015, receiving an average tax cut of more than $600.
  • Save for Retirement:  Too many households know they should be saving for retirement but lack access to employer-sponsored plans like 401(k)s, which puts the onus on individuals to set up and invest in an Individual Retirement Account (IRA).  Complementing the President’s myRA executive action, the Budget proposes to establish automatic IRAs (or auto-IRAs), which will expand access to and build on proven best-practices in the private sector to encourage workers to save.  About 13 million workers would begin contributing to retirement savings through auto-IRAs as a result of this proposal.
  • Pay for College:  Education has never been a more important part of the path to opportunity and the middle class, and the President believes that we should do all we can to help students and their families afford college.  That’s why this Budget would:
    • Permanently Extend the American Opportunity Tax Credit (AOTC), which will benefit 11.5 million families and students by an average of more than $1,100.
    • Simplify Taxes for Pell Grant Recipients, benefiting nearly all of the approximately 9 million Pell grant recipients by clarifying AOTC rules and simplifying calculations and providing some with a reduction in taxes or a boost to their AOTC. 
    • Provide tax relief to student loan borrowers by excluding student loan forgiveness from taxation for borrowers who have made student loan payments for many years under an income-related repayment plan.

Readout of the President’s Call with Chancellor Merkel of Germany

The President spoke to Chancellor Merkel today regarding the events unfolding in Ukraine.  The leaders expressed their grave concern over Russia’s clear violation of Ukrainian sovereignty and territorial integrity and agreed on the importance of de-escalating the situation, including through the deployment international observers and human rights monitors, and of initiating direct talks between Russia and Ukraine.  They also discussed the need to continue to support the government of Ukraine as it works to stabilize its economy and makes preparations for elections in May.  The leaders agreed to stay in close contact in the days ahead. 

Remarks by President Obama and Prime Minister Netanyahu before Bilateral Meeting

Oval Office

2:04 P.M. EST

PRESIDENT OBAMA:  Well, it's a pleasure to welcome once again Prime Minister Netanyahu to the Oval Office.  There’s nobody I’ve met with more or consulted with more than Bibi.  And it's a testimony to the incredible bond between our two nations. I’ve said before and I will repeat, we do not have a closer friend or ally than Israel and the bond between our two countries and our two peoples in unbreakable. 

And that's the reason why on a whole spectrum of issues we consult closely; we have the kind of military, intelligence and security cooperation that is unprecedented.  And there is a strong bipartisan commitment in this country to make sure that Israel’s security is preserved in any contingency.

We're going to have a wide range of issues, obviously, to discuss given what’s happening on the world stage and the Middle East, in particular.  So we’ll spend some time discussing the situation in Syria and the need for us to not only find a political solution to the tragic situation there, but also to address growing extremism inside of Syria, the spillover effects on Lebanon and Jordan, in particular.

We’ll have an opportunity to discuss the work that we do in counterterrorism and the work that we are going to be continuing to do to try to stabilize an environment that has become very dangerous in many respects.

We’ll also have a chance to talk about Egypt, a country that obviously is of critical importance and where we have the opportunity, I think, to move beyond recent events over the last several years to a point in which once again there is a legitimate path towards political transition inside of Egypt.  And that's important to Israel’s security as well as to U.S. security.

We're going to be talking about Iran and my absolute commitment to make sure that Iran does not have a nuclear weapon -- something that I know the Prime Minister feels very deeply about.  And we will discuss how the Joint Plan of Action that is currently in place can potentially at least lead to a solution that ensures that Iran is not developing a nuclear weapon.

And we’ll spend time talking about the prospects of peace between Israelis and Palestinians.  I want to commend publicly the efforts that Prime Minister Netanyahu had made in very lengthy and painstaking negotiations with my Secretary of State, John Kerry, Abu Mazen.  They are tough negotiations.  The issues are profound.  Obviously if they were easy they would have been resolved many years ago.  But I think that Prime Minister Netanyahu has approached these negotiations with a level of seriousness and commitment that reflects his leadership and the desire for the Israeli people for peace.

It's my belief that ultimately it is still possible to create two states, a Jewish state of Israel and a state of Palestine in which people are living side by side in peace and security.  But it's difficult and it requires compromise on all sides.  And I just want to publicly again commend the Prime Minister for the seriousness with which he’s taken these discussions. 

The timeframe that we have set up for completing these negotiations is coming near and some tough decisions are going to have to be made.  But I know that, regardless of the outcome, the Prime Minister will make those decisions based on his absolute commitment to Israel’s security and his recognition that ultimately Israel’s security will be enhanced by peace with his neighbors.

