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Obama Cuts Deal to Extend All Bush Tax Cuts, Renew Jobless Benefits

4 years ago
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Ending weeks of speculation, President Obama on Monday night announced that he had reached an agreement with Republican leadership to extend the Bush-era tax cuts for both middle-class and upper-income earners for another two years. Speaking to disaffected Democrats who have long been opposed to such a move -- estimated to add $60 billion to the deficit each year they are in place -- the president said, "As sympathetic as I am to those who would rather fight, it would be the wrong thing to do." The American people, Obama asserted, "are looking to us to solve problems" rather than engage in "political posturing."

In exchange for the extension of the tax cuts for individuals earning more than $200,000 per year and families making over $250,000 per year, Republican leaders agreed to extend unemployment insurance for another 13 months -- reaching an estimated 2 million Americans whose insurance expired on Nov. 30.

The president was also able to secure temporary extension of stimulus-related tax cuts including the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit, which provides tax relief for students. According to senior White House officials, both sides agreed to extend the Alternative Minimum Tax for two years.

President Obama also announced a 2 percent employee payroll tax cut, which will go into effect next year. (Under current law, employees pay 6.2 percent of their income toward Social Security. With the new provision, they will pay 4.2 percent). Businesses will also receive an extension on tax credits that allow them to write off new investments, in a bid to encourage job growth.

Obama said he was forced to cede ground on the Estate Tax, which he had agreed to set at 35 percent rather than the White House's preferred 45 percent rate. For his part, he characterized the compromise as "a more generous treatment of the tax than I think is wise."

Obama was frank in his assessment of the compromise, saying he "completely disagreed" with the largely Republican-held view that the Bush tax cuts should be extended for upper-income earners. But he sounded a pragmatic note in his assessment that the GOP would block an extension for middle- and working-class families unless they secured an extension for the wealthy. "Without a willingness to give on both sides," said Obama, "there's no reason to believe this stalemate won't continue into next year. I'm not willing to let that happen."

He offered that the compromise was "not perfect" but that it was "an essential step on the road to recovery." Given the fact that the Bush tax cuts remain temporary, it is clear that debate will be taken up again in two years -- likely in the middle of the 2012 presidential election. Despite this, the president maintained that time -- and further economic recovery -- might lessen the controversy around the issue.

"I'm confident that as we make tough choices about bringing our deficit down, as I engage in a conversation with the American people about the hard choices we're going to have to make to secure our future and our children's future and our grandchildren's future," he said, "it will become apparent that we cannot afford to extend those tax cuts any longer."

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Mr. Slick

Remember 2 years before George Bush left office, we had constant growth and unemployment was non existent. MSNBC and CNN won't tell you this. They also won't tell you that during the last two years of the Bush Presidency the demoncrats took over the house and senate..Look it up!

December 09 2010 at 6:00 PM Report abuse +2 rate up rate down Reply

I am so sorry that the Extreme Liberals are joining in with the Extreme Rightists in obstructing the President's compromise, a compromise that would avoid leaving the poor and the unemployed in a lurch. Has none ever taken Political Science 100? Or have they failed the course? God forbid that any of them and any of their loved ones ever find themselves in the situation of needing a helping hand from hard-nosed parties and a hard-nosed House. Hopefully the top 2% wealthiest Americans will extend a hand by creating employment. Actually, their having to create jobs should be a clause to their being able to keep their tax cuts.

December 09 2010 at 2:49 PM Report abuse -1 rate up rate down Reply
1 reply to GBShell's comment

nicely said.. I like your idea!

December 09 2010 at 3:16 PM Report abuse rate up rate down Reply

I assume the tax package will be passed if the dream act amnesty is passed. Once again they turn backs on the American people and play their stupid games.

