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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.

lillvfamily 12/06/2010 8:21pm

WHAT ABOUT US 99ER’S!!!!!!!!!!

donnyshaw 12/07/2010 6:29am
in reply to njvixen Dec 07, 2010 12:57am

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.

Abaratarrr 12/07/2010 6:34am
in reply to seanurse Dec 07, 2010 6:05am

Danny Shaw, is almost never wrong, and he is not wrong about this. This bill is not an unemployment extension, it just extends the deadline to sign up for the current extension.

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.

donnyshaw 12/07/2010 6:39am
in reply to Herostratus Dec 07, 2010 1:45am

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.

beenblue 12/08/2010 7:49am
in reply to quitwhining Dec 07, 2010 6:21pm
@ 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..
DGalanteNJ 12/07/2010 6:25am

I am so disappointed in the President, I don’t understand how he can turn his back on us 99er’s. ABC recanted the story they did last night and said it was a mistake, there is nothing for the 99ers. Never a truer word has been said, there is nothing for us. I voted for Obama thinking and hoping he would make the country better again, I voted Dem across the board in the last senate election, it seems the only ones who give a damn about us were the Dem’s (Well most of them anyways) and soon they will be gone from Congress. We want to work, I want to work, none of us want a free handout, but thanks to our goverment we have no jobs….but Wall St got their big bailouts not long ago and the rich got their tax cuts now, what did we get??? A big foot right up our a$$‘s. With my 401K gone there is no $ for medicine, food, heat, taxes and mortage. God help us cause our country won’t.

rwoodward 12/07/2010 9:56am
in reply to Adambomb Dec 06, 2010 7:54pm

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?

ExGOP 12/07/2010 5:54am

This past Sunday on 60 minutes, Bernanke stated that the American job crisis will not improve for another 4-5 YEARS!!! Yet the 99ers get nothing, the 26-99 weekers get 13 months, and the rich get 24 months of a 5% income tax break (35% vs. 40% tax bracket). UNBELIEVABLE!!! If the President is going to cave, the Democrats need to come up with AND fight for a better (more equal) package. For example, the tax break should only be for 13 months and the 13 month UI should include “ALL” unemployed (the 99ers are also Americans, and GROWING).

This Republican Congress makes me sick. They’re nothing but a bunch of fat cat hypocrites!!! Prior to this so-called compromise everything had to be pay-go EXCEPT when it comes to themselves and their super rich friends. It’s hard for me to believe that they’re able to convince the majority of Americans (98%) to vote Republican. It’s a sad day when average Americans can’t see through their lies and their greed. God bless America … we need it.

Abaratarrr 12/07/2010 6:29am
in reply to Abaratarrr Dec 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

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!!!!!!!!!!!!!!!!!

Abaratarrr 12/07/2010 6:58am

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 even ask if we can have a tier 5!!

seanurse 12/07/2010 6:05am

wow donny I hope your wrong about the 99ers not being part of this package deal. If you are right I will not vote for this president again. wow some change he gave us. sold us out for rich assholes. I can’t believe that a president of this great country would have 99ers behind him in a speech to the voters of this country and not help them. What do we do now. did you hear of all the people who died from exposure and homeless. even kids are dying. come on president put your balls back on and be the president. I thought our country didn’t give in to terrosist. Our republicans are terrorist. Time to jail up some assholes.

eavina30 12/07/2010 7:23am

As a fellow 99er I declare a No Vote for 2012, count me in…..

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

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

Abaratarrr 12/07/2010 6:29am
in reply to Adambomb Dec 06, 2010 7:54pm

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.

Abaratarrr 12/07/2010 7:13am

looks like Obama is having a press conference at 2 to better explain the tax cut bill, Please stay on the phones people we are getting their attention.

Abaratarrr 12/07/2010 7:54am
in reply to donnyshaw Dec 07, 2010 6:29am

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

seanurse 12/07/2010 7:42am
in reply to Abaratarrr Dec 07, 2010 7:13am

WHERE IS HE HOLDING IT ON NATIONAL STATIONS OR C-SPAN AND MY TIME IS 12:40 NOW WHAT TIME THEN? I WOULD LIKE TO SEE HIM TALK ABOUT THIS. I HAVE EMAILED AND CALLED POLITICIANS AND PRESIDENT OBHAMA IN THE LAST TWO HOURS. EVERYONE DO THE SAME.

DeborahJBrown 12/07/2010 3:18am
in reply to odiolasgalletas Dec 06, 2010 9:14pm

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.

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.

Abaratarrr 12/07/2010 6:32am
in reply to ExGOP Dec 07, 2010 5:54am

“he 26-99 weekers get 13 months”
false

This bill simply extensds the deadline to sign up for the current teir, no one gets beyond 99weeks.

This should be called a dealine extension not an unemployment extension.

Obama never even asked for a tier 5 it was never debated!!!

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 !!!!

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.

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.

widget02us 12/07/2010 10:40am
in reply to DGalanteNJ Dec 07, 2010 9:30am

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.

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.

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!

ExGOP 12/07/2010 9:17am
in reply to 530i Dec 07, 2010 9:05am

In “your own” worthless opinion. Back up your statements with proof, otherwise stop bothering me.

P.S. It sounds like you need to hire a CPA to take advantage of all those loopholes the tax code has to unfairly offer businesses.

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