So, Mr. Prime Minister, I want to welcome you again, and thank you again for your leadership and your friendship with the American people.

PRIME MINISTER NETANYAHU:  Thank you, Mr. President. 

Mr. President, I appreciate the opportunity to meet with you today, especially since I know you’ve got a few other pressing matters on your plate.  During the five years of your presidency, you and I, and Israel and the United States have worked very closely on critically important issues -- security, intelligence-sharing, missile defense -- and we're deeply grateful for that.

I look forward to working closely with you in the years ahead to address the main challenges that confront both our countries, and of these, the greatest challenge, undoubtedly, is to prevent Iran from acquiring the capacity to make nuclear weapons.  I think that goal can be achieved if Iran is prevented from enriching uranium and dismantles fully its military nuclear installations. 

Now, Mr. President, if that goal can be achieved peacefully and through diplomacy, I can tell you that no country has a greater stake in this than Israel.  Because, as you know and I'm sure you’ll appreciate, Iran calls openly for Israel’s destruction, so I'm sure you’ll appreciate that Israel cannot permit such a state to have the ability to make atomic bombs to achieve that goal.  We just cannot be brought back again to the brink of destruction.  And I, as the Prime Minister of Israel, will do whatever I must do to defend the Jewish state.
 
We’re also going to discuss the peace process, as you said. I want to thank you and Secretary Kerry for when I say tireless efforts, I mean tireless efforts that he has put into this quest, as you are. 

It’s an opportunity to congratulate Secretary Kerry on the birth of his new granddaughter.  Mr. Secretary, you may not be aware of this -- but the news of the new granddaughter came to Secretary Kerry while we were discussing the peace process.  So we’ve had many productive meetings, but this is truly a productive meeting.  (Laughter.)  And so I thank you both for you efforts and your team’s.

The 20 years that have passed since Israel entered the peace process have been marked by unprecedented steps that Israel has taken to advance peace.  I mean, we vacated cities in Judea and Samaria.  We left entirely Gaza.  We’ve not only frozen settlements, we’ve uprooted entire settlements.  We’ve released hundreds of terrorist prisoners, including dozens in recent months. 

And when you look at what we got in return, it’s been scores of suicide bombings, thousands of rockets on our cities fired from the areas we vacated, and just incessant Palestinian incitement against Israel.  So Israel has been doing its part, and I regret to say that the Palestinians haven’t.

Now, I know this flies in the face of conventional wisdom, but it’s the truth.  And the people of Israel know that it’s the truth because they’ve been living it.  What they want is peace.  What we all want fervently is peace.  Not a piece a paper –- although that, too -- but a real peace; a peace that is anchored in mutual recognition of two nation states that recognize and respect one another, and solid security arrangements on the ground.
 
Mr. President, you rightly said that Israel, the Jewish state, is the realization of the Jewish people’s self-determination in our ancestral homeland.  So the Palestinians expect us to recognize a Palestinian state for the Palestinian people, a nation state for the Palestinian people.  I think it’s about time they recognize a nation state for the Jewish people.  We’ve only been there for 4,000 years. 

And I hope President Abbas does this, as I hope that he’ll take seriously Israel’s genuine security needs.  Because, as you know and I think everybody does, in the Middle East, which is definitely the most turbulent and violent part of the Earth, the only peace that will endure is a peace that we can defend.  And we’ve learned from our history -- Jewish history, but I think from general history -- that the best way to guarantee peace is to be strong.  And that’s what the people of Israel expect me to do –- to stand strong against criticism, against pressure, stand strong to secure the future of the one and only Jewish state. 

And I think there is a partnership there, a partnership between Israel and America, that I think is important for this end.   I want to thank you again for your friendship and your hospitality, and the warmth you’ve shown me on the snowy Washington day.  I thank you.  It’s good to see you again.

PRESIDENT OBAMA:  Thank you.

Q    The initial punishments that the U.S. is threatening against Russia for their advances into Ukraine don’t seem to be having much of an effect.  What leverage do you believe you have over President Putin at this point?  And is the U.S. concerned primarily about getting Russian forces out of Crimea, or are you also concerned about Russian forces moving into parts of eastern Ukraine?

