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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 61-90 of 108 total comments.

  • Comm_reply
    quitwhining 12/07/2010 6:22pm

    No ambitions to get a job no ambitions to vote. Shocking

  • Comm_reply
    beenblue 12/08/2010 2:20pm

    I`m surprised you can spell( ambitions ) since your devoid of intelligence, and a sense often called (common). Do you pull the band aid off your children slowly ??? so they understand about life !!!! Shocking….. I figure you were abused as a child, and therefore can only blame your parents for your lack of compassion.

  • craines 12/07/2010 7:24am

    99er’s Do This Now!
    Fax and email your senators and congress man now while you still have a chance for 99ers.

    http://american99ersunion.yolasite.com/take-action-now.php

    Get the fax number and contact web site here.

    CR

  • seanurse 12/07/2010 7:27am

    I HAVE A THOUGHT . I KNOW IT’A DANGEROUS THING BUT HERS GOES. ABC REPORTED IT WRONG SO WHY DON’T ALL THE 99ERS CONTACT THE STATION AND ASK FOR TIME ON THEIR PART TO HELP REPORT HOW THE 99ERS ARE LEFT OUT TO DRY. PLEASE EVERYONE PLEASE CONTACT ALL THE NEWS STATIONS TODAY. LETS MAKE SOME NOISE IN THIS COUTRY. WE ARE FIGHTING FOR OUR LIVES. WE MUST GET HEARD TODAY. POST ON TWITTER AND FACE BOOK ETC. GET THE WORD OUT TODAY. EMAIL. PHONE, ETC ETC. TODAY!!!!!!!!!!!!!!!!!

  • Hopeful2010 12/07/2010 8:41am

    Does anyone know when a vote would likely happen on this deal?

  • widget02us 12/07/2010 8:58am

    Again, we do not exist.

  • Comm_reply
    quitwhining 12/07/2010 6:21pm

    Maybe if you did something more than blogging all day about how the 99ers are getting screwed you could get a job, novel idea. Pay some taxes and maybe congress will care.

  • Comm_reply
    tmc732 12/08/2010 6:02am

    You obviously have a job or you would realize how hard it is to find a job. This is a web site aimed at letting the americans know what is going on in congress….and this is a web site that people can voice their opinion…(and you voiced yours) but please have some compassion!!! I actively look for a job every day…I have sent out hundreds and hundreds of resumes and have not even got once response..and i hold a degree! Its not easy out there and i really feel you you owe widget02us an apology because you have no idea what situation that person is in…and just so you know…..if he/she could find a job that person would be paying taxes!!! and also you dont know if they own personal property and pay taxes on those items….and those count for something …..QUITWHINING…maybe you shouldnt be on here judging people. its not your place!

  • Comm_reply
    beenblue 12/08/2010 7:49am
    @ quitwhining, Feeling superior, picking on the weak and vulnerable on a day their emotions are on a roller coaster !!. What`s the matter, you can`t get noticed for your rhetoric on the far right blogs, because you all sound the same ? It says allot about your character taking the time to agitate the victims of this fiasco, you must be a blast at the zoo..
  • Comm_reply
    beenblue 12/08/2010 2:52pm

    Spoken like a true trust fund baby….

  • seanurse 12/07/2010 9:06am

    again not one asshole reporter asked aBOUT THE TIER FIVE. THEY ASKED STUPID QUESTIONS. OH AND I JUST GOT A RESPONSE FROM SENATOR DURBIN THAT WE HAVE A NEW EXTENSION AND TO CHECK WITH IDES FOR DETAILS. OK IS HE ON CRACK!!! HE DOESN’T EVEN KNOW WHAT IS BEING TALKED ABOUT. HE DOES’T EVEN KNOW WHO OR WHAT A 99ER IS. THIS COUNTRY IS A F DISGRACE. WELL SEE ALL YOU 99ERS IN THE NEXT WORLD. i have no fight left.

  • DGalanteNJ 12/07/2010 9:30am

    I saw that Seanurse, not one reporter brought up a tier5 question for the 99ers, not one. I still can’t believe that we were thrown under the bus by the President, I really thought he would help us. I’m so sorry to say even he doesn’t give a damn about us. What will happen now is we will fall off the number roster for the unemployment rate because we are no longer collecting, the stats will go down for the unemployment rate and the vote on this bill will look like it was a good one, saving everyones face. I would love to know the TRUE rate of the unemployed, us, the ones still able to collect and including all the people who fell off the books by not being elegible anymore, I would venture to say its close to 17 or 18%. I’m just sick to my stomache that our own country would do this to us. Its easy to sweep us under the rug isn’t it.

  • Comm_reply
    widget02us 12/07/2010 10:40am

    Maybe if we get all of the 99ers to continue to certify as though we are still getting benefit then we will at least be counted. Even though we won’t receive any money at least they might see that we exist.

  • widget02us 12/07/2010 10:46am

    ….or we could just pick one day once a month that all 99ers certify just so that we can stay on the record.

  • tmc732 12/07/2010 11:10am

    yep….his speech says it all!!! screw you 99ers!!

  • rocky2007 12/07/2010 2:49pm

    My Congressman advised that there has been no tier V added. As anyone actually heard the words “Tier V” mentioned out of Obama’s mouth? Obama also said that the extension would help the 2 million whose benefits will expire at the end of the month. He just wants to bring all of the unemployed up to the same number of maximum weeks which is 99. Also, if you have been out of work for 2 years good luck in getting a job now. Many places have signs stating that theya re only accepting applications from those who are employed.

