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What Exactly Is In Obama's Tax Cut/Unemployment Extension Compromise?

December 6, 2010 - by Donny Shaw

President Obama on Monday announced the “framework” of a deal with congressional Republicans for dealing with the looming expiration of the Bush tax cuts. It’s a two-year deal, and it includes a bunch of other stuff, all at a cost about $900 billion. None of it is offset, so this will be a direct increase in the deficit. Let’s take a look at the specifics of what’s included:

1. Two-year extension of all Bush tax cuts — Income taxes will stay right where they are at least until January 2013, even for the wealthiest Americans. Obama seems to think that having this tax debate again in 2012 will be good politics for his re-election.

2. Two-year estate tax cut — Bush’s 2001 tax bill gradually scaled back the estate tax, a federal assessment on inherited wealth, to 0% in 2010. But because it was done using budget reconciliation, the bill sunsets after ten years (just like the income taxes) and the rate is scheduled to go back up on January 1st to the pre-Bush rate — 55%, with the first $675,000 being exempt. Obama’s proposal would lower this significantly for 2011 and 2012 — the first $5 million would be exempt and the rest would be taxed at 35%. This compromise is taken directly from a Sen. Blanche Lincoln [D, AR] amendment that was added to the 2010 budget resolution by a vote of 51-48.

3. 13-month extension of federal unemployment programs — The filing deadline for federal unemployment insurance that provides benefits for people who run out of their 26 weeks of state-provided benefits without finding a job would be extended until January 2012. Essentially, this will make it possible for people who became unemployed in the past 99 weeks and still haven’t found a job to collect benefits for the same length of time as people who lost their job more than 99 weeks ago. This would not add additional weeks of benefits — 99 weeks would still be the maximum amount of time that anybody could receive benefits.

4. One-year payroll tax holiday — Social security payroll taxes, which, under current law, are split equally between employees and employers, would be reduced from 6.2% to 4.2% with all of the benefits of the reduction going to the employees. For the average U.S. salary of $50,000, this would mean tax savings of about $1,000 next year. Obama originally wanted to include an extension of his “Making Work Pay” tax credit, which provides workers up to $400 annually for all workers, but Republicans objected and the payroll tax holiday was included instead. Reducing payroll taxes is generally considered the most stimulative form of supply-side policy.

5. Two years of 100% business expensing — Businesses will be able to immediately write off 100% of the costs of new equipment purchases until 2013. Typically, the costs of equipment purchases are deducted over the life of their use. This proposal is designed to free up now money for businesses that would normally be spread over multiples years in order to encourage more hiring and investing.

6. Miscellaneous stimulus bill tax cut extensions — The lower earning threshold for the child tax credit would be extended for two years. The expanded earned income tax credit would be extended. And the American opportunity tax credit, which provides college students with a $4,000 credit in exchange for community service, would be extended.

Now, this is far from a done deal. This package is designed to get 60 votes in the Senate, but it may not pass muster in the House. The House Democratic caucus, which is generally more progressive than their Senate counterpart, is reserving the option to revolt. And Tea Party Republicans are threatening to vote “no” because of the unemployment insurance extension that is attached.

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Comments

Displaying 1-30 of 108 total comments.

  • Adambomb 12/06/2010 7:54pm

    I knew they couldn’t turn there backs on us. hope in the near future they think about the “99’ers” to.

  • Comm_reply
    Abaratarrr 12/07/2010 6:29am

    THIS IS NOT AN UNEMPLOYMENT EXTENSION,

    IT ONLY EXTENDS THE DEADLINE TO SIGN UP FOR THE CURRENT EXTENSION

    if you are already out of unemployment benefits you will not receive anything.

    if you want to receive benefits get on the phone to your representatives and demand that 3706, or a tier 5 or and expansion or tier 4 is added to the bill.

  • Comm_reply
    Abaratarrr 12/07/2010 6:29am

    I get the impression that the people in washington do not know the 99ers exist, it appears that their aids are not passing on our messages to the congressmen

    Maybe if we were to start getting a hold of the parents, wifes, kids and grandkids of the people that represent us, we might have a better chance of them getting our messages. Congresspeople can tell their aids that they do not want anymore messages from the unemployed but they can not tell there parents, children, brothers and sisters that they do not want hear what they have to say.

    I am sure we can come up with ways to get a hold of the relatives of the members of congress and ask that they pass on our messages to our leaders.

