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Adjusting to Obama economics

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Tess Vigeland:This week, the Obama Administration stepped up calls for an $825 billion stimulus package. Banks are far from the only worry. There’s unemployment, health care, taxes… all things that President Obama has pledged to fix.

Marketplace’s Nancy Marshall Genzer is in the nation’s capital. Nancy, let’s take a look at some of the personal finance issues that might be on the table in the near future, starting with taxes.

Nancy Marshall Genzer: Well, Tess, everybody hates tax time, but there is a little bit of good news for college kids in the economic stimulus package. The House and the Senate are both considering a temporary $2,500 tax credit to help pay for college. President Obama’s even a little more ambitious than that. He actually wants a college tuition tax credit for middle class students. They would get $4,000 and in exchange, they would perform 100 hours of community service.

Vigeland: One other tax issue that just keeps coming around every single year is the alternative minimum tax. We’ve seen patches for this in years past. Any talk of that happening again this year?

Genzer: Yeah, actually Democrats say they may try to include a patch in the stimulus package. Some deficit hawks don’t like this idea of adding the patch to the stimulus proposal because they don’t want anything in there that doesn’t actually stimulate the economy by producing jobs.

Vigeland: One issue that came up a lot on the campaign trail before the election was the notion of a tax cut for certain taxpayers. What’s the word on that and how might that work?

Genzer: Yeah, and those certain taxpayers, Tess, would include you and me. Most of us earn less than $200,000 a year and that’s what this tax cut is aimed at. Those folks would get a $500 tax credit and couples in that tax bracket would get a $1,000 credit and the way it would work is the payroll taxes that are automatically deducted from our paychecks would be lowered. So we wouldn’t get a check in the mail, but we would hopefully see that our paychecks were a bit fatter and go out and spend that money right away and stimulate the economy.

Vigeland: Well, I’ll definitely look forward to that possibility. And what about — again, this was an issue on the campaign — the notion of rolling back or repealing the Bush administration tax cuts?

Genzer: Yeah, President Obama has talked about that. He said he was going to repeal the Bush tax cuts for people making more than $250,000. He has backed off of that pledge a little bit, but the House Speaker Nancy Pelosi may hold him to it.

Vigeland: Nancy, President Obama has a lot of ideas about improving health care while he was on the campaign trail. What’s he got up his sleeve on that issue?

Genzer: Yeah, he wants to require insurance companies to cover pre-existing medical conditions. The new White House also is supporting a tax credit for small businesses. That’s intended to help them provide health insurance for their workers through a pool that President Obama is calling the National Health Insurance Exchange.

Vigeland: And finally, unemployment just keeps going up and up and up in this country. We’re up over 7 percent. What does the administration want to do about all the folks who are losing their jobs?

Genzer: Yeah. President Obama has included that in his economic stimulus package as well. And the House is considering a plan that would increase unemployment checks by about $25 a week. And, Tess, on the subject of food stamps, the House Appropriations Committee has agreed to increase food stamp funding by about $150 million. So, House Democrats and the Obama administration are moving ahead on both of those fronts.

Vigeland: Alright. Marketplace’s Nancy Marshall Genzer joining us from our Washington D.C. bureau. Thanks so much, Nancy.

Genzer: You’re welcome.

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