Obama Set To Redirect Expiring Tax Cuts

(NewsCore) - With the job market stuck in neutral, the Obama administration is moving toward using the revenue from expiring tax cuts for the wealthy to finance about $35 billion of tax cuts for small businesses and workers, administration and congressional officials said Friday.

The employment report for August, which showed a slight uptick in unemployment and anemic private-sector job creation, put new impetus on the White House to produce a labor-policy response, The Wall Street Journal reported.

President Barack Obama said he would be proposing additional economic measures next week, when he speaks Monday at a union picnic in Milwaukee and in a Wednesday address in Cleveland.

"We need to take further steps to create jobs and keep the economy growing, including extending tax cuts for the middle class and investing in the areas of our economy where the potential for job growth is greatest," the president said in the Rose Garden Friday, flanked by his economic team.

But Democrats are split into three camps. A small but vocal group wants to temporarily extend all the tax cuts passed by George W. Bush, which expire January 1.

A larger camp wants to let tax cuts for those earning $250,000 or more expire and use the proceeds for measures such as a payroll-tax holiday or other small-business breaks. And the third contingent wants to end those top-tier cuts and use the revenue to pay down the deficit.

The White House is ready to redirect the tax cuts, arguing that most of the tax increases would hit households with incomes topping $1 million.

The amount at issue is small in a $14 trillion economy, but economists said it could have an impact if targeted correctly. Most agreed the biggest bang for the buck would come from steering the money toward hiring and investment.

Read more: Wall Street Journal