Jeff Bingaman United States Senator from New Mexico

When Congress passed the American Recovery and Reinvestment Act, we enacted a spending plan to create jobs by tackling our nation’s long-standing infrastructure needs. But often overlooked are the tax cuts the law contains for 95 percent of working families – saving American taxpayers $288 billion.

Specifically, the law provides for the following:

• The Making Work Pay Credit puts $400 (individual) or $800 (family) back into the pocket of most working taxpayers beginning this year.  This money was included in April 2009 taxes through a reduction in the amount of income tax withheld in workers' paychecks.
• The Economic Recovery Payment of a one-time payment of $250 to recipients of Social Security, SSI, Railroad Retirement, and Veterans Disability Compensation benefits.
• An increase in the Earned Income Tax Credit, which eases the tax burden of low- to moderate-income working families with three or more children. This credit also begins the phase-out of the “marriage penalty,” thus helping eligible couples save up to $1,880.
• The American Opportunity Education Tax Credit refunds taxpayers up to $2,500 for the cost of tuition and other related expenses. Congress has also ensured that computers now qualify as an educational expense, making it easier for students to afford the best technology.
• The Refundable Home Buyer Credit increases the maximum home buyer tax credit to $8,000, which will help more New Mexicans buy homes, and eliminates the taxpayer re-payment obligation, which will help homeowners continue to afford those homes.

Because of these recently enacted tax policies, most middle-income families face a federal tax burden near its lowest level in decades. That is good news for New Mexicans. 

As we update our tax laws, it’s also important for us to get a handle on spending. Congress has taken the first steps toward responsibly restructuring our budget. In this year’s Budget Resolution, we outlined the following:

• Reinstating statutory PAYGO rules. PAYGO restricts the federal government from spending money it does not have, just as families are restricted from spending more than they have.
• Expanding oversight in large programs. This will help prevent fraud, which is enormously costly to taxpayers.
• Investing in our economy without increasing the deficit. This Congress has made significant investments in education, health care, and energy from deficit-neutral reserve funds that comply with PAYGO requirements.
• Cuts the deficit by nearly two-thirds. The president set a goal to cut the current deficit in half within four years, and this budget goes beyond that. By 2013, we will have shaved $1.7 trillion from the current deficit, and will save even more by 2014.

Bringing fiscal discipline to the federal budget is as essential as providing tax relief to middle-income Americans. Congress is working hard on both of these important issues.