Obama and Republicans strike deal to save tax rates, unemployment checks UPDATE: Video up
Forgive me for being underwhelmed. The Republicans held all the cards and I don’t see this as much of a victory for the conservative way as a victory for politicians. But still, the tax rates will remain in force for those making more than $200,000 a year and unemployment benefits will be extended another year.
Here’s the summary:
- A two year extension of the current tax rates for all
- A one-year payroll tax reduction that would cut the amount contributed to Social Security from 6.2 percent to 4.2 percent
- An estate tax of 35% for two years, with a $5 million dollar exemption, which was set to rise to 55% (The 0% rate disappears on January 1)
- Unemployment benefits extended another 13 months (record 5th extension allowing the earliest layoffs a total of 3 years on unemployment)
In addition it keeps the Earned Income Tax Credit and the American Opportunity Tax Credit, both favorites of the lefties but little more than wealth transfer payments. These were both increased in last year’s stimulus.
UPDATE: The video has been added. I have tried to include most of the speech to keep the context. A couple quick pointers. The beginning of the video is dedicated to defending his position on redistributing other people’s money and giving some last whacks to Republicans (so much for the bi-partisan President). 3 and half minutes in he details the compromise. But I just can’t get over how he sounds like a sore loser. Allowing people to keep their cash is simply distasteful to lefties. On the other hand paying people not to work is right up their alley.
Here’s a bit from the President’s announcement:
The payroll tax reduction and maintaining the rates will come as a big boost to the economy I would expect. The 13 month extension of unemployment benefits I think is a mistake. Allowing people to remain on unemployment for 3 years is counterproductive to both the economy and to these people themselves. The longer people are allowed to lean on the government for help, the harder it is to bite the bullet and take a job in the marketplace. I know. I’ve been there.
It’s not the scammer that bothers me so much. They will always find a way to scam bucks from someone. It’s the people who at one point truly wanted to work and a job but after 3 years have become accustomed to a government check, plus whatever cash to can pick up under the table. It becomes a lifestyle, their new normal. Not a terribly attractive one and one that offers little promise of ever advancing in life.
This is not the answer. The answer is getting people back to work and that begins by making it easier for business to grow and expand … not more difficult.
If David Stockman, Reagan's budget director, is to believed, unfunded tax cuts will take us closer to the edge if disaster. He's been recently critical of the "have your cake and eat it" mentality of both parties, but especially tough on the Republicans who he says for the last 30 years have abandoned traditional fiscal policy. In his August NY Times op-ed piece he claimed that during the 2002-2006 bubble "the top 1% of Americans-paid mainly from the Wall Street casino-received two thirds of the gains in national income, while the bottom 90%..got only 12%" That's not good for America, especially since we tax payers covered Wall Street's bad bets.
re. unemployment benefits: If someone out there is unemployed (i.e. the assistant museum curator you spoke of yesterday during the show) and does NOT know about WIA right away, then they clearly plan to use up all their unemployment from the beginning. Workforce Investment Act allows someone to get into a new field with $5000 toward education. It wasn't my plan to go into the medical field, but I KNOW I'll be able to get a job in OT when I'm done with school & I pass my boards. I qualified for WIA, but am able to attend school through a grant for Connecticut colleges. With the increase in income, I'll more than pay back the gov. in taxes what I received in unemployment benefits. If you're unemployed with zero goals, you deserve it when your benefits stop. (sorry I went over on this one)
By 2012 they will be the "The Obama Tax Cuts" and touted as the best thing for the country since Jimmy Carter's cardigan. Meanwhile no discussion of a simplified and equitable tax code will take place but socialism will march on.
Winnie888, Thanks for two things. One, telling us about WIA, and two, showing us what a woman with pluck, intelligence and hard work can do. OT is the place to be. Good luck, I have no doubt you will achieve your goals.
Oh, I'm sorry, I can't watch the video, thanks for warning us. We need bipartisan politics, not condescending one upsmanship. I think Republicans did as well as they could right now. Unfortunately, Congress is always voting everything in crises mode. I'm looking forward to Paul Ryan as Budget Chair, he has a plan.
@Lynn….Thanks for the vote of confidence! Does anyone really want to step out of their comfort zone and change careers in their 40s, 50s, 60s? Speaking for myself, all I needed was that pink slip to RUN for a different career path & was enrolled in school full time within a month. I'd love to know how many 99ers actually took advantage of WIA to better themselves and their chances for rehire. I'll bet the # is very, very low. And now true panic is setting in.
Reading the comments, it's clear that "it's never good enough", no matter the realities.
Just another sugar high…we've done this all before (except the SS reduction) and where did it get us? On the verge of bankruptcy. We continue to subsidize not working and we reduce the SS base/benefits for a sugar high, today. Extending Bush rates just avoids adverse impact. Politically, it's to be expected from this crew. Get out the mashete', Paul Ryan & "young guns"!
If the government can't put 15M unemployed to work doing something…anything…then cut them from the payroll! Unfortunately, government never was any good at managing a work force or cutting costs. That would be operating too much like a business.
