Yesterday, a deal was announced between President Obama and congressional Republicans of the currently expiring Congress to extend the tax cuts due to expire this month for another two years, to December 2012.
The deal entails several key provisions for many middle-class workers as well as assists for current workers and unemployed workers seeking work:
- The current tax rates, as set forth under President Bush and due to expire on December 31, will now be extended for another two years and will now expire on Dec. 31, 2012 unless other action is taken prior to then. This concession represents a major departure from President Obama's campaign that, first and foremost, sought a repeal of the Bush-era tax cuts, and appears to be infuriating his liberal base.
- Payroll taxes paid by employees will be cut by 2% from 6.2% to 4.2% The amount paid by employers will remain the same. This will replace the temporary "making work pay" program proposed by Obama in 2009.
- The estate tax, also known as the "death tax", will be set at 35% for the next two years, as proposed by Republicans in contrast to the Democrats' proposed 55% rate. (Keeping it at 0%, as it was for only 2010, was not going to happen.)
- The process of paying Unemployment Insurance benefits will continue to be funded for an additional thirteen months. Currently, in states with unemployment over 8%, the amount of UI that can be received, at most is 99 weeks. This deal does NOT add another 13 months on top of that. This deal instead allows for funding to continue for UI benefits to be paid within the current structures allowed, which are for a maximum of 99 weeks. The program and the amount of benefits that can be paid, at maximum, has NOT been changed. If you're close to 99 weeks or have hit it, you are not going to suddenly be eligible for another 13 months worth of benefits.
The top three points are all points put forth by various conservative platforms. The fourth point does not allow for additional benefits to be paid out to individuals; it is instead allowing the current structure now in place to continue until the end of 2011. There is no expansion of benefits beyond what is already mandated in federal law currently.
Conservatives can already rack up a big victory after Election Day - and their new House majority hasn't even been seated yet. Meanwhile, Democrats seem intent on continuing the circular firing squad.
We're going to need some more popcorn. On the docket tomorrow in the Senate is Harry Reid's latest attempt to ram through the DREAM Act.
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