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Tax-Cut Deal: If It's Good for Regular Americans, Isn't That Good Enough for Now?

1 year ago
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"Absolute disaster." "Legislative blackmail." "Almost moral corruptness." We get it. Democrats in Congress really, really don't like President Obama's tax deal with the Republicans. But is it truly as apocalyptically bad as all that?
Please, people, take a deep breath, step back and stop working yourselves into a lather about cave-ins and core principles and lines in the sand. Earlier this week, I said we should wait to see what Obama got from Republicans in tax negotiations before convicting him of terminal wimpiness. He may have dispelled that image at his combative news conference Tuesday by calling out Republicans as hostage-takers and liberal naysayers as sanctimonious purists. But that's just the politics. Let's look at the economic winners in this package to get to the real bottom line:
-- The long-term unemployed. In an economy with 9.8 percent unemployment, with five jobless people for each job opening, they'll get another 13 months of benefits if they need them.
-- Families with children and college students. They'll continue to get tax credits included in last year's stimulus package for two more years.
-- Lower-income working families. The stimulus package expanded assistance under the Earned Income Tax Credit. The extra help will continue for two more years, benefiting some 6.5 million working parents with 15 million children.
-- Businesses. They will continue to get tax breaks included in the stimulus, and they'll also be able to expense 100 percent of their investments in 2011 (an Obama proposal from September).
-- People who have jobs. Over 155 million workers will get a one-year, two-percentage-point cut in the payroll tax (that pays for Social Security and Medicare). That's worth about $1,000 to the average family, Obama says.
-- Everyone with income. For at least two more years, they will continue to pay lower Bush-era tax rates on income under $250,000.
-- Oh yeah, the rich. They're getting a 35 percent inheritance tax and an exemption for individual estates under $5 million (Obama and Democrats say both are too generous), and -- the part that makes Democrats question their reason for being -- the lower Bush-era rates on income above $250,000.
Yes, yes, I know. Obama campaigned on a promise to eradicate George W. Bush's "tax cuts for the rich" from the face of the earth. It was his battle cry. It defined him and his party. And granted, he should have had some strategy in place months ago to go to the mat for something, whether it was ending the high-end tax cuts or raising the income threshold, when there was still time for a few rounds of political warfare.
To be fair, though everyone has known for 10 years that all the tax cuts for everyone were due to expire Dec. 31, Obama's party refused to vote on extending the middle-class tax cuts before the election. "I would have liked to have seen a vote before the election. I thought this was a strong position for us to take into the election, to crystalize the positions of the two parties, because I think the Democrats have better ideas," Obama said Tuesday.

When Democrats finally brought their tax cut package to the floor a few days ago, the Senate couldn't overcome a filibuster threat. Time was running out. Obama said his top priority is to make sure 2 million long-term unemployed don't lose their lifelines and "tens of millions of hardworking Americans are not seeing their paychecks shrink on January 1st just because the folks here in Washington are busy trying to score political points." The agreement gives Washington time to have the political argument over taxes, he said, without doing harm to individuals or the economy as a whole.

Some liberal interest groups have pounced on Obama and branded the deal a complete sellout. "If Obama's theory is that Independent voters will flock to presidential weakness, mission accomplished," wrote Adam Green, head of the Progressive Change Campaign Committee. His evidence: An Associated Press dispatch Monday headlined "Republicans achieve top goal in Obama tax-cut plan." Republicans "largely dictated the terms" of the compromise though they don't control the House, Senate or White House, the AP said.

Never mind that Republicans would have preferred a permanent extension of the high-end tax cuts instead of the two years they got. Or that they agreed to extend unemployment benefits for an unprecedented 13 months, a $56-billion expense, and did not secure spending cuts to offset the cost. Their insistence on such an offset -- even as they said there was no need to offset the 10-year, $700 billion cost of the high-end tax cuts -- has repeatedly held up attempts to extend the benefits, including twice since Nov. 30.

By Tuesday, the AP had its economic team on the case. New headline: "Tax deal should help economy, analysts say." Bill Scher of the very liberal Campaign for America's Future implored Democrats to "do the deal. For the Jobless. For the Economy." The liberal Center for American Progress (CAP) said the plan could save or create 2.2 million jobs. The group's ThinkProgress blog says Obama's priorities get far more money in the deal and help 32 times as many people as the GOP's priorities.
The size and sweep of the deal reportedly were a surprise even to those who worked it out. It will cost about as much as the $787-billion stimulus plan that the GOP opposed nearly unanimously last year. It flies in the face of all the deficit-reduction talk of recent days. It could help goose the economy. If Democrats are incensed by the idea of spending $120 billion on two years of tax cuts for the wealthy (bonus tax cuts, in CAP's terminology), maybe they'll feel better if they think in more general terms about how the package could spark a recovery -- for both the economy and their party.

