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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 91-108 of 108 total comments.

  • Comm_reply
    beenblue 12/08/2010 12:50pm

    @ SEANURSE, I knew you had some fight left, and good for you. Let`s not have anymore talk of giving up, let`s talk of being fed up. You are not alone, if you know what I mean, the things of this world will pass away, but not my words, NOW LOOK UP, AND DUST YOURSELF OFF WERE NOT FINISHED YET !!!

  • Comm_reply
    seanurse 12/08/2010 3:09pm

    thanks beenblue you are right ive always been a positive kick ass take names later kind of woman. i’ve fought the state for nursing home residents and won. I’m a nurse and actually finally had an interview yesterday but didn’t get the job. there was 1000 applications taken . so at least they are calling for interviews and letting me know that i didn’t get the job. it is a start in the right direction. I’m going to get some action somewhere for the 99ers. I wrote and left messages for the president ten times today. i will become his nightmare stalker till he helps us out. take care and i’ll be back tomorrow.

  • Comm_reply
    beenblue 12/08/2010 4:29pm

    LOOKING FORWARD TO IT, AS I`M ALWAYS WATCHING, AND LISTENING.

  • Comm_reply
    beenblue 12/08/2010 5:25pm

    @ TMC732, after knocking at the door, beat it down. If they want you off the street, HAVE A PARADE, feel like no ones listening, START YELLING. MAKE IT KNOWN THAT, YOU WON`T BE UNKNOWN. Personally, I`v made them my hobby since I have seven Saturday`s a week to dedicate, and their pre-digested responses only encourage me, to help them understand that a formatted response is not acceptable. And yes, it`s enough to piss anybody off, so I started drinking again, at this point the best of life is intoxication, a keyboard, and a sense of purpose, not necessarily in that order. Good luck…..

  • Comm_reply
    beenblue 12/08/2010 8:37am

    Fox News Corp. is not news, and it does not report the news objectively. They are in fact, a 24-7 wholesale propaganda outlet for the far right and their agenda to divide this country, and keep it in the hands of the elite few who are intent on ruling the world from their ivory towers. If you notice the main spring, or source of calling Democrats " socialists and liberals " and equating Obama with Hitler comes from (FOX) and their subsidiary magazines and news print. FOX has demonized the word liberal, and Democrat, WHAT`S THE PROBLEM WITH LIBERATED THINKING ?? it beats (Group Think) where your afraid to think outside the collective. Personally I feel the FCC should do their job and shut them down since they distort and lie to the public, and call it news.

  • beenblue 12/08/2010 9:34am

    Lady`s and Gentlemen of Open Congress, We are not the sum total of what we own or had (possessions), we are what we do, and what we stand for. Your self worth can NOT be taken from you, but you can give it away if you quit believing in your self. The squeaky wheel gets the oil, so to say, and it always has. Things look bad there is no disputing that, and the system wants to sweep us under the rug, and if we quit and go quietly into the night WHO WILL TAKE UP OUR CAUSE, AND OUR RIGHT TO BE HEARD ? There is a type of freedom in having nothing left to loose except your worth as a human being, and I say that`s worth fighting for, and to hell with those who would judge us as inferior, and dismiss us as lazy. PICK UP YOUR HEADS, AND MAKE SOME NOISE, YOUR WORTH IT !!!!

  • Spam Comment

  • DGalanteNJ 12/08/2010 1:27pm

    Here is another list of news anchors and their email contact address’s.

    http://www.labnol.org/internet/email/email-address-of-journalists-news-editors-tv-anchors-web-reporters/1352/

  • DGalanteNJ 12/08/2010 1:30pm

    Rachel Maddow is a friend of the unemployed, here is a link to her site and also her contact info.
    Contact us•Rachel@msnbc.com (We read our mail.)
    •Use the form here to upload photos or videos.
    •Technical problem with the site? Tweet @WillAtWork.

    http://maddowblog.msnbc.msn.com/_news/2010/07/02/4601672-unemployed-gop-wants-you-to-go-away

  • beenblue 12/08/2010 1:50pm

    Remember this, you`re not a failure because you get knocked down, you`re only a failure if you stay down…the tougher the fight , the sweeter the victory. People don`t really learn from success, they learn from their failures, and then name them experience. Success, is going from failure to failure without a loss of enthusiasm. I fought in the unpopular war in Viet Nam at 17 years of age, and I knew the only way I was coming home alive, was to be an optimist, I did`nt have the luxury of quitting or retreating, I simply advanced from the opposite direction, well long story made short, coming home after serving my tour I was viewed as an invader, and baby killer by the Nation I swore to protect, but instead of quitting, I joined forces to end the war, and found myself in another war against the establishment, and the status quo , well we all know how that turned out, we lost over there, and won over here. My point is never give up and never retreat, even when the odds are against you.