  • HelpUsPlease 12/07/2010 7:25pm

    One could only hope that these messages are seen by someone in Washington who actually gives a crap about the working class and not the heiress’ of family fortunes, Government Sachs, oil tycoons, and the rest of the filthy rich…its time that you carry this country for a while, give me your job and you take my unemployment and then we’ll talk about “Change”. you people make me sick..one suggestion to create jobs…INSTEAD OF TAX BREAKS TO COMPANIES WHO OUTSOURCE JOBS, HOW BOUT GIVING THEM TAX INCENTIVES TO STAY IN THE U.S.? Seems kind of ignorant to me that they haven’t figured out that the reason that we are in this position in the first place is because of outsourcing and a War with no end…Our gov’t assists other countries all the time but fails its own people at their worst & of no fault of their own..pitiful. anyone know where I can get a bumper sticker that says “Support our troops. We are going to need them to overthrow our government”….I need 900 BILLION of them

  • HelpUsPlease 12/07/2010 7:33pm

    oh yeah…here is one for you Obama…Have you ever thought that maybe, just maybe, the reason that our educational system is the way that it is is because we have so many illegal immigrants in this country that our children are suffering because teachers have to work harder and longer to explain things to kids who don’t know a lick of the english language? Why should we have to accomodate them? If you want to live here in this country you should know the English language…I wouldn’t move to another country if I didn’t know the language…oh yea…this is America and the US government will take care of them

  • DGalanteNJ 12/08/2010 2:13am

    Help us, you hit the nail on the head! More and more whereever you go no one speaks English. Call customer service at just about anywhere and you have to keep repeating excuse me, pardon me, can you please repeat that? Try ordering something at a fast food place and if your lucky maybe half your order will be right, why….because the help does not speak English, the language of this country. You just gotta love it when the non Englsih speaking staff gets a attitude with you because you don’t understand them, and they reply in my country we speak (fill in the blank) why you no speak? Well guess what your in MY country and we speak English, if you don’t like it go the hell back to your country and stay the hell there!

  • Comm_reply
    tmc732 12/08/2010 6:07am

    when you call customer service and get people you dont understand it is because those jobs are overseas…..they are not even in the united states!!! ANOTHER HUGE PROBLEM AMERICANS CANT FIND JOBS!!! …………HELLO!!!…………….DO YOU HEAR US AMERICAN GOVERNMENT????

  • jenny2010 12/08/2010 5:02am

    I appreciate the possibility of extending filing deadlines for unemployment benefits but I’d much rather have a JOB!!!! How about offering some type of incentive to employers for hiring unemployed people? I’d much rather have the hope of getting a job than unemployment benefits.

  • saturnsc2 12/08/2010 5:54am

    it’s going to come down to street rioting to be noticed. violence, period. maybe when people who got nothing to lose start launching petro bombs & burning down neighborhoods they might notice…

  • Comm_reply
    tmc732 12/08/2010 6:15am

    this is already a war in our country..but lets hope that it doesnt come down to that!

  • eavina30 12/08/2010 6:58am

    Fox news reported last night that Harry Reid tried to sneak in a last minute compromise to Legalize online poker, it’s obvious that they have no intention on help Hard working Americans, 99ers give em hell today, it’s our last chance, with the majority of republicans on board they may have 60 votes to officially filibuster the 99ers, 2012 No Vote, count me in!!!!!

  • Comm_reply
    tmc732 12/08/2010 7:52am

    HOW DO WE DO THAT?? HOW DO WE MAKE THEM HEAR US?

  • Comm_reply
    seanurse 12/08/2010 9:34am
    I WAS THINKING THAT TO GET THE PRESIDENTS ATTENTION AND CONGRESS IS TO EMBARESS THEM INTERNATIONALY. WE NEED A REPORTER TO TAKE OUR STORY AND STRUGGLE AND GET IT ON THE NEWS IN THERE COUNTRY. I BELIEF THEY SEE OTHER COUNTRYS NEWS BEFORE OURS ANYWAY. THEY CAN’T AFFORD TO LOOK CHEAP AND WEAK TO OTHER COUNTRYS. IF ANYONE HAS AN IDEA ON HOW AND WHO WE CAN GET LET ME KNOW. HAY ITS WORTH A SHOT.
  • Comm_reply
    Bunnie1978 12/08/2010 10:50am

    in comparisons of educational achievement of students in industrialized nations, American students rank very poorly. Below average or worse. We should ALREADY be embarrassed.

  • Comm_reply
    beenblue 12/08/2010 11:47am

    THE EDUCATIONAL SYSTEM PRODUCES DOCILE WORKER BEES IN AMERICA, THE ELITE AND WEALTHY GO TO HARVARD, PRINCETON, OR YALE TO JOIN THE FRATERNAL SKULL AND BONES SOCIETY. OUR HEALTH CARE, AND EDUCATIONAL SYSTEM RANKS LOWER THAN SO CALLED THIRD WORLD COUNTRIES. AMERICA HAS BECOME NOTHING MORE THAN A SECOND WORLD COUNTRY , WITH A FIRST WORLD MILITARY.

  • Comm_reply
    Bunnie1978 12/08/2010 12:22pm

    Haha… I don’t know if I would go that far, but it certainly does a good job of protecting socioeconomic status boundaries. I’m terrified for my son… he’s two now and reading at a kindergarten level. What’s going to happen when he gets into school? Nothing. As in, he’s going to spend years waiting for school to catch up with him!

  • Comm_reply
    beenblue 12/08/2010 2:32pm

    @ Bunnie, no haha`s intended, protecting socioeconomic boundaries is the job of the sociopaths in Washington, and the elite whom they serve. I know it`s scary, but all the same, true.

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