Obama to Announce Aid for Middle Class

WASHINGTON (AP) -- Previewing key elements of his State of the Union address, President Barack Obama is announcing on Monday a series of initiatives aimed at calming some of the economic fears of struggling middle class families.

The proposals to be unveiled by Obama and Vice President Joe Biden at the White House, and which the president will push in his Wednesday night speech, include a doubling of the child care tax credit for families earning under $85,000; an increase in federal funding for child care programs of $1.6 billion; capping student loan payments to 10 percent of income above "a basic living allowance;" expanding tax credits to match retirement savings; and increasing aid for families taking care of elderly relatives. The plan would also require all employers to provide the option of a workplace-based retirement savings plan.

The proposals are the result of the work of a middle class task force that Biden had headed. A White House official says they are aimed at the "sandwich generation" - Americans that are struggling to care for both their children and their parents. The official spoke on the condition of anonymity because the speech has not been finalized.

The official said that creating jobs, addressing the deficit, changing Washington and helping middle class families are the main themes of Obama's first State of the Union address. He'll also discuss his bid to take on the financial industry, energy, education and immigration - all issues the president has said fit into his plan to rebuild the economy.

White House advisers see the speech as a key opportunity for Obama to recalibrate his message to better connect with the public and reset his presidency after stinging setbacks.

Obama has promised a sharper focus on jobs and the economy as the dust settles from the punishing loss of the late Edward M. Kennedy's Senate seat in Massachusetts. Republican Scott Brown's victory put the seat in the hands of Republicans for the first time in decades and took away Democrats' 60-vote majority in the Senate.

Obama and fellow Democrats are trying to regroup to head off more populist anger and stem more losses of congressional, gubernatorial and legislative seats in the 2010 midterm elections. Obama's poll numbers are also off - primarily because of the slow economic recovery and double-digit unemployment. A majority of Americans also have turned against health care reform, the president's signature legislative effort now in jeopardy.

The initiatives being announced Monday were first reported by The New York Times.

Under the president's proposals, families making under $85,000 a year would see their child care tax credit nearly doubled. Families making under $115,000 would also see at least some increase in their credit. Obama will also call for the allocation of $100 million to assist families caring for aging relatives by providing help with transportation, adult day care and in-home aids.

The initiatives also focus on savings, requiring employers that don't offer jobs-based retirement plans to enroll their workers in a direct deposit retirement account, unless the employee opts out. The cost to employers would be offset by new tax credits, and the administration says the smallest firms would be exempt.

Obama will also call for caps on some student loans, limiting a borrower's payments to 10 percent of their income, and forgiving all remaining debt after 10 years of payment for those in public service work and 20 years for all others.