Obama to propose package of tax breaks for businesses

WASHINGTON - Among the tax breaks President Obama is set to propose Wednesday is one that would allow businesses to write off 100 percent of their investments in new plants and equipment through 2011.

The goal of that tax break and a series of others, which Obama will call on Congress to approve, would be to show that the president is acting on the economy as the November midterm elections approach.

The package of tax breaks would save businesses $200 billion over two years, allowing companies to have more cash on hand, said an administration official, who spoke on the condition of anonymity because the formal announcement has not been made. The president will outline the proposal during a speech on the economy in Cleveland.

Amid an uptick in unemployment to 9.6 percent, and polls showing that the November election could be dismal for Democrats, Obama has promised to propose new steps to stimulate the economy.

In addition to the business investment tax break, he will also call for a $50 billion infrastructure investment and a permanent expansion of research and development tax credits for companies.

However, congressional approval is highly uncertain given Washington's partisan atmosphere and the elections, a reality not lost on the White House.

"We understand what season we've entered in Washington," White House spokesman Robert Gibbs said Tuesday. "We certainly hope that there are measures, including some of the ones that the president will outline, that Congress will consider. If they don't do that prior to the election, the president and the economic team still believe that these represent some very important ideas."

Republicans were quick to attack the president's proposals for missing the mark.

"The White House is missing the big picture. None of its plans address the two big problems that are hurting our economy: excessive government spending, and the uncertainty that their policies . . . are creating for small businesses," House Minority Leader John Boehner said.

With the public growing increasingly concerned about the mounting federal deficit, the White House has been careful to avoid labeling their proposals as a stimulus program, hoping to avoid drawing comparisons to the massive $814 billion stimulus Obama signed last year.

The tax breaks for capital investments that Obama is proposing would build on stimulus measures enacted in 2008 and 2009. They allowed businesses to depreciate 50 percent of their capital investments.

If Congress passes the administration's proposal to expand the tax breaks to 100 percent, several million people and 1.5 million businesses would benefit, said the administration official.

The official estimated the ultimate cost to taxpayers over 10 years would be $30 billion, with most of the money lost in tax revenue being recouped as the economy strengthens.