Here’s the tax cut deal

Senior administration officials talked to bloggers tonight after President Obama addressed the nation on the results of the extortion negotiation with the Republican leadership, and I have to tell you, I’m not all that unhappy with the results. This is an actual compromise deal. (And, as I’ve said before, giving tax cuts to the rich is the best insurance policy we can get for Social Security.)

First of all, the unemployed who are still collecting benefits get to heave a sigh of relief, because they’re covered for the next 13 months. (I did ask about the 99ers. Sorry, nothing. Apparently we’re still invisible. I also said if they were still in negotiations, they might want to considering exempting unemployment benefits from the income tax, the way they used to before Reagan.)

But that’s not all. The package includes a shiny new one-year 2% payroll-tax cut for employees, which will stimulate the economy because the people who get it are the ones most likely to spend it. Thumbs up on the payroll-tax cut!

It also includes a fix to the Alternative Minimum Tax.

The aforementioned millionaires and billionaires do get their tax cuts — but only for two years. (That will cost us $95 billion, by the way, and will be financed by borrowing from China.) But they’ll have a merry Christmas anyway, because of the jingle in their pockets from (you knew this was coming) reinstating the estate tax with a $5 million exemption. (The officials said that issue will be fought again at a later date.)

If the president had his way, one of the officials said, they would only be making the middle-class tax cuts permanent, but it “wasn’t possible to get through. If there was a compromise, though, he wanted lots of other pieces included.”

Bottom line, as the officials pointed out, if he didn’t deal with the Republicans, they would have dragged this out for “months and months and months,” and there was a good possibility they wouldn’t get any UI extensions at all.

Honestly, I don’t care that he promised not to raise these taxes. With a gun to his head, he didn’t have much choice. But Obama needs to learn that an occasional piece of cheese from the Republican rats doesn’t mean a new era of understanding.

11 thoughts on “Here’s the tax cut deal

  1. why didn’t he insist that all of his stuff lasted as long as the 2 year extension of the tax cuts? if everything is expiring at once, it gives the president (or whoever is negotiating for the dems later on) more leverage.

    obama got some goodies, but it’s still basically a cave. the GOP wanted these tax cuts extended real bad. why not make them pay for something permanent in exchange for a temporary extension?

  2. Because he starts his reelection campaign in January and he thinks it’s to his benefit to have that fight when the economy’s better. The thing is, I think the economy will be even worse. Oh well!

    Plus, this isn’t the final version. He’ll have to add something to make the Democrats happy. Stay tuned.

  3. I’m curious about this payroll tax cut. Why exactly is it such a good idea? While they will withhold less money during the year (and I guess that having an extra 2% to spend is a good thing) , won’t that same amount need to paid when you report to the IRS in April?

    And don’t payroll taxes included Soc. Sec. and Medicare contributions? If less money is paid into Soc. Sec. over the next year, won’t that be another excuse to Do Something to “fix” Soc. Sec.?

  4. I don’t see the “deal” as anything bordering on terrific by any stretch of the imagination. Thirteen months more for the UI doesn’t sound all that great; why not two years more (if necessary, which it probably will be) since the tax breaks are being extended for two years. And what about the 99er’s? What are they supposed to do while Obama sucks up to McTurtle and his boys? Just saying………..

  5. It’s truly sickening. I’m a 99er – I don’t have a damn tax problem. When you have no income, who cares what the rate is. It’s some percentage of zero. We need unemployment extensions and JOBS, not tax cuts. I’ve had it with Obama. This is the tipping point for me. I won’t vote for him again.

  6. No to both of your questions. It’s a tax cut, you get to keep more money, you’re not taxed on that 2%. They’ve included a payment to Social Security to make up for the missing income in their proposal.

  7. “They’ve included a payment to Social Security to make up for the missing income in their proposal.”
    A payment that comes from … tax revenue.

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