Obama Takes Liberal Heat for His Tax-Cut Compromise

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President Obama has reached a tax-cut compromise with Republicans, but it's left him open to attack from Democrats.President Barack Obama unveiled his compromise to extend the Bush-era tax cuts and renew unemployment benefits Monday evening, calling it an "essential step on the road to recovery." But he's already coming under fire from his own liberal supporters for giving the Republicans everything they wanted without winning major concessions.

"It's really kind of pathetic that he was willing to give up so much and get so little in return," says Dean Baker, co-director of the liberal Center for Economic and Policy Research. "[Obama acts] like the president of the United States is the least powerful person in the county." Tax cuts for the wealthy are just about the worst way to put more money into the economy, Baker adds. "There are many more productive uses of that money."

Obama agreed to Republicans' demands to extend the Bush tax cuts for all taxpayers, including those making above $250,000, for two years. In a surprise concession, he also agreed to accept the Republican estate tax proposal, which levies a 35% tax on the inheritance of estates worth more than $5 million. Obama had been calling for a 45% tax on estates worth more than $3.5 million. The estate tax was repealed for this year, but was scheduled to jump back up to 2001 levels of 55% on estates worth $1 million and more starting Jan. 1.

The compromise plan also would reduce the 6.2% Social Security payroll tax by 2% for one year, which could give middle-income workers an additional $1,000 in take-home pay, and leaves the capital-gains tax untouched at 15%.

Unemployment Benefits Extended


In exchange, Obama won GOP agreement for a 13-month extension of unemployment benefits for as many as 2 million jobless Americans. The benefits are due to start expiring at the end of this month. "We cannot play politics," Obama said.
But while the unemployment benefits were extended for just over a year, the tax benefits for the wealthy were left in place for two years.

Bernie Sanders, a left-wing independent in the Senate who caucuses with the Democrats, has vowed to block the compromise.

Alan Viard, a resident scholar at the American Enterprise Institute, a conservative think tank, says he's glad the president decided to extend the cuts for both middle and high-income taxpayers. "We should not give the middle-class tax cuts unconditional priority because the high-income tax cuts are actually more powerful in providing incentives for long-run growth," Viard says.

The Price of Inheritance

The estate-tax compromise also drew mixed reactions. Viard says the 35% tax will still leave "potentially significant savings disincentives in place for those households subject to the estate tax."

Steve Wamhoff, legislative director for the Citizens for Tax Justice, a liberal think tank in Washington, D.C., says that even when the estate tax was set at 45% in 2009, it affected just the top 1% of the country's estates. The 35% proposal "is just a terrible idea," he says.

And Dick Patten, president of the American Family Business Institute, a lobbying group that opposes any estate tax, says the 35% is the best interim solution. 'If our families have 35% of the capital confiscated instead of 55%, that's a step in the right direction," he says.

While Republicans are hailing the deal, it still faces opposition from some Democrats in Congress -- although the GOP majority in the House of Representatives makes it less likely that the compromise could be blocked.

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crimson00king

Let them give tax breaks to the rich NOW ALL AMERICANS KNOW WHO THE GOP IS WORRIED ABOUT AND THAT IS THE RICH 1 percent of America. I just love it when the tan man Boehnor crys on cue for the rich. I believe Americans are wise to the GOP now and 2012 when the younger voters return to the polls THE GOP will be SENT PACKING. Enjoy it while it last fellows.

December 12 2010 at 10:35 PM Report abuse rate up rate down Reply
smithpet8

I know that the tax compromise will help the rich. But I also know that for a nation with over 280,000,000 people in it, you can't always have situations on any issue, where 1 size solultions fit everyone perfectly. There are No Pefectly politically aligned agendas, needs, etc., so there can be NO perfect solutions. I don't agree that giving the rich a tax break will increase jobs, However, we need to get on with the peoples business, it's called reality. This notion of a "Perfect" solution, is the stuff of pure fantasy. I offer the the working poor the following empowerment suggestion. You may be in a financial squeeze, But if you have a lot of family, friends, or nieghbors, you could always swap, or barter. Don't focus on your liabilities, but rather on your assest, where there trading elements. Look upon your gifts the things you do best. One of the most socially debilitating things that will destroy a society isn't poverty Per se, it's Throwing up your hands, and saying, "I am a powerless, helpless, hopeless, "Victim", and just refusing to try anything new. That is a trap greater than any poverty situation I can imnagine. The choice is yours, You claim the victim status, Or you csan just put one foot in front the other, and continue the journey that is our lives. ThAT'S my p?ersonal opinion. speaking for myself.

