Lawmakers and Financial Experts Question Obama's Tax Cuts

By Shailagh Murray
Washington Post Staff Writer
Thursday, January 8, 2009

At least two tax cuts that are part of Barack Obama's stimulus package have been criticized by lawmakers, tax experts and economists for being potentially too expensive and ineffective, signaling that they are likely to face resistance on Capitol Hill as congressional leaders begin direct negotiations with the president-elect's team.

Both Democrats and Republicans have questioned a provision that would provide a $3,000 tax credit to companies for every job created and, possibly, for every job spared. They contend that the idea would be ripe for abuse and difficult to administer.

Lawmakers are also skeptical about a measure that would allow companies to deduct large portions of recent losses. The proposal would benefit companies that have been hit hardest by the recession, including in the banking and real estate sectors, but experts worry that costs could soar because so many would be eligible.

Despite the concerns, as well as growing unease from Republicans about the size of the package after the Congressional Budget Office's latest projection of a $1.2 trillion deficit for the current fiscal year, congressional leaders said they are moving swiftly to produce a big, bold bill. Senate Majority Leader Harry M. Reid (D-Nev.) vowed that a stimulus package would be passed by Congress before it takes a 10-day break on Feb. 13, or "there won't be a recess."

Obama is scheduled to speak this morning at George Mason University to promote his plan, while former Treasury secretary Lawrence H. Summers, who will be Obama's most senior White House economic adviser, is scheduled to brief Senate Democrats in the afternoon on its outlines. Today the Senate Finance Committee will hold its first meeting on the emerging stimulus package.

(More here.)