Obama Announces Tentative Pact on Bush Tax Cuts

Updated 7:45 p.m. Eastern Time

President Obama announced late Monday afternoon that the White House and a group of Republicans have worked out a "framework" to extend the Bush-era tax cuts for all Americans for two years.

He said that while the agreement "was not perfect" it represented "an essential step on the road" to economic recovery.

It was not immediately clear whether there was wide agreement on the proposal, however, which included elements sure to anger both left and right. Top Democrats in Congress have warned such a deal would be too generous to the wealthy, and House Democratic leadership aides told CBS News immediately after the announcement that House Democrats have not signed off on any deal.

Sen. Bernie Sanders, I-VT, said following the announcement that he would "do whatever is necessary to stop a deal that extends tax cuts for the top earners." In a statement, House Majority Leader Harry Reid's office said, "Now that the President has outlined his proposal, Senator Reid plans on discussing it with his caucus tomorrow."

House Republican leader John Boehner, meanwhile, said that Mr. Obama's position on extending the tax cuts was encouraging but added only that "we look forward to discussing this proposal with House Republican Members and the American people."

The deal does appear to have support from Senate Republicans. In a statement, Senate Minority Leader McConnell said, "I appreciate the determined efforts of the President and Vice President in working with Republicans on a bipartisan plan to prevent a tax hike on any American and in creating incentives for economic growth."

Mr. Obama and most Democrats wanted the Bush-era tax cuts extended only for couples making less than $250,000 per year and individuals making less than $200,000. Republicans wanted the cuts permanently extended for all Americans, and if the tentative deal goes through they will have gotten their wish, at least temporarily. 

But the plan also includes concessions to Democrats, including the extension of unemployment insurance benefits for an additional 13 months.

Mr. Obama said that while he strongly prefers not to extend the cuts for all, he had no choice but to agree to do so temporarily because Senate Republicans blocked efforts to extend the cuts for all but the top two percent in votes over the weekend.

"What is abundantly clear is that Republicans will block a permanent tax cut for the middle class unless they also get a permanent tax cut for the wealthiest Americans regardless of the cost or impact on the deficit," he said, stating that a permanent extension of the cuts for top earners would cost $700 billion.

GOP opposition meant all Americans were at risk of having their taxes increased, he said, a risk he found unacceptable.

"Without a willingness to give on both sides, there's no reason to believe that this stalemate won't continue well into next year," he said, adding: "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."

President Obama announces a tentative deal on extending the Bush-era tax cuts.

/ CBS

"I know there's 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 added. "But I'm not willing to let working families across this country become collateral damage for political warfare here in Washington...So as sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do."

The plan includes a $120 billion, one-year cut in employees' Social Security taxes that would reduce employee contributions from 6.2 percent to 4.2 percent. The cut in payroll taxes, which is designed to spur hiring, replaces the "Making Work Pay" tax credit in the stimulus bill, which Mr. Obama had wanted extended for another year. Under the plan the Social Security tax would be reduced from 12.4 percent to 10.4 percent overall, since employers pay in 6.2 percent as well.

The White House says that for a family of four making $75,000 per year, the payroll tax cut means a reduction of $1,500 in yearly taxes. An administration officials says this "will have more than twice the economic impact next year as a one-year extension of Making Work Pay." The cut also will be more noticed than the "Making Work Pay" tax credit from the stimulus package, which many Americans did not realize they had received.

The agreement also sets sets the estate tax, which was zero this year, at 35 percent on estate transactions of more than $5 million for the next two years, according to White House sources. (Mr. Obama made clear in his remarks that he opposed that part of the agreement., saying it is "a more generous treatment of the estate tax that i think is wise or warranted.") And it allows business to write off investments next year in an effort to spur job creation.

It maintains the earned income tax credit for low-income families, the child tax credit and the American opportunity tax credit for college, components Mr. Obama hailed as protecting "key tax cuts" for "some of the folks who have been hit hardest by this recession."

"I'm looking forward to working with members of both parties in the coming days to see to it that we get this done before everyone leaves town for the holiday season," Mr. Obama said. "We cannot allow this moment to pass."

He added that "I'm confident that this needs to get done, and I'm confident ultimately that Congress will do the right thing."

---

Brian Montopoli is senior political reporter for CBSNews.com. You can read more of his posts here. Follow Hotsheet on Facebook and Twitter.

[buckfush500]

But when the upper income folks need some young folks to defend their oil wells and go after the lithium that is in Afganistan (a trillion dollars worth), they don't ask the children of their own. They send the children of the lower income folks. And for some reason the lower income people go along with this farce. I suppose there is no free lunch there. Some of these lower income soldiers have children of their own, something that never happened in Vietnam when there was a draft. The rich foks have it both ways they get all of the benefits and the poor get all the blame.