December 09 2010 at 8:35 PM Report abuse rate up rate down Reply
jagcapt007

Lacitsileinad is truly a deVout socialist rewriting history again as does his beloved Daily Kos. Carter like FDR created the price and Labor freeze acts that caused the economic collapse. They have repeatedly been declared unconstitutional through out History. Anytime you create loans and Mortgages without secure down payments disasters must occur with the slightest downturn in the market place. Demanding price controls, and wage restrictions for workers, never solve those problems. Just like today 2010 Carter had HUGH failed mortgage loans higher than the value of their actual home value. Reagan wisely sold those loans at a hugh lose to investors, and moved forward to the greatest economic growth in Modern history. Liberals oddly always refuse to acknowledge that failed policy cost we taxpayers $1,400,000,000,000 in loses, and was a DNC economic disaster that took over a decade to rectify. Over 84% of the original home owners, ultimately walked away from their homes free and clear of all debt. It also doubled the inflation rate under Carter. He created two new cabinet post, Energy and Education. He gave back the Panama Canal for free, Including it's Revenue, and refused ALL pay raises for Military Personal. I sadly admit I voted for Carter who upon election, immediately gave unconditional Amnesty for all draft dodges. He was without exception my last DNC vote. As a Military Officer in Vietnam, I felt profusely betrayed. Obama is Carter repeated, with the same results. Obama publicly stated that Obama Care was NOT a TAX. He than demanded his AG under oath, declare it is a tax, but in the Daily KOS tradition, he didn't lie. Obama just paid others to lie for him. It's the same stupid rich tax cuts on borrowed money theology. It's their earned dollars being mandatorily confiscated, to pay off others credit cards including Congresses. It's never borrowed money, it's always extortion via socialism ========= =============== ======================= ====================== "President Obama won policies that will put or keep money in the pockets of the families of the unemployed and middle and low-income families, which will increase spending and create jobs." Obama betrayed no one___he did what was best for all of america...................................... In 2012 America will see how many unemployed persons created jobs, and stimulated this country out of debt. We will Once again see the rich with massive profits from businesses and investments outside the USA repeating, We refuse your monopoly money in payments for our goods and services. This is the liberal shell game. We have super DNC Majorities is all areas of Congress and the presidency, but this Bush war still rages on. RICHARD how can the economy go on an upswing, when Obama demanded 85% of those rich tax cuts be spent on welfare UB benefits, instead of on creating jobs? That is HOPE and CHANGE for Socialist, NOT Business or the middle class. billbokamo Ike wanted that war debt paid ASAP. Obama and the DNC care less if anybody gets repaid their loans, thus those HUGH spreads. Progressive mathematics only works for politicians, and deadbeats, never We the taxpaying people. Swebertx standard marxist strategy (C&P) trapping the Middle Class pawns between them. They ultimately (MC) slit their own throats.

December 08 2010 at 7:19 PM Report abuse rate up rate down Reply
swebertx

I haven't seen any comments about the 2% cut in social security. On the one hand, I thought the system was having serious financial problems and cannot afford a reduction of revenues--isn't that why we are increasing the retirement age. So, how do these economics work? On the other hand, we might as well reduce the tax because we probably won't see the money when we're ready to retire.

December 08 2010 at 5:11 PM Report abuse rate up rate down Reply
braun1994

obama taxing his way to greatness?

December 08 2010 at 12:55 PM Report abuse +1 rate up rate down Reply
sfamilyent

Congress controls taxes and spending and they are getting nothing done to stimulate the economy or to trim the federal budget deficit. Rather than figuring out how to encourage increased domestic business activity to create jobs, Congress is debating how to pay people for not working and how to increase the wealth of high income earners. The tax cuts will not encourage business growth and job creation in the US in the absence of taking action to balance trade with countries that have protectionist policies and/or subsidize their domestic production. We need Congress to create an economic environment that promotes an increase in domestic production for domestic consumption and that discourages imports from countries that do not open their markets to our goods and services.