    Maybe a wiki of contact info for the families of our representatives or we could post contact info on their opencongress pages, names, addresses phone numbers, where they work, whatever info we can find so local people can hand deliver them letters or visit them and explain our situation

    could help

  • Comm_reply
    rwoodward 12/07/2010 9:56am

    So let me get this right? Im a 99er its been a little over 2 yrs now that i can’t find or get work this extention is not including us?

  • Comm_reply
    quitwhining 12/07/2010 6:18pm

    Yep, doesnt affect you. I’ve got a job in the last two years. Lower your standards. Your UI benefit probably doesn’t pay too much more than minimum wage. If you are that hard up fli[ burgers

  • Comm_reply
    chelly 12/07/2010 7:41pm

    If you don’t have anything nice to say why comment at all?

  • Comm_reply
    tmc732 12/08/2010 6:12am

    QUITWHINING….how did you ever get a job and keep it with your ignorance and bad attitude? ..and i hope you are never in our position! because it sucks!

  • lillvfamily 12/06/2010 8:21pm

    WHAT ABOUT US 99ER’S!!!!!!!!!!

  • widget02us 12/06/2010 9:02pm

    ABC news said that the extension was 13 months beyond 99 weeks.
    http://abcnews.go.com/Politics/tax-cut-deal-president-obama-expected-announce-terms/story?id=12327282

  • odiolasgalletas 12/06/2010 9:14pm

    I really hope ABC News is correct. Which one is it?

  • Comm_reply
    DeborahJBrown 12/07/2010 3:18am

    The vast majority of news media do not really seem to comprehend the tier system so odds are largely against ABC news being correct. This article clearly states that the extensions are for those unemployed UP TO 99 weeks… after 99 weeks there is nothing. This is a complete sell-out but creates the illusion that all unemployed will be taken care of when in fact, nothing could be further from the truth — those hardest hit, those most discriminated against, those in the most dire circumstances are once again, cast aside. Tier IV is only 3 checks and some states don’t even qualify for a Tier V so those who are currently on Tier III right now will see their benefits expire rather quickly and will soon join the 99ers who have had nothing for nearly a year.

  • Comm_reply
    luvscass 12/07/2010 5:40am

    ABC incrorrectly reported to the public…again!

  • njvixen 12/07/2010 12:57am

    I saw the same thing on AbC last night and on Freedom Watch the host Judge Napolitio (spelling is wrong) said that now people could stay on unemployment for 3 years instead of 2..so that would include us 99ers. I hope they are right.

  • Comm_reply
    donnyshaw 12/07/2010 6:29am

    OpenCongress Staff

    ABC and Fox have it wrong. There in no Tier V in the framework Obama announced yesterday. As I said above, 99 weeks would still be the max.

    It’s amazing that in the middle of an unprecedented unemployment crisis people reporting the news can’t take a second to understand the issue and report it right. Some members of Congress are also confused on the difference between extending the filing deadline and adding more weeks.

  • Comm_reply
    Abaratarrr 12/07/2010 7:54am

    This is not firsthand information so it needs confirmation, but my fatherinlaw said that Rush Limba was talking about Donny Shaw and Opencongress on his show today.

    Dude your big time

  • njvixen 12/07/2010 1:05am

    “Sources tell ABC News that the president pushed for several items in the deal, including a 13-month extension of unemployment benefits beyond the current limit of 99 weeks. That will help some 9 million Americans.”this is a quote right out of the article from the link above, thanks for the link widget02us. Maybe an early Christmas gift from the President and Congress…lets keep our fingers crossed.

  • Comm_reply
    luvscass 12/07/2010 5:24am

    INCORRECT! Find a new news source…

  • Comm_reply
    Abaratarrr 12/07/2010 7:57am

    they didn’t bother trying to help us. THE SUBJECT OF 99ERS NEVER CAME UP IN THEIR NEGOTIATIONS!!!!

    “No Tier 5 extension was asked for or debated upon. "

    http://www.rantrave.com/Rant/99ers-Shafted-in-Obama-Rollover-on-Unemployment-Extensions.aspx

    Obama didn’t ask if we can have a tier 5!!

  • Herostratus 12/07/2010 1:45am

    Anyone know if those are the only “Miscellaneous stimulus bill tax cut extensions?” Any others from the Bauchus bill?

    Does the author have a publicly-available source for this list?

