President Barack Obama on Monday announced a deal with Republican leaders that would extend Bush-era tax cuts for two years and unemployment benefits for 13 months while also lowering the payroll tax by two percentage points for a year.
The compromise, worked out in negotiations involving the White House, the Treasury and congressional leaders from both parties, includes provisions that each side doesn’t like, Obama said in a hastily arranged statement to reporters after discussing the proposed deal with Democratic leaders.
“It’s not perfect,” Obama said of the plan, which also would continue tax breaks for students and families contained in the 2009 stimulus bill and allow businesses to write off all investments they make next year. “We cannot play politics at a time when the American people are looking for us to solve problems.”
As outlined by Obama and sources, the deal would add trillions of dollars to federal spending in coming years by extending the lower tax rates as well as the jobless benefits at a time when the president, Republican leaders and a federal deficit commission appointed by the president all say that the growing federal debt must be brought under control.
It includes the temporary 2 percentage-point reduction in the payroll tax to replace Obama’s “making work pay” tax credit from the 2009 economic stimulus package for lower-income Americans. An administration source familiar with the talks said the one-year reduction of the payroll tax would bring savings of about $1,000 for someone making $50,000.
House Democrats, who have approved a measure extending the Bush-era tax cuts for family incomes up to $250,000 a year, indicated earlier Monday they were unhappy with the negotiations that the White House was conducting with congressional Republicans.
(Source: CNN)
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One Response
1. The payroll tax cut will mean a great deal for almost anyone frum (who pays social security taxes).
2. The ability to work with the Republicans may alienate the far-left of the Democratic party, but will substantially increase Obama’s chance of winning in 2012.
3. The whole is fiscally irresponsible, but that’s a long term problem, as to paraphrase Lord Keynes, in the long run, we are all dead.