Obama: People should see tax cut help by April 1

Obama: People should see tax cut help by April 1

So when should most people hope to start seeing the benefits of tax cuts in it?

By April 1, according to the president.

"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," Obama said Saturday in his weekly radio and Internet address.

The president said his signature two-year "Making Work Pay" tax break will affect 95 percent of working families, and, in six weeks' time, a typical family will start taking home at least $65 more every month.

Taxpayers won't get a separate check mailed to them like many did with last year's one-time payment designed by the Bush administration to help boost the economy.

Instead, Obama's credit — up to $400 credit for individuals and up to $800 credit for married couples — is to be doled out through the rest of the year through paychecks. Most workers are to see about a $13 per week increase in their take-home pay. In 2010, the credit would be about $7.70 a week, if it is spread over the entire year.

People who do not earn enough money to owe income taxes are eligible for the credit, an attempt to offset the payroll taxes they pay.

But the credit is phased out for higher-income taxpayers, defined as individuals who have a modified adjusted gross income of between $75,000 and $95,000, and married couples filing jointly who make between $150,000 and $190,000. Thus, the administration says many of them will see little or no change in their paychecks.

With employers and payroll companies responsible for making the necessary changes, no worker has to fill out a new W-4 withholding form or do anything else to get the credit. The Internal Revenue Service, however, is suggesting that individuals and couples with multiple jobs submit a revised withholding form to be on the safe side. And, it's always a good idea for people to keep a close eye on pay stubs to make sure their money is included.

In concert with Obama's announcement, the Treasury Department on Saturday began directing employers to reduce the amount of taxes withheld from people's paychecks in accordance with the new law as soon as possible and not later than April 1. The IRS also released new withholding tables on its Web site to help guide employers in reflecting the new credit. It says more instructions about tax provisions in the law will be available next week, and will be mailed to more than 9 million employers next month.

"We have the wheels turning to deliver much needed boosts to the paychecks of working Americans," Treasury Secretary Tim Geithner said in a statement.

Obama's expensive and ambitious package of federal spending and tax cuts is designed to revive the economy and save or create 3.5 million or more jobs. It aimed to inject a sudden boost of cash into transportation, education, energy and health care, while helping recession victims through tax cuts, extended unemployment benefits and short-term health insurance assistance. It also will add to a rapidly growing national debt.

The president signed the measure into law Tuesday.

In his weekly address, Obama said he was grateful to Congress, governors, mayors and all the people who supported the measure.

Still, he added: "It is only a first step on the road to economic recovery. And we cannot fail to complete the journey." He said the country also must stem foreclosures, repair the banking system, get credit flowing again and revamp financial industry regulations.

And, even as he promoted the record-breaking spending plan, he called for doing what's necessary to control "exploding" deficits as the economy begins to improve.

Obama is holding a bipartisan "fiscal responsibility summit" at the White House on Monday to talk about ways to control the trillion-dollar budget deficit. The next day, he is to address a joint session of Congress, a speech expected to focus heavily on the economy. On Thursday, Obama will send a budget request to Congress "that's sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don't and restoring fiscal discipline."

Republicans are certain to hold him to that.

In the GOP's weekly address, Rep. Dave Camp of Michigan, the top Republican on the House Ways and Means Committee, said his party wants to work with Obama to solve the country's economic problems "in a responsible way that does not burden our children and grandchildren with a mountain of debt."

"We can't borrow and spend our way back to prosperity," Camp said. "If he is serious about dealing with the tough issues and getting spending under control, his budget will show it."

___

Internal Revenue Service: http://tinyurl.com/a9r8nv

White House: http://www.whitehouse.gov

02.21.09

(AP Photo/Ron Edmonds)

Bailout?

The View From a Throne

There's something about the image of John Thain sitting on a $35,000 toilet that won't go away.

It began with a report by CNBC that the former Merrill Lynch boss, facing the demise of his firm, blew $1.22 million redecorating his office.

Contributing to this obscene tab was "something called a 'commode on legs,' " CNBC reported, based on the details it had at the time.

As other media outlets began to swirl about the story, this minor detail was shortened to "$35,000 for a commode" in a list of outrages that included $1,400 for a trash can, $68,000 for a credenza, $87,000 for a rug and $800,000 for a celebrity designer.

After that, many reporters and bloggers mistakenly took out their plungers.

"During his $1.22 million office renovation, ex-Merrill Lynch boss John Thain reportedly bought a portable toilet at a cost of $35,000," the Chicago Tribune quipped in a Jan. 23 column about popular Internet searches of the week. "No doubt a metaphor for where such purchases have taken our economy."

"Not only did John Thain flush Merrill Lynch shareholders down the drain, and not only did he oversee $100 billion of losses, we now find out that the most overpaid and over-compensated CEO in America now spent $35,000 on a toilet," read blog Wall Street Manna in a Jan. 22 post. "Let's face it, a (bleep-bleep) that big needs a $35,000 toilet," read another piece at www.alternet.org, called "John Thain: Corporate Jerk of the Moment."

Subsequent reports concluded that there is more than one definition for "commode," including, "a low cabinet or chest of drawers . . . usually standing on legs or short feet," according to thefreedictionary.com.

But in every carnival of greed, we love to see sideshows.

Like the anonymous trust-fund kids who took credit for toilet-papering alleged Ponzi-schemer Bernie Madoff's $9 million Palm Beach home last weekend.

Like Dick Fuld, former boss of bankrupt Lehman Brothers, who recently sold his $14 million seaside mansion in Florida to his wife for $100.

Like Citigroup planning to buy a $50 million corporate jet even as it bagged billions in government bailouts.

Like insurance giant AIG getting bailout money but still paying for pricey hunting trips and sending independent insurance agents to a posh resort.

Pundits often use these examples to allege that there is a disconnect between the super-rich and the rest of us. But greed is just a part of the human condition. And anyone climbing the socioeconomic ladder is looking up, rarely noticing the rungs below.

This is why middle-class folks can still buy shirts for $18 and never even know about the young laborers who sewed them together for just enough pennies to buy rice.

And it's also how Wall Street executives can insulate themselves from the middle-class lugs whose retirement funds they've been pinching to keep their jets in the air.

Sometimes, when such oversights are called to their attention by raging mobs, they repent.

Citigroup is backing out of its jet deal after a little chiding from President Barack Obama. AIG has long apologized and promised to be more conscious of the fact that it's funded by taxpayers.

But Fuld hasn't explained his fire sale. And Thain's apology — though it came with a pledge to personally reimburse his lavish office expenses — was pretty much a "Sorry, but . . ."

"It is clear to me in today's world that it was a mistake," he said in a CNBC interview. But then he preceded to blame the decorating choices of his predecessor, the overpaid and then ousted Stan O'Neal.

"It really would have been very difficult for me to use it in the form that it was in," Thain said. "It needed to be renovated no matter what."

And there was no $35,000 toilet.

Nevertheless, Thain risks installation in the same filthy bathroom where we've collectively hung the $6,000 shower curtain of former Tyco International CEO Dennis Koz lowski.

Because it's a lot easier to imagine Thain on a throne than to fathom the fortunes he made turning a 94-year-old powerhouse into something resembling an outhouse.

Or that in his firm's final days, he rushed $4 billion in bonuses to Merrill's merry managers for their parts in this feat.

Or that the global economy is collapsing because the paper that Wall Street firms sold us may soon be worth less than a jumbo pack of Charmin.

Al Lewis 201-938-5266 or al.lewis@dowjones.com
02/01/09

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