Obama pledges tax cuts for business

Many Americans are angry about the poor state of the US economy [Reuters]

In a bid to kick-start the US economy, along with his party’s political fortunes, Barack Obama, the US president, has unveiled a series of new economic measures aimed at helping businesses and creating more jobs.

In a speech in Cleveland, Ohio, an area hit hard by the recession with an unemployment rate of 10.3 per cent, Obama said he wants to introduce new tax breaks that would allow businesses to write off 100 per cent of new capital investments through 2011.

Al Jazeera’s John Terrett said that Obama’s announcement on Wednesday is part of a larger programme by the president.

“On Monday, he announced $50bn for infrastructure building including roads, bridges, airport runways and things like that,” our correspondent said.

“Now today he is adding another $300bn [including] $100bn in tax credits for businesses who carry out research and development in the United States and $200bn [in tax breaks] for all American companies, corporations and small businesses, so as they buy new computer systems or build new buildings, they can write off the tax,” he said.

Tax fight

Obama said he opposes any plan to extend the Bush-era tax cuts for families earning more than $250,000 a year. The tax cuts, enacted in 2001 and 2003, are set to expire at the end of this year.

Obama said the struggling US economy cannot afford to spend $700bn to keep taxes low for the country’s highest income earners, despite a call by John Boehner, the Republican leader in the House of Representatives, to do just that.

“Let me be clear to Mr. Boehner and everyone else. We should not hold middle class tax cuts hostage any longer,” Obama said, pledging that his administration “is ready this week to give tax cuts to every American making $250,000 or less”.

Boehner, who could become the House leader if Republicans make gains in November elections, said that Obama’s government was “out of touch” with the American public.

The speech comes on the heels of new employment figures released by the Department of Labour, showing that new job openings rose by 6.2 per cent in July after two months of declines, a sign that companies could step up hiring in the coming months.

Critics say the plan will do little to improve the economy, and that this latest push is a desperate effort by the White House to win support ahead of the November mid-term elections.

Polls have shown a steady slippage in Obama’s approval ratings and an accompanying rise in Republican prospects for winning House and Senate seats in November.

“All elections are fought and won on the basis of the economy and the economy is simply not performing in the way that Mr. Obama said it would be by now,” our correspondent said.