FYI, I believe that unemployment stays at a 99 week maximum, it does not make it another year on top of that. Once you reach the end of the 99 weeks you're done. This agreement allows people laid off after 12/1 to get the recent 99 week assistance instead of dropping back to whatever it was previously. This doesn't change the basic point Jim was making but the statement needed to be corrected for the sake of accuracy. Someone can correct me if my facts are wrong.
FYI, It appears National Review made the same error and issued a correction.
Poll really needs an option for "Meh." I mean, it's good that taxes didn't go up, and I'm realistic enough to admit that hoping for a tax cut would be wishful thinking, but the amount of stuff that was in with it does somewhat stick in my craw. Is good to know that the cap is only absurdly high on unemployment, instead of insanely high. Thanks for the info, JNelchef.
My main curiosity is, now that they've effectively frozen the tax thing, what's Congress going to do to adjust their own spending… that's more wishful thinking, isn't it?
RE. David Stockman again, Reagan's budget director and no Liberal: "If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing." I urge everyone to read his July 31, 2010 NY Times op-ed piece. Sorry if it looks like I am picking on the Republicans but when you have an old-time supply-sider saying the tax cuts will do more harm than good, the Reps ought to pay attention. I hope the Tea party folks can get the GOP back to its basics. Chances are slim though, because corporate influence over both parties will control policy, until things get much worse.
David R, Stockman has not been a fan of Republicans for a long time. He was so vilified with his supply side policies, by everyone, he got bitter. He's a smart man, but there are a lot more smart men, like Jim V, Cavuto, Paul Ryan etc. that disagree with him. Bottom line, we need to cut departments from the Govt and All the Czars. Any business person knows the best way to cut a budget is to get rid of personnel and their benefits.
And then, Lynn, after the businessman gets rid of personnel, the personnel goes on un-enployment. Where is the solution?
I agree with Lynn. In the case of the Czars, many of them have more "eggs in other baskets". There are those on the lower end who will feel a bit more pain, but they should have seen the "writing on the wall", expecially after the recent election. The businesses I deal with are afraid to do anything because they are concerned about tax increases. If gov't is cut and tax rates extended it will help set their minds at ease. They'll know the government won't be coming after them to foot the bill.
DavidR, Stockman says that the reason for Ch 11 also includes the "$7 trillion of new deficits baked into the cake through 2015". We could elliminate the $7 trilion in deficits.
After seeing "Inside Job", I am more certain than ever that bickering about party politics is a waste of time. If half what's in it is true, Dems. Reps and everybody else ought to make common cause of bringing to justice the Wall Street crooks who put us in this mess in the first place. As is clear in the film, Wall Street runs the government. No matter which party is in office the cast of characters in charge of finances remains the same: Sommers, Bernanke, Greenspan et al. I know some of you are ideologically against regulating the financial industry. I prefer to think of it as regulating human nature. Subject to greed, arrogance, stupidity and self-deception, it never changes, especially when money and power are in the mix. You may think that one party or other stinks, but I am sure this is where the smell is coming from.
Sorry Wall Street may be full of crooks, but Congress beats them by a mile. Ever notice how first year Congressmen are not particularly wealthy but by the second or third term they are the millionaires and billionaires. We the people pay them, give them benefits far better than we earn, and they are fed a steady stream of money from bribes, graft and corruption, they just pretty up the names.
Lynn. Human nature doesn't take the day off regardless of political party or profession. I hope you get to see the film, which paints a pretty grim picture of how Wall Street, rating agencies, government and business schools (particularly Harvard and Columbia) support each others misdeads. Something strange happens when a really wealthy person enters the room. I recall a few years ago when Vegas entrepeneur Steve Wynn came to save CT with casinos in Bpt and Hartford. Some pols, whom he'd convinced were his new best pals, were falling over each other trying to kiss his southern regions. It gets worse when those possesed with a sense of superiority and entitlement in big business, high government posts and elite academic institutions insist they write their own rules. This go round, the rule wreckers put millions out of work and home, destroyed retirement accounts, and bankrupted countries. At the same time, wealth got concentrated in fewer hands. All without the smallest mea culpa from the perpetrators: Sommers, Paulsen, Bernanke and Greenspan to name a few trans-partisan crooks.
Everything you say is true. I well remember Colonial Realty, Bernie Madoff, etc. Wealth, Power Corruption flourishes in every walk of life and has from the very first civilization Man made. All I'm saying is that people are not required to be be taken by the private sector's corruption. If we live in a country with a government, we are required to live by the law, which takes our money to fuel their lust for power. The only other way, if we can't gain control of our government is revolution.
Yes, Colonial Realty is a good example of how easy it to intoxicate the smartest people in the room. If we are to reclaim government by and for the average Joe, we first need to take it back from the people and corporations who've bought it: the ones who treat it like a bank where the only possible transaction is a withdrawal. Unfotunately my reading of history tells me it's always been that way, and I am not optimistic that it will ever change unless we are on to their game like white on rice.