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Republicans Get Millionaire Tax Break Extension, Unemployed Get Lifeline

Republicans Get Millionaire Tax Break Extension, Unemployed Get Lifeline

The game of chicken over cutting off unemployment insurance payments, for many the only way of paying any of their bills, is resolved.  The White House has announced that unemployment benefits will be extended for another 13 months and in exchange, the Republicans will be able to extend tax credits for millionaires.

From the Los Angeles Times:

President Obama proposed a compromise on the thorny political issue of tax cuts on Monday, describing a tentative agreement that would extend all of the George W. Bush-era reductions set to expire the end of this year and continue unemployment benefits for 13 months.

In a televised statement, Obama announced what he called “a framework for a bipartisan agreement” that would temporarily extend the tax cuts for the middle class and for the rich alike. The tentative agreement reached Monday likely means that taxes will not increase on Jan. 1 as originally scheduled.

Such a tax increase,  “would be a chilling prospect for the American people,” Obama said  “I am not willing to let that happen.”

Obama defended his decision to compromise as needed for the economic recovery.

Recognizing that the agreement could cause problems with some Democrats, who have urged him to stand firm against the Republicans, Obama insisted that it “would be a grave injustice to allow these” tax cuts to expire.

The statements make a sharp contrast to the President’s earlier remarks regarding concern for the great burden extending tax cuts for the wealthy would place on the deficit, but show that his urge to find some sort of compromise outweighed any desire to force Republicans to justify their preferences for giving more money to the wealthy over assisting the poor.

For months, President Obama insisted that permanently extending tax cuts for the wealthy would be unfair to middle class Americans and add $700 billion to the government deficit.

What the president calls a framework agreement involves a two-year temporary extension of all Bush-era tax cuts, continuing unemployment benefits for 13 months, and reducing payroll taxes for workers to encourage businesses to hire new employees.

Citing what he called real and profound differences between Democrats and Republicans, Mr. Obama said he decided to move to break a stalemate that could have continued into the new year.

“I know there are some people in my own party, and in the other party, who would rather prolong this battle, even if we can’t reach a compromise,” said President Obama. “But I am not willing to let working families across this country become collateral damage for political warfare here in Washington.  I am not willing to let our economy slip backwards, just as we are pulling ourselves out of this devastating recession.”

For those who realized the fight was already over when the White House put out a statement declaring private talks and the need to compromise only minutes after the House voted to reject extending the millionaire tax cut extension, the President appears simply to be the worst negotiator ever.  But TIME Magazine is painting this as a brilliant strategic move.

The president presented a series of major concessions to the Republican Party, proposals he had campaigned against and with which he said he still disagreed. For two years, expiring income tax cuts put into place by President Bush would be extended for all income groups, including the richest two percent of households. A cut on the estate tax would also be extended, in a modified form, with no taxes on the first $5 million of inheritance and a 35% tax on everything else.

In exchange, Obama said he had secured an extension of unemployment benefits for 13 months and a number of tax cuts, for education expenses, families with children and the low income from the 2009 Recovery Act that were set to expire. One of those tax cuts, which had long been criticized by Republicans, the Making Work Pay Tax Credit, would be traded for a similarly generous 2 percent decrease in the payroll tax for workers. There was also a deal to extend certain business incentives.

A cynic could read the deal, which still needs to be accepted by rank and file members of Congress, as a classic Washington giveaway. In order to gain acceptance for budget-busting benefits that Republicans wanted, Obama had negotiated budget-busting benefits that Democrats wanted. The White House offered no estimates for the costs of the two-year deal Monday night, but it is likely to cost as much as $200 or $300 billion, money that will simply be borrowed with expectation that another generation can foot the bill.

But at the White House, where there is much anxiety about the staggering performance of the economy, this is considered a victory. In crafting the compromise, Obama may be able to effectively able to sneak another stimulus bill through Congress, by capitalizing on the Republican habit of refusing to acknowledge the deficit impact of tax cuts.

One thing is for certain — the President is most definitely working in the way that he believes will best position himself for his 2012 reelection.  We can only hope that as we progress, that coincides with what is best for the country as well.

The House and Senate will still need to vote to approve the new compromise, which will need to be done before the lame duck session ends December 17th.

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212 comments

+ add your own
11:12PM PDT on Mar 24, 2011

Yay GOP. Good job. No more free money for lazy liberals

11:18PM PST on Dec 13, 2010

Noted, thanx

2:36PM PST on Dec 12, 2010

Parasites .

12:30AM PST on Dec 12, 2010

Same old crap, new roll of paper . . .

11:05AM PST on Dec 11, 2010

Caught between a rock and a hard place!

5:53PM PST on Dec 10, 2010

John Hall,
It is quite amazing, isn't it? 47% is just far too much. Let's bring that number down.

9:43AM PST on Dec 10, 2010

South Africa has the very same tax problem, as well as other countries. Get real

5:38PM PST on Dec 9, 2010

For Republicans to vote against the unemployment extension is political suicide for 2012. For Obama to GIVE IN TO tax cuts for the rich PLUS giving them more with the Capital Gains and Inheritance "free pass", IS POLITICAL SUICIDE FOR OBAMA. Obama is making one bad decision after another, caving in to the Republicans ... the result shows him to be in bed (or a Republican plant) with the big banks, the Fed, Wall Street, the pharmaceutical companies and big insurance companies, which is why we got a bad health care deal which, largely, benefits insurance companies with the purchase mandate. President Obama has turned his back on the very people who swept him into office ... and the only transparency we've seen is his obvious moving to the right.

10:46AM PST on Dec 9, 2010

It doesn't matter how much you give the government, it will only be wasted. All lyou do is give them more more to ivoke more control. The poor will always be poor under the progressive movement. There is no utopian society where everyone gets along, everyone makes plenty of money. There are too many lazy people who will continue to feed off the system. the larger the system the more people will feed and become dependent on it. That is the fallacy of the whole redistribution principle. It will never be enough to do what you want. The only thing iw will do is make more poor people. The answer is to isolate those poor that turly need help. Put in place a support system for them, but make everyone else do something, improve their standard of living through effort. Give them some self worth through accomplishment. If we could cut the waste and fraud alone we would have enough to take care of those who truly need it. Utopia through socialist redistribution only brings everyone down to a level, it never raises people up to what they could be. Only the elitists in control become the haves, and everyone else becomes the have-nots. I promise you most of the progressives on this site will end up in the have-not group. How sad.

6:07AM PST on Dec 9, 2010

When will people learn that what matters is taking care of each other. When it comes to money, people can lack compassion for their own neighbor and only think about themselves. What's the point? Do they think they will be able to take it with them when they die? It just so selfish.

Then on the other side - some unemployed people are holding out for the great paying job that they were terminated from. Um, if you haven't found a job in your field of choice after two years, it's time to rethink your career. We can't expect jobs to stay the same; it's constantly changing out there and we have to be just as flexible in order to survive.

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