President Obama in his State of the Union address is quoted as saying “We are fighting every single day to put Americans back to work, to create good jobs, and strengthen our economy for the long-term. The additional steps laid out today focus on easing the burdens on middle class families who are struggling in this economy, and providing the help they need to get ahead.”

The Obama administration immediately upon its inauguration set up what they refer to as the Middle Income Task Force. This project, spearheaded by Vice President Biden, is aimed at finding common sense solutions to popular middle income problems. To get a better understanding of the troubles faced by middle income families across the country, Mr. Biden has been meeting with a cross section of people and his team has proposed a number of initiatives in answer to their complaints.

The main policy initiatives to emerge from this task force are as follows;

    • Increasing the Child Care Tax for middle income families. Under the new law families with an annual income of less than $85,000 will be able to claim a tax credit of 35% of costs as opposed to the previous 20%. All the other stipulations regarding claiming for the Child and Dependent Care Tax remain the same. For a refresher on what those requirements are you can visit the IRS website. The increase represents almost double the pre-initiative credit in dollars and cents for families in the under $85,000 income bracket, while families making less than $115,000 will also see an increase in their credit.
      • Implementing automatic IRAs at the workplace. This will require all employers to offer employees a salary deducted IRA option to help with retirement planning. In addition to this, the task force also proposes to introduce a bigger match for the Saver’s Tax Credit. The government proposes to match up to 50% of the first $1000 set aside for retirement for all families earning under $65,000 a year.
        • Putting a cap on student loan payments. Another policy initiative is to lower the monthly minimum payments on student loans to 10% of income after basic expenses are deducted. This is to answer the call of those grappling with hefty student loans.
          • The Middle Income Task Force has also suggested funding a Caregiver Initiative which will provide much needed support for the millions of Americans who not only care for their children, but also provide financial assistance to aging parents and relatives.

            These policy proposals are all in the pipelines but while some see them as a welcomed respite to tough economic times, there are others who feel that they are a step in the wrong direction. Those who oppose these measures think that the public stands to benefit more from stimulation of the private sector than from these initiatives that ultimately increase the size of the budget deficit.

            For more information on these measures see the official Whitehouse Press Release.