Barack Obama just announced his final deal with Republican leaders on extending the Bush tax cuts, unemployment benefits, and other issues, after secret negotiations. Here are the details. In short: There won't be much government revenue next year.
- A two-year extension of all Bush income tax rates.
- Extensions of the Earned Income Tax Credit, Child Tax Credit, and American Opportunity Tax Credit, all of which are refundable.
- A 13-month extension of expiring unemployment benefits.
- A two-percent cut in payroll taxes — on the employee side — from 6.2% to 4.2%
- Businesses can write off all new investment expenses for at least next year.
- Reinstating the estate tax (which lapsed completely this year), but starting at estates of $5 million and at 35%. Before the lapse it started at $3.5 million and 45%.
This is far from certain to pass Congress, as is. Why? Check out some of the reactions from liberals in the comments. Especially after that surprising estate tax bit. Oh man...
One thing that cannot be emphasized enough, however: Any party that wins an election campaigning on the emergency need to cut deficits, and then immediately plays hardball to cut hundreds of billions of dollars in additional taxes without paring it to spending cuts, is objectively full of shit. And the other party enables it.
Update: I am trying to avoid 20 paragraphs of analysis because once you start talking about this stuff you cannot stop, but for Democrats this isn't the worst deal given the circumstances. A 13-month unemployment benefits extension is a wonderful thing. But the circumstances are that they left themselves two weeks to do this whole thing after losing a shitload of elections and never putting together a strategy. That deserves some constructive feedback.
[Image via AP]