Good compromise. This also makes taxes a very clear issue for the 2012 elections.
Obama announces proposed deal on taxes, jobless benefitsFrom Ed Henry, CNN Senior White House Correspondent
December 6, 2010
Washington (CNN) -- 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.
"We won't rubber stamp a deal between the White House and (Senate Minority Leader) Mitch McConnell," one Democratic congressional source told CNN. "We want to make it clear. Don't take our support for granted."
House Speaker Nancy Pelosi, D-California, and Majority Leader Steny Hoyer, D-Maryland, were among Democratic leaders who attended a White House meeting with Obama and Vice President Joe Biden to discuss the proposed deal.
According to the senior Democratic source, Obama and Biden told the congressional Democrats that the proposed deal was the best they could expect.
Liberal House Democrats are believed to be among the most reluctant in Congress to agree to a deal extending all of the 2001 and 2003 tax cuts.
The House measure, which was blocked from consideration in the Senate by a Republican filibuster, would cause tax rates to increase to 1990s levels for individuals making more than $200,000 a year and families earning more than $250,000. Senate Republicans blocked a similar proposal that set the income threshold for higher tax rates at anything over $1 million.
Top senators from both parties had indicated Sunday that a deal linking the extension of lower tax rates for everyone with extended unemployment benefits was likely. Congress would continue working on a long-term plan to reduce the nation's debt.
Democrats contend the nation must prevent working-class Americans from facing higher taxes, as promised by Obama in his 2008 election campaign, but can't afford the extra hundreds of billions of dollars it would cost to maintain the tax cuts for the wealthy. Republicans argue that the economy remains too weak to allow anyone's taxes to increase.
Earlier Monday, Obama reiterated his position that extending the cuts for the wealthiest Americans would be fiscally irresponsible, and stressed the opinion of Democratic leaders that an extension of unemployment benefits needs to be part of any agreement with the GOP.
"We have got to find consensus here because a middle-class tax hike would be very tough, not only on working families, it would also be a drag on our economy at this moment," Obama told an audience in Winston-Salem, North Carolina.
"We've got to make sure that we are coming up with a solution even if it is not 100% of what I want or what the Republicans want," he said.
http://www.cnn.com/2010/POLITICS/12/06/obama.taxes.debates/index.html?hpt=C1
