Obama slams Romney's 'fairy dust' tax cut

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US President Barack Obama waves as he arrives to deliver remarks during a campaign event in Leesburg, VA, August 2.

President Barack Obama slammed Mitt Romney's "fairy dust" tax cuts, claiming his millionaire Republican foe would swell his own wealth while sticking the middle class with the bill.

Romney hit back as he roared onto the campaign trail after a rocky overseas tour, as his camp decried the "sclerotic" Obama economy, hours before the release of crucial new data on job creation in the stalled recovery.

In a punchy new personal attack ad running in battleground states, Obama said Romney would hike taxes on families with children by $2,000 to pay for his $5 trillion tax plan that would mostly benefit the wealthy.

"You work hard, stretch every penny," the ad said, showing a picture of a man working at a desk and a woman comparing cans of tuna at a supermarket.

"But chances are you pay a higher tax rate than him," the sonorous voice of the narrator said, as a picture of a smiling Romney, a former venture capitalist, flashed on screen.

"Mitt Romney made $20 million in 2010 but paid only 14 percent in taxes -- probably less than you," the ad said, branding the former venture capitalist's approach as "He pays less. You pay more."

The Obama camp is using Romney's bank balance, as well as his refusal to release more than two years of tax returns and complicated offshore accounting arrangements, to paint him as out of touch with the hard-pressed middle classes.

Obama based his assaults on a survey released by The Brookings Institution that said plans like Romney's to lower rates and maintain tax breaks would spell "large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers."

And the president linked Romney's plans to the policies of the former Bush administration, which he blamed for setting off the economic crisis in the first place.

"They have tried to sell us this trickle-down tax cut fairy dust before," Obama said during a campaign trip to the battleground state of Virginia.

"Guess what? We've seen this before. It didn't work then. It will not work now. It's not a plan to create jobs. It is not a plan to lower our deficit."

Romney was in another swing state, Colorado, unveiling a report card which said Obama had failed, by several of his own economic measures, and bemoaned eight percent unemployment, shrinking home prices and shriveling wages.

"All measures he laid out are measures that have gone in the wrong direction," Romney told some 2,000 people in Golden, just outside Denver, decrying Obama's record on job creation as "a tragedy" and "a moral failing."

"His policies have not worked," said the former Massachusetts governor. "My policies will work, and I know that because they have worked in the past."

Later, in an interview with conservative talk show host Sean Hannity, Romney declared "Help is coming" after laying out a plan for the middle class, stressing skills, energy production, trade, help for small business and deficit cuts.

Romney has proposed cutting income tax rates by 20 percent, eliminating tax on investment income, getting rid of the estate tax and cutting the corporate tax rate.

The Republican's campaign dismissed the Brookings tax study, describing its authors as partisan and saying it considered only half of Romney's tax platform.

But the survey was prime ammunition for the Obama campaign's contention that if elected, Romney would further tilt the economy toward wealthy Americans at the expense of middle class voters still suffering from the recession.

As Obama headed to Florida on Thursday, Democrats gleefully circulated a picture of the front page of the Tampa Bay Times newspaper bearing the headline: "Romney's plan will hit middle class."

Romney paid an effective tax rate of 13.9 percent in 2010, according to returns he has released, because his income from investments was taxed as a capital gain rather than under high rates due for salaried income.

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