  • Comm_reply
    beenblue 12/08/2010 1:57pm

    P.S I`v been homeless twice, all I can say is (SHIT HAPPENS) now lets kick some ass !!!!!

  • tomjw 12/09/2010 8:24am

    corporate executives (the rich )and our past and present representatives in congress (also the rich ),have conspired over the years to give away america to the chinese,etc. to increase their bottom line (money).how do we stop the continuing decline of the middle class worker in america.first,STOP buying anything that is made in china and i mean everything that you buy cannot be made in china!who will suffer from this when 9 million people (the present unemployed people in america ,now),stop ,buying for the rest of your life anything that is made there!the corporations that who!!let us unemployed americans, now and in the future,never never buy anything made in CHINA!!if you and 9 million others look at the package before you buy and follow this the corporations will eventually hurt!!just like you are hurting NOW!!!payback is a bitch!!let corporate americas elite fell the hurt!!

  • joero 12/10/2010 2:37am

    listen up 99ers, in my opinion, the vast majority of you bums are not even trying to get a job. you want what you used to have or more, guess what, its not going to happen. go to work for a lesser amount, i’m in a union, i don’t have to work for a lesser amount, i bet if they did a search the majority of the 99er’s are nonunion scabs sucking the money out of the federal funds.
    when the country was booming you did’nt think it was ever going to come to an end, well now you see, you made your bed, now sleep in it.

  • DGalanteNJ 12/10/2010 6:53am

    Joero, let me set you straight pal if you think your job is safe because your in a union, think again buddy. I worked for 40 years for the New York Times as a driver, I was in a union just like you. In January of 2009 the NYT laid off 550 drivers to bring in scab labor, we lost our benefits, pension and most importantly our jobs. They opened a shop under another name and wouldn’t even consider hiring us, we made $35 a hour, the scabs….they had to provide their own trucks, gas and insurance and they got paid $500 a week and they worked 7 days a week 9 hours a night, if they didn’t show, the scab company under the NYT name would charge them for a inside driver for their time to do their route and minus out the $200 from their $500 and charge the scab the money, so the moron worked 6 days instead of 7, used his gas, truck and insurance and got $300 for it.

  • DGalanteNJ 12/10/2010 6:53am

    We were also in a union, only our union the NMDU (Look it up, you’ll find lots of news about them) was corrupt and was raided not once, but twice by the FBI. When the NYT knew they were locking us out they went to the union and gave them $27 MILLION dollars to be distributed to the 550 employees for health insurance and severance, we got 6 months of health insurance, when we asked the union what happened to our money, we were supposed to get health bene’s they said we used it for Cobra. That wasn’t the deal, but we didn’t have a leg to stand on…again the union was corrupt. So if you think your ass is safe because you have a job and are paying union dues think it over again son, soon you too could be posting in this blog about how you have no money left because you went through your 401K trying to keep your head above water.

  • seanurse 12/10/2010 12:25pm

    hello everyone i finally got my computer up and running again. I heard today on a radio station how all the senators were complaining that as one said a virus of 99ers crashed their emails and fax machines. I actually laughed out loud and it felt good. so keep faxing and emailing its starting to get to them. they are listening to the emails. and also to all of us 99ers or soon to be may god bless us all to rise up from these hard times . please god give our president and congress a heart to extend weeks for the 99ers.

  • SanDiegogirl 12/11/2010 11:11am

    I am also in a union of 13 yrs.I’m 1 of 3 women employed out of 5000 men in the San Diego area. I have always been told how I am better at my job the most men. Yet laid off. No jobs are safe!

  • Spam Comment

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