  • Comm_reply
    donnyshaw 12/07/2010 6:39am

    OpenCongress Staff

    Those are the three Obama mentioned.

    http://www.whitehouse.gov/the-press-office/2010/12/06/statement-president-tax-cuts-and-unemployment-benefits

    Again, this is not a final deal. Things can, and likely will, be added and removed.

  • craines 12/07/2010 2:52am

    Email and Fax your senators now – this is your last chance to be heard!
    http://american99ersunion.yolasite.com/take-action-now.php

    CR

  • BenjaWiz 12/07/2010 3:33am

    Read this carefully “This would not add additional weeks of benefits — 99 weeks would still be the maximum amount of time that anybody could receive benefits.” so there will be no tier 5 or extension for 99er’s so only those just starting to receive UI will keep receiving their benefits as well as any new people who lose there jobs in the future who have not started to collect UI.

  • wes00 12/07/2010 3:46am

    Yeah it is true..it does included a 13-month unemployment ext. beyond 99 weeks. I actually watched the new report myself. Here we are again fighting for our lives like we were in June and Most of July smh. But I am just hoping and praying that some compromise is reached that includes a solution for everyone. I think it would be wrong if they didn’t and there is NO way you can ignore about 9 million Americans that are stuck at 99 weeks. The economy REALLY sucks and they need to face reality and do something to HELP US. I understand that we are in dept and the Deficit it growing out of control BUT Americans need help and you CANNOT ignore that! The Unemployment rate in NYS rose from 9.6% to 9.8%, so that goes to show us that things aren’t any better, in fact, they are actually getting worst. Congress also needs to understand that is impossible to find jobs when there aren’t any!

  • Comm_reply
    luvscass 12/07/2010 5:13am

    INCORRECT! It is vastly being incorrectly reported by those who do not bother to truly comprehend what they are reporting, there is no extension beyond 99 weeks! The extension simply extends the deadlines for the unemployed to advance throught the tiers for a possible total of 99 weeks, depending on their states unemployment rate. There are zero added weeks for those who have exhausted all of the current available benefits (aka 99’ers) It offends me that news outlets don’t bother to research and report truthfully.

  • Comm_reply
    OnlyinAmerica 12/07/2010 5:56am

    Exactly. It is shocking how many people do not understand what has happened. Politicians, so-called journalists, the public and yes, even the unemployed. Obama has`reached a compromise with Republicans. A lot of Democrats and a lot of Republicans who are suddenly a part of the Tea Party are not happy with the solution. Somebody still needs to introduce a bill and both House and Senate need to pass it before Obama can sign it. The only thing encouraging the Republicans to vote yes is the tax cuts. These tax cuts have existed for years; why were no jobs created? Suddenly tax cuts are the solution to everything.

  • tmc732 12/07/2010 3:57am

    if this is true that it does not include 99ers…..GOD HELP US!! cause our government is not going to!

  • Catfish8173 12/07/2010 4:00am

    Unbelieveable how the reps cant be so outspoken and confident to a nation of a struggling middle class to rail both houses of congress for provisions for wealthy people…. Its a dirty shame that they play on the good conscience of people like Sen Durbin,Sen Harkin,and my senators from Delaware and the majority of the Dems WHO have been fightning for Unemployment everytime it has come to expire…and if you listen to them talk …its never about people for Reps ..its always about the money .SO in order to get unemployment done .. help for struggling people …gotta give the Reps a bribe of cash to get Rep votes so their Xmas parties can have more cavier.

  • tomjw 12/07/2010 4:14am

    it just goes to show us that blackmail does pay.the repugs get to keep their not so hard earned millions ,while the rest of the middle class gets to eat the scraps.i dont know how these rich SOB’s sleep so soundly,it must be that pile of cash under the mattress!!!we need a new system of government because it doesnt seem to matter which party screws us ,its still a screw!!

  • luvscass 12/07/2010 5:20am

    Here is a link clearly explaining that even congress does not understand the current unemployment extension they are voting on.

    http://www.huffingtonpost.com/2010/11/10/do-members-of-congress-un_n_781647.html

  • Comm_reply
    luvscass 12/07/2010 5:36am

    Open Congress has also done an artice about this same failure by congress to understand the basics of an unemployment extension.

    http://www.opencongress.org/articles/view/2122-GOP-Blocks-Unemployment-Extension-Again-But-Do-They-Even-Know-What-They-re-Blocking-

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