President Obama, GOP leaders reach deal on tax cuts
By Agri-Pulse Staff
© Copyright Agri-Pulse Communications, Inc.
Washington, Dec. 7 - President Obama and Congressional negotiators have agreed to a tentative framework that would extend the current tax cuts for all Americans and set the estate tax at 35% for the next two years, and extend unemployment benefits for an additional 13 months. Administration officials head to Capitol Hill for caucus meetings today in attempt to sell the $900 billion plan to several Democrats who are vowing to fight the bipartisan deal. Some GOP lawmakers are also upset about extending unemployment benefits and the lack of offsets.
In announcing the compromise, the president said the agreement was the “right thing to do,” but stressed his displeasure with several aspects of the agreement, especially the extendsion of tax cuts for the highest earners and the 35% rate for the estate tax. But he said that he did not want to risk the expiration of the middle class tax cuts in the likely event of a lengthy impasse between Democrats and Republicans in Congress.
"I know there are some people in my own party and in the other party who would rather prolong this battle even if we can't reach a compromise," he said. “But I'm not willing to let working families across this country become collateral damage for political warfare here in Washington. I'm not letting to let our economy slip backwards just as we're pulling ourselves out of this devastating recession."
Here are details of the framework under discussion:
· Extends tax cuts to all Americans for two years.
· Extends unemployment insurance for 13 months.
· Provides a one-year, 2% reduction in employees' portion of Social Security payroll taxes, lowering the rate from 6.2% to 4.2%. For a family earning $50,000 a year, the reduction would amount to a savings of $1,000.
· Keeps the Earned Income Tax Credit and American Opportunity Tax Credit increases from last year's economic stimulus law.
· Allows business to write off 100% of their capital purchases next year.
· The top rate of 15% on capital gains and dividends would remain in place for two years.
· Sets the estate tax at 35% for two years, with a $5 million asset limit per person and $10 million per couple, in a deal negotiated by Sen. John Kyl (R-AZ) and Sen. Blanche Lincoln (D-AR). The 2009 level was $3.5 million. Without the change, the estate tax is expected to climb to 55% on estates valued at $1 million or more in 2011.
· Negotiations are ongoing over the extension of the ethanol blender's credit and the biodiesel tax credit, according to Hill sources. A spokesman for Sen. Grassley (R-IA) said he was still pushing for full extension, but others have speculated that provisions proposed by Sen. Max Baucus (D-MT) last week might be included in the final package. Baucus proposed a one year extension of the $1.00/gallon biodiesel tax credit. The ethanol blender's credit would be extended at a reduced rate of 36 cents per gallon, while the small producer's credit would be extended at a rate of 8 cents per gallon. The bill also extends through 2011 the existing 14.27 cents per liter (54 cents per gallon) tariff on imported ethanol and the related 5.99 cents per liter (22.67 cents per gallon) tariff on ethyl tertiary-butyl ether (ETBE).
The president framed the compromise as a way to help turnaround the ailing U.S. economy.
“It's not perfect, but this compromise is an essential step on the road to recovery. It will stop middle-class taxes from going up. It will spur our private sector to create millions of new jobs, and add momentum that our economy badly needs.”
But some Democrats were quick to express their displeasure with the framework. Ohio Democratic Sen. Sherrod Brown said he was “very unhappy” with the negotiations.
"In essence it borrows 700 billion dollars from China, charges it, puts it on our children and grandchildren's credit cards and gives it to the wealthiest two percent tax payers," Brown said an an interview with John King on CNN.
Brown also took aim at congressional leaders, declaring that "It's just hypocrisy from a whole lot of people in this institution that sing with that upper class accent."
Vermont Senator Bernie Sanders suggested that he may filibuster President Obama's proposed deal with Republicans. Speaking on the Ed Schultz Show, Sanders said he will “do whatever I can to see that 60 votes are not acquired to pass this piece of legislation.”
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