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251 Comments

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Dave

Sometimes I think out legislators are working against us. On one hand, they fight amongst themselves in the name of what's right and on the other, they do it for their party. But in the long run, these fluctuations put all the working people off guard and create an uncertain future. The best you can hope for is somehow, you'll make enough money that you can survive the next tax hike, people will still be able to afford your product or service and you won't have to go under like the guy next door. If the feds want more money, they should create more jobs, hence more income. Not try to crash us into poverty and slavery.

December 10 2010 at 7:08 AM Report abuse +1 rate up rate down Reply
Rob & Kathy

It's amusing. Liberals call this a "tax cut", but, letting it expire, is not a tax increase....

December 09 2010 at 12:51 PM Report abuse rate up rate down Reply
1 reply to Rob & Kathy's comment
Kenneth

What did you expect with their way of doing math. Just like Pelosi's statement. For every dollar the government pays out in unemployment two dollars goes into our economy?

December 09 2010 at 1:06 PM Report abuse +3 rate up rate down Reply
Kenneth

It is not a tax cut deal. All this is a decision by government to extend the rate of taxes people and businesses have been paying for the last 10 years. With our economy as week as it is I feel increasing the taxes and taking more money out of our economy will only do more damage then good. More people could lose jobs and companies could have reduced incomes. Common sense would you rather receive 20% of todays income with hope of getting more if income increase or 25% of reduced incomes.which could end up less then the 20% deal.

December 09 2010 at 12:45 PM Report abuse +2 rate up rate down Reply
doncrites

End the tax rebates for those that don't pay taxes.

December 09 2010 at 10:31 AM Report abuse +3 rate up rate down Reply
Trakehners

Although I did not vote fore President Obama, I admire that he finally took a stand and was firm about something. I am also happy that he is more environmentally friendly than the other candidates were, and hope that he will get some good environmental policies in place. I know a lot of people are proponents of nuclear power, though I am not. Do not see the point of making energy that's waste is completely toxic and will kill the planet. Lets see some forward thinking progress on managing waste in this country combined with renewable energy, lets see some tariffs on the companies that have bailed out of the USA, like Cutie said...How is it that we have bailed out GM and they have sent Wisconsin jobs to Mexico? Let's protect our boarders, have some fair trade, clean environment and create a business friendly climate- that also protects our own environment- in job creation, Mr. President, please still enforce environmental health for our kids and our future.

December 09 2010 at 9:03 AM Report abuse +1 rate up rate down Reply
Charlie

The tax cut deal DOES NOT help everyone, it helps ONLY the rich... those families making under $40,000 pay higher taxes IMMEDIATELY because the Making Work Pay Credit is ended and the Payroll Tax temporary 1 year reduction won't make up for that. THEN, one year later, we lose the Payroll Tax reduction and EVERYONE making under $100,000 pays higher tax, while the rich get a HUGE windfall.

December 09 2010 at 8:48 AM Report abuse -5 rate up rate down Reply
tripnic

Being an independent my first take was the same as this article, that that these people need help now! The Democratic Senate and House have had control for 2yrs and have gone about things the same old way. So I'm for compromise and getting things done for now!

December 09 2010 at 7:30 AM Report abuse +2 rate up rate down Reply
1 reply to tripnic's comment
suddencall

President Obama missed the message from the last election. The people elected Republicans because they wanted to shut down the government until the next elections. So it is foolish for Democrats to compromise their principle when the people have spoken. The thing to do is get out the veto pen and do what the people said they want ,SHUT IT DOWN NOW. Give the republicans nothing and vote democratic on every issue that comes up,let the republicans come to the democrats and admit that they are dumb as a box of rocks. ITS THE ONLY THING TO DO . Every Democrat needs to vote no on this compromise that sells out their principles and SSi.Obamama needs to get out of the negoeating business ,he is way to naive for this kind of job.

December 09 2010 at 10:18 AM Report abuse -2 rate up rate down Reply
mullermugs32

"If Democrats are incensed by the idea of spending $120 billion on two years of tax cuts for the wealthy" Lets' get a fact straight. We do not spend a dime for a tax cut. People are allowed to keep their money and government takes less of it!

December 09 2010 at 7:19 AM Report abuse +1 rate up rate down Reply
Hi Rotondos

Is everyone hearing the truth??? There is to be no increase in Social Security benefits for 2 years, Medicare is strapped, so where are the tax cuts??? We will pay LESS into Social Security and Medicare and take home a bigger paycheck. It's all smoke and mirrors! The truth is the government is trying to do away with these "entitlement" programs. What better way than to make us feel they are giving us something, when in the end they are royally screwing us!

December 09 2010 at 6:38 AM Report abuse rate up rate down Reply
Darling

dealing with terrorists,holding people hostage,repubs can ride with us as long as they sit in the back,etc.etc.etc.why doesnt the pres.just stamp his feet or hold his breath till he turns blue like little kids used to do.this shows the utter immaturity of not just the pres but the dems in congress.if they were smart they would have done all these things when they had the super majority.but healthcare was at the top of the list.so they wasted a whole year and alot if bribery just to get healthcare thru.ideology before the needs of americans.if the dems should be mad it is at themselves and nobody else.

December 09 2010 at 12:29 AM Report abuse +2 rate up rate down Reply

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