December 08 2010 at 5:40 AM Report abuse rate up rate down Reply
1 reply to sfamilyent's comment
bggdg

Keeping what you earn is not a manner to increase ones wealth. Also, if other countries subsidize production of goods consumed in the US, that can only mean foreign citizens have been forced to subsidize US consumers. We should encouage them to do more of it. Just think if their subsidy grew large enough that the consumed goods became free!

December 08 2010 at 8:07 AM Report abuse +1 rate up rate down Reply
Robert & Lisa

Obama does the first HALFWAY thing in his Presidency and the "liberals" (socialists) go bananas. They're a bunch of crazy loons. George Soros and his plan to conquer America are on track.

December 08 2010 at 2:54 AM Report abuse +3 rate up rate down Reply
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December 08 2010 at 1:37 AM Report abuse rate up rate down Reply
jagcapt007

I always profusely smile at The FDR FUZZY math syndrome. Let put up some facts and watch liberals play games with them. The first thing America did after FDR left Office is put TERM LIMITS in written form. Never again could that abortion happen in History toward the Greatest President of all time. The second thing American did is demand the courts intervene in the great FDR policies; 98% were declared unconstitutional via SCOTUS and other high courts. Only FDIC basically survived, thus demanding We the people are responsible for bank debts, instead of stock holders. Let's NEVER forget FDR demanded the overturning of the SCOTUS courts with 9 more liberal Justices, to make him a dictator, instead of just a President. Even the Liberals feared FDR once empowered. All economist today left or right agree he prolonged the depression, and his policies failed big time to stop the depression. What saved America was WWII, that immediately employed 13 million soldiers killing its fellow man. It would more economically feasible today to make ALL the unemployed soldiers, and deplore them to afghanistan and Iraq. We stimulate the economy and end this war in 6 months, thus double bang for the buck. ============================================================ We need to raise revenues AND cut spending; you know, balance it out. How about 5 years with the Tax Tables that were in force during the Eisenhower Admin. and reduce about 5% out of Spending for the same period. ......... I have zero problems with that, as long as we pass the same deductions and spending restrictions. My father served with the Eisenhower Admin, both civilly and militarily. Please note NO business investment was taxed, and directly taken off their personal taxes dollar for dollar for corporations. How do you think America created the biggest corporations world renounced. NO entitlements were allowed (Medicare & Medicaid) directly towards individual persons. ALL social spending were Civil service workers, and not Minorities or illegal deadbeats demanding Health care as a civil right. My dad always taught me you can't imprison wealth... you can only most profusely encourage it to move elsewhere. If we ended ALL entitlements tomorrow in five years our national debt in cut to 4 trillion dollars. We maintain 9.8% unemployment, and everything remains on hold. We Also went extremely Green free of charge.

December 07 2010 at 10:57 PM Report abuse +1 rate up rate down Reply
1 reply to jagcapt007's comment
billbokamo

Jag, you are far more on target than most of today's congressmen. Here, however, are a couple more MATH syndromes. During Ike's eight years, his administrations collected from 16 to 19 percent of GDP, and they spent about the same. Last year (Obama's first), the revenue was 14.8 percent of GDP, but the expenditures were 24.7 percent. The ten point spread (the deficit) increased gross national debt to 15 trillion (i.e., 100 percent of GDP). The solution (if there is one) has got to address BOTH income and expenses. If I understand you correctly, I think that we are in agreement.

December 08 2010 at 12:01 AM Report abuse +1 rate up rate down Reply
billbokamo

There was really no surprise on this "compromise" from Congress. The Democrats said, "We will let you Republicans decrease revenue as long as you let us Democrats increase spending." Meanwhile the Gross National Debt is at fifteen (15!) trillion and climbing. The only countries with higher debt to GNP ratios are Italy, Greece and Japan. Keep it up, Congress, and we will soon catch all three of them.

December 07 2010 at 9:23 PM Report abuse +5 rate up rate down Reply
1 reply to billbokamo's comment
bggdg

bill, these tax cuts have been in place since since 2003. For the following 5 years income tax receipts INCREASED every single year, growing a whopping 42% for the cumulative 5 years through 2008