December 09 2010 at 1:57 PM Report abuse -1 rate up rate down Reply
1 reply to bakethis's comment

I think that the decision made by the President to extend actual tax cuts for another two years and go along with Republicans is always the way things are re-solved.Both sides have basically agreed to let middle class and wealthy to trust and spend in the nation so it can recover or else to continue borrowing money to make up for this distrust,greed,and selfishness from its own people.Job crea- tion in America depends on this trust,lack of greed,and lack of selfishness in or-der to expand and share with others.If America does not come back to God's princi-ples of living and operating,certainly its people will apply greed,selfishness, and distrust and national deficit will increase to make up for this conduct.

December 09 2010 at 8:09 AM Report abuse rate up rate down Reply

It is definitely time for term limits.

December 08 2010 at 11:23 AM Report abuse +2 rate up rate down Reply

I think it's interesting how some right wing Republicans believe that black people should pull themselves up by the bootstraps and receive less government support, even though the Civil Rights act was not passed until 1964 which has given African Americans only 40 years to recover from 400 years of slavery and economic disenfranchisement in the U.S. Many of these wealthy right wing Republicans, don't even like the idea of having to pay taxes to support the poor. elderly and disabled in the U.S., even though nearly all the wealth in America, which is enjoyed disproportionately by European Americans, has been generated from 400 years of FREE slave labor.....and now all we're required to do, to make-up for this wrong, is pay taxes to support African Americans in their economic and social recovery. I think African Americans will need many more years of our financial and spiritual support to overcome nearly half a millenium of economic and social disenfrachisement and abuse. Although we now see a few thousand millionaire black athletes and performers on television, our metro areas are surrounded by MILLIONS of African Americans living in crime ridden ghettos, struggling just to pay rent and buy food.

December 07 2010 at 2:41 PM Report abuse -3 rate up rate down Reply

WHAT was he suppose to do? Shame on the Republicans for highjacking this political issue. They know that there is no way that the President can allow another 7-9 million people to instantly have no income by ending their unemployment benefit. My husband and I together make $70,000 and $80,000 per year. We own a small home. We have two used cars that are paid for. We have 2 daughters in college with a combination of scholarships, grants and student loans. We have approx. $1000 in savings. My husbands job of 18 years closed and went to Mexico and he even had to train the Mexican that was taking over his supervisory position. If he refused to train him, he would forfeit his termination package which was one year of health insurance and three weeks pay. I am a disabled veteran with a fixed income of $16,000 per year. If Obama had turned down this package because the Republicans condition was to give benefits to those over $250,000 in income many many families like ours would have been at a sheter within a couple of weeks. All you people criticizing Obama for agreeing to the terms the Republicans set, please tell me WHAT WAS HE SUPPOSE TO DO? THROW US ALL UNDER THE BUS!! Thank you President. thank you for giving us a chance!

December 07 2010 at 12:55 PM Report abuse -1 rate up rate down Reply

people are mistaken to think rich people are rich because they work harder. rich people are born rich, grow up rich, go to rich schools, graduate rich, get a rich job in the rich family business, and stay rich. i'm not rich, i have a middle class job and probably put forth at least the same effort as a rich person. i know you people hate the poor, but poor people are born poor, grow up poor, dont graduate from poor schools and stay poor. please stop defending rich people for heaven sake they certainly dont need your help.

December 07 2010 at 12:51 PM Report abuse +1 rate up rate down Reply

I really dont care about the deficit,it will never affect me.Basically we voted to pay less toward our bills(deficit) and future generations will pay it instead of us.Hell,let them learn what it feels like to suffer,they have it too good anyway.The liberals are all worried about other people,I couldnt care less,as long as I get mine,Im happy.A lesson I learned along time ago is being broke isnt that bad if it's someone else,not me.I never planned on social security or medicare for retirement and I can clearly see them callapsing in the next 15 years.I hope the repubs win in 2012 because im in that over$250k bracket and they vote my way.

December 07 2010 at 8:06 AM Report abuse -7 rate up rate down Reply

Lowering the deficit will not happen with tax increases. Out of control spending will always out pace tax collections. Obama has been throwing our money around with no positive result and no matter how much you hate the rich higher taxes will not solve the problem. Cut spending and eliminate unnessary govt departments and programs.

December 07 2010 at 6:54 AM Report abuse +8 rate up rate down Reply

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