“They believe that we should also make permanent the tax cuts for the wealthiest 2 percent of Americans. I completely disagree with this,” said President Barack Obama in an e-mailed statement to the AmNews. “A permanent extension of these tax cuts would cost us $700 billion at a time when we need to start focusing on bringing down our deficit. And economists from all across the political spectrum agree that giving tax cuts to millionaires and billionaires does very little to actually grow our economy.”
But, for the time being, the millionaires and billionaires will still get their cuts, with an unemployment extension bone thrown to the rest of the American population.
On Monday, Obama reached a deal with Republican leaders that would extend tax cuts, including Bush-era tax cuts for the wealthy, across the board for two years and extend unemployment benefits for the next 13 months. The tax cuts end just in time for the 2012 presidential election.
But some Democrats are not happy with the bill.
“Legislative blackmail,” said Rep. John Conyers of Michigan.
“Bad economic policy,” said Sen. Sherrod Brown of Ohio.
Obama, knowing he’s going to have to get the Senate to OK the legislation, tried to explain his stance to the American people via his e-mailed statement.
“I’m not willing to see 2 million Americans who stand to lose their unemployment insurance at the end of this month be put in a situation where they might lose their home or their car or suffer some additional economic catastrophe,” said Obama. “Make no mistake: Allowing taxes to go up on all Americans would have raised taxes by $3,000 for a typical American family. And that could cost our economy well over a million jobs.
“At the same time, I’m not about to add $700 billion to our deficit by allowing a permanent extension of the tax cuts for the wealthiest Americans,” Obama continued. “And I won’t allow any extension of these tax cuts for the wealthy, even a temporary one, without also extending unemployment insurance for Americans who’ve lost their jobs or additional tax cuts for working families and small businesses.”
During a White House conference call Monday night, Obama’s sentiments were repeatedly hit home to reporters. “It was important to not let the division keep us from creating jobs and make sure that tens of millions of Americans do not see their taxes go up,” said one White House official. “So this is a compromise.”
But the focus on extending Bush’s tax cuts and unemployment insurance only funds the first four tiers created up to 99 weeks of benefits and not the fifth tier, which is reserved for people who have already finished their 99 weeks of unemployment insurance. By next year, the numbers of “99ers” is expected to rise to 6 million. It’s currently at 2 million.
Last week, the president’s Council of Economic Advisers held a conference call with national media after releasing a report forecasting that the exhaustion of unemployment benefits for many will curb spending power enough to impede economic recovery.
But despite the compromises made, some Republicans still aren’t satisfied. Sen. Orrin Hatch called on Obama and the Democrats to “put away their partisanship” after declaring that he wanted Bush’s tax cuts to be extended permanently. Jeb Hensarling, the incoming House Republican conference chairman, chimed in as well.
“With respect to the unemployment insurance, I mean, we want to make sure we’re dealing more with paychecks and not so focused on unemployment checks,” Hensarling said on FOX News this week. “And if we’re going to extend the unemployment insurance beyond its normal level, let’s at least pay for it and get this nation off its ruinous spending path.”
Needless to say, most people aren’t satisfied with the agreement, but it might be the one that American citizens have to live with for the time being.