[noseitall]

. ************************

We have an all-volunteer military. Which pretty much discredits the statement above that "But when the upper income folks need some young folks to defend their oil wells and go after the lithium that is in Afganistan (a trillion dollars worth), they don't ask the children of their own. They send the children of the lower income folks."

But for some reason, it keeps getting repeated.

. ************************

.

[noseitall]

.

Obama is a multimillionaire. So are many other Democrats.

But the people that are represented by Democrats are, mostly, lower-income folks.

Lower-income folks want to raise taxes on upper-income folks because they get something for nothing.

But this puts the wishes of the lower-income folks in direct conflict with their Democrat representatives, who are mostly upper-income.

The Democrat representatives know that they must publicly say that they want higher taxes on the rich.

But working behind the scenes, the Democrat representatives make sure that the new taxes on the rich, which means themselves, is not passed.

Democrat voters are upset, but Democrat representatives know that lower-income voters are easily manipulated and are locked into the Democrat party by being promised something-for-nothing.

The End.


.

[noseitall]

.

A government that robs from Peter to pay Paul can always count on the support of Paul.

.

[noseitall]

.

Liberals are upset right now.

But in two years, Obama will make passionate speeches and promise to do great things.

Many liberals will believe him and re-nominate him.

Obama knows this.

He also knows that the large majority of liberals will always vote Democrat.

Watch and see.

.

[batazoidz]

So why, in these hard economic times when people -- good people -- are actually running out of their 99 weeks of unemployment benefits, do people with a $5 million and over estate need their taxes reduced from 55% to 35%? Who would have the chutzpah to demand that, and why?

At this time I don't have any real idea just how much money this represents, but whatever it is, I am sure for any of those 99ers, it will mean a lot more to them than to the surviving beneficiaries.

That said, I support the "compromise" and would strongly urge all my friends in Congress to support it. And to those who oppose it: remember, this is only the beginning of the debate, not the end.

ex animo
batazoid

[karek40]

You complain that the tax cuts will cost 6 to 10 billion per year, the extension of unemployment benefits will cost several times that figure. Raise the taxes on all (particularly those who make the jobs) then establish soup lines and public housing since more will lose their jobs. The government could take over hotels and motels and put those losing their homes in them. Good plan - socialism all dependent on the government to take care of them. Its worked so well in every country thats tried it. Yeah right - it has not worked in any country thats tried it, even Castro finally figured that out.

[antoniof123]

Dude the tax cuts are est to come in at 900 billion as a cost where do you get your numbers from now the unemployement is est at 15 billion for the extension.

[infantryman1968]

Obama Announces Tentative Pact on Bush Tax Cuts

hahahahahaahhahaahahahahahahaha


This deal was done two weeks ago in secret. Check wikileaks!

[lucifersshadow]

He caved in on the war, now he is caving on the taxes . . . he may as well be George Bush.

[msmsucks]

Bill Maher sat down with CNN's Fareed Zakaria to discuss President Obama's first term in office and how he's reacting to the mid-term elections, the hypocrisy of the teabaggers and Glenn Beck's move from pundit to preacher among other things.

ZAKARIA: "Politically Incorrect" was the name of the show Bill Maher hosted in the 1990s. It's also an apt description of the man himself. Now host of eighth HBO's hit show "Real Time", I find Maher to be one of the sharpest observers of American politics and life in general out there. It doesn't mean I always agree with him. I always find him funny, though.

Several times over the past few years, he has asked me questions. This time it's my turn. Welcome to the show, Bill Maher.

MAHER: Nice to be here.

ZAKARIA: So Obama. How do you think he's responded to the shellacking so far?

MAHER: He looks beaten down. That's what disturbs me. You know, I thought when we elected the first black president, as a comedian, I thought two years in I'd be making jokes about what a gangster he was, you know. And not that he's President Wayne Brady. I thought we're getting Suge Knight


So according to Mr. Maher, if you do not act like Suge Knight, then you really are a "real" black man. What a racist, sterotypical thing to say.

Watch out Bill, your letting your racism slip out.

[Green8019]

It is nice to see that the GOP has added $700,000,000,000.00 to our deficit before even taking over Washington, and they said they wanted to reduce the deficit.

House Republican leader John Boehner, meanwhile, said "we look forward to discussing this proposal with House Republican Members and the American people." Well, I'm sorry, the top 2% of THE RICHEST PEOPLE IN THE US ARE NOT THE AMERICAN PEOPLE!

[msmsucks]

How does a tax cut ad to something. If you make 50k a year and spend 60 do you go to your boss and say I need 10 more or do you figure out where you can cut down to save?

Common sense.

[endurorob_5]

Not raising taxes does not add to the defecit. Excessive spending adds to the defecit.