In an eleventh-hour compromise, United States President Barack Obama struck a deal with his entrenched Republican opposition to extend Bush-era tax cuts for another two years.
The cuts, introduced in 2001 by the former President, George W. Bush, were set to expire on December 31 since Congress was forbidden from making them permanent under rules at the time. The situation saw both the White House and the opposition digging in their heels as the deadline approached.
President Barack Obama had initially hoped to preserve the tax cuts for middle-class Americans while allowing the benefit to lapse for the richest two per cent — a distinction that Republicans sought to block.
Under the bargain struck this week, Mr. Obama will have his way at least on one item on the White House agenda — the extension of unemployment benefits and a payroll tax cut that will improve the lot of ordinary Americans.
In remarks following the negotiations, Mr. Obama said he “completely disagreed” with the Republican view that the tax cuts, including for the wealthiest, should be made permanent. “A permanent extension of these tax cuts would cost us $700 billion at a time when we need to start focusing on bringing down our deficit,” he said.
He, however, said he would not accept the “chilling prospect” faced by middle-class Americans of a tax rise on January 1, 2011, and unemployment insurance payouts drying up. “Make no mistake; allowing taxes to go up on all Americans would have raised taxes by $3,000 for a typical American family. And that could cost our economy well over a million jobs,” he said.
While the deal marks the breaking of a stalemate that could have spelt economic doom for millions of American households still reeling from the effects of the downturn, some experts noted that Mr. Obama has endangered the support of his liberal base.
Economist Paul Krugman recently argued against precisely such a deal, saying: “Mr. Obama should draw a line in the sand, right here, right now. If Republicans hold out, and taxes go up, he should tell the nation the truth, and denounce the blackmail attempt for what it is.”
Under the bipartisan deal, American families will retain not only the Bush-era tax cuts, but also those introduced under Mr. Obama.
Mr. Obama said that in exchange for a temporary extension of tax cuts for the wealthiest, middle-class tax credits such as the Earned Income Tax Credit and the Child Tax Credit would persist, as would the American Opportunity Tax benefitting nearly eight million students.
The agreement will also see unemployment insurance extended for a further 13 months, a direct benefit to nearly three million Americans.
Keywords: Bush-era, tax cuts, U.S., economic situation
What about the 99ers? I have been tring to find a job and i would like nothing better to be working now I am looking at losing everything and living in my truck and now with more people out of work and at my age I don't see much of a chance in getting a job. I am 51 and i have tred everywhere i can think of and there is just nothing out there!
First and foremost, unemployment benefits are necessary to tide people over from job to job. But when you continue to extend unemployment benefits, you are continuing to pay people for being out of work. The government needs to find some way to stimulate job growth rather than just continually paying people for not having a job. The tax cuts fit this bill: since most small business owners file their company gains under personal income, they are disproportionately taxed at this high rate: they may not take home $250,000, but their tax reports report their company's income. So when you let taxes rise, you are directly hurting small business. Since small business employs a significant portion of Americans, letting taxes rise would hurt American employment. That means more people filing for unemployment, less jobs on the market, and the vicious cycle continues. When the government increases taxes, the government is taking away money that the individual rightly earned. The tax cut extension is not a bailout from the rich: rather, it's letting the people who earn money keep their money, and use it to reinvest, spend, and save in ways that directly bolster the entire American economy.
I think it's interesting that the very people President Obama wants to 'protect' are the ones who caused the financial crisis to begin with. The middle class is who is responsible for the financial mess we are in. The middle class are the ones who lived beyond their means and overcharged credit cards, bought houses they couldn't afford, defaulted on loans. Everyone tries to blame the evil corporations, government, greedy banks, etc....but ultimately it was the middle class citizen that signed his or her name to the debt and refused to pay when it got too hard. Start taking responsibility for your own actions and decisions.
Let look at the number and we will know how fair and rational this deal truly is. The tax cut for the poor, middle class and the rich for next 2 years. The unemploymnet insrance extended for another 13 months. Question: 1. how come the rich get their tax cut extended for 2 years? and the unemployed, the ones who needed the most help can only receive the extended help for only 13 months? Who made this deal for us who need the help? Who in his heart believes that it's a fair deal the rich gets two year extra tax cut, the unemployed only get 13 months help. How much does it translate into the dollar amount for the poor and the middle class for the next 2 years? How much does it translate into the dollar amount for the rich for the next 2 years?
I think President Obama had no choice. If we wanted them to extend the benefits for Americans. I don't think they were willing to save the middle class. The party of NO! I feel for President Obama he really didn't want them extended for the rich, the party of NO gave him no choice. They don't care and they never will! Why did Americans vote these people back into office when things were going so great for the middle class. President Obama was going to work on creating jobs. Now look what has taken over! Shame on those who voted the Party for the Rich back in.
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