Advantage, Obama as voting begins in the US

The opinion polls have hardened in favour of the President in the last days of the campaign.

The US goes to the polls today with Barack Obama on the brink of an historic re-election. After a brutal campaign in which the Romney and Obama camps have spent an estimated $6bn between them, making this race comfortably the most expensive election in history, the two candidates are separated by just over one per cent in the national opinion polls. However, Obama holds slight leads in most of the key swing states, including the perennial bellwether state of Ohio. Of the states picked up by Obama against John McCain in 2008, Romney holds poll leads in just Indiana and North Carolina, with Florida and Virginia in a dead-heat.

The two candidates have splurged over $700m on television adverts, most of them negative, in the battleground states. Aside from the presidency, the entire House of Representatives, 34 Senators and 11 governors will be decided today. However, after months of intense campaigning, little is expected to change. The Democrats are poised to retain a narrow majority in the Senate, with the Republicans unlikely to pick up the four seats it needs to take control. In Missouri, Republican candidate Todd Aikin, whose comments about "legitimate rape" rarely leading to pregnancy sparked widespread outrage, is However, the huge gains GOP gains on the back of the Tea Party campaign are not expected to be wiped out, with the Democrats set to fall well short of the 25 gains needed to take a majority in the House of Representatives.

The political deadlock that has existed since the Republicans took control of the House in 2010 is set to continue. In truth, US politics is more divided than it has been for a generation. Despite committing a series of media gaffes, the most notorious being a secretly-filmed video of Romney dismissing the "47 per cent of electors who don't pay income tax and won't vote for me", the former Massachusetts governor has remained in contention. In particular, the Romney campaign was energised by a strong performance against a lacklustre Obama in the first Presidential debate on 3 October. However, after recovering in the final two debates. An opinion poll released over the weekend by the Washington Post found that 79 per cent rated Obama's response to Hurricane Sandy, which ripped through north-eastern America last week, as excellent or good. The President has since been bolstered by October's employment statistics showing that 171,000 jobs had been added to the economy.

Even small factors such as the weather - the forecast for Florida promises rain on Tuesday - may come into play as the party machines complete their 'get out the vote' programmes. However, turnout is expected to be up to five per cent lower than the 57 per cent seen in 2008.

Volunteers at the Romney office in St Petersburg maintain an upbeat demeanour, with a chart on the wall showing the numbers from the minority of favourable opinion polls. But the mood is brittle. Canvassers say they are "scared for their country". One lady tells me that "Obama-care forcing everybody to be equal is just wrong", complaining that the new healthcare regime would force Catholic charities to offer abortions and birth control. She says that she and her husband had to sell their home to pay rising medical bills 'but that's how it works" and proudly states that no Congressional Republicans voted for the bill.

The antipathy to their opponents is not reserved to Republicans. Victoria Yeroian, Young Democrats President at Virginia Commonwealth university in Richmond, describes the Tea Party to me as "an organised version of the Ku Klux Klan".

Democrat party operatives in Virginia and Florida have been in full lock-down mode when it comes to speaking to journalists but seem quietly confident amid the bustle of campaigning activity. The opinion polls have hardened in favour of the President in the last few days, and Democrats have been cheered by New York Times's uber-pollster Nate Silver, who projected a comfortable Obama win on Monday night, placing the vital bellwether state of Ohio, along with Florida and Virginia, in the Democrat column. Silver's formula puts a 92 per cent likelihood on Obama being re-elected, estimating that the President will claim between 310-315 electoral college votes.

As ever, attention will focus on the three big swing states - Pennsylvania, Ohio and Florida. No Republican has ever won the keys to the White House without claiming Ohio, but Romney needs to claim the Buckeye State and either Florida or a clutch of smaller swing states. The world is watching as America votes.

Ben Fox is a political reporter for EU Observer.

Barack Obama calls volunteers as he visits a campaign office in Columbus, Ohio. Photograph: Getty Images.
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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.