PRESIDENT OBAMA:  All of the above.  I spent the weekend talking to leaders across Europe, and I think the world is largely united in recognizing that the steps Russia has taken are a violation of Ukraine’s sovereignty, Ukraine’s territorial integrity; that they’re a violation of international law; they’re a violation of previous agreements that Russia has made with respect to how it treats and respects its neighbors.  And, as a consequence, we got strong statements from NATO, from the G7, condemning the actions that Russia has taken.  And we are going to continue these diplomatic efforts during the course of this week.

My interest is seeing the Ukrainian people be able to determine their own destiny.  Russia has strong historic ties to the Ukraine.  There are a lot of Russian nationals inside of Ukraine as well as native Russians, as there are a lot of Ukrainians inside of Russia.  There are strong commercial ties between those two countries.  And so all of those interests I think can be recognized.  But what cannot be done is for Russia, with impunity, to put its soldiers on the ground and violate basic principles that are recognized around the world. 

And I think the strong condemnation that its received from countries around the world indicates the degree to which Russia is on the wrong side of history on this. 

We are strongly supportive of the interim Ukrainian government.  John Kerry is going to be traveling to Kyiv to indicate our support for the Ukrainian people, to offer very specific and concrete packages of economic aid -- because one of the things we’re concerned about is stabilizing the economy even in the midst of this crisis.  And what we are also indicating to the Russians is that if, in fact, they continue on the current trajectory that they're on, that we are examining a whole series of steps -- economic, diplomatic -- that will isolate Russia and will have a negative impact on Russia’s economy and its status in the world.

We’ve already suspended preparations for the G8 summit.  I think you can expect that there would be further follow-up on that.  We are taking a look a whole range of issues that John Kerry mentioned yesterday. 

And the question for Mr. Putin, who I spoke to directly, and the question for the Russian government generally is if, in fact, their concern is that the rights of all Ukrainians are respected, if, in fact, their primary concern, as they’ve stated, is that Russian speakers and Russian nationals are not in any way harmed or abused or discriminated against, then we should be able to set up international monitors and an international effort that mediates between various parties, that is able to broker a deal that is satisfactory to the Ukrainian people -- not to the United States, not to Russia, but to the Ukrainian people -- and we should be able to deescalate the situation.

And so we’ve been very specific with the Russians about how that might be done under the auspices of either the United States or the OSCE, or some other international organization.  And John Kerry will pursue that further when he arrives. 

And so there are really two paths that Russia can take at this point.  Obviously, the facts on the ground in Crimea are deeply troubling and Russia has a large army that borders Ukraine.  But what is also true is that over time this will be a costly proposition for Russia.  And now is the time for them to consider whether they can serve their interests in a way that resorts to diplomacy as opposed to force.

One last point I would make on this:  I’ve heard a lot of talk from Congress about what should be done, what they want to do.  One thing they can do right away is to work with the administration to help provide a package of assistance to the Ukrainians, to the people and that government.  And when they get back in, assuming the weather clears, I would hope that that would be the first order of business.  Because at this stage there should be unanimity among Democrats and Republicans that when it comes to preserving the principle that no country has the right to send in troops to another country unprovoked, we should be able to come up with a unified position that stands outside of partisan politics.  And my expectation is, is that I’ll be able to get Congress to work with us in order to achieve that goal.

END
2:22 P.M. EST

G-7 Leaders Statement

We, the leaders of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States and the President of the European Council and President of the European Commission, join together today to condemn the Russian Federation’s clear violation of the sovereignty and territorial integrity of Ukraine, in contravention of Russia’s obligations under the UN Charter and its 1997 basing agreement with Ukraine.  We call on Russia to address any ongoing security or human rights concerns that it has with Ukraine through direct negotiations, and/or via international observation or mediation under the auspices of the UN or the Organization for Security and Cooperation in Europe.  We stand ready to assist with these efforts.

We also call on all parties concerned to behave with the greatest extent of self-restraint and responsibility, and to decrease the tensions.

We note that Russia’s actions in Ukraine also contravene the principles and values on which the G-7 and the G-8 operate.  As such, we have decided for the time being to suspend our participation in activities associated with the preparation of the scheduled G-8 Summit in Sochi in June, until the environment comes back where the G-8 is able to have meaningful discussion.

We are united in supporting Ukraine’s sovereignty and territorial integrity, and its right to choose its own future.  We commit ourselves to support Ukraine in its efforts to restore unity, stability, and political and economic health to the country.  To that end, we will support Ukraine’s work with the International Monetary Fund to negotiate a new program and to implement needed reforms.  IMF support will be critical in unlocking additional assistance from the World Bank, other international financial institutions, the EU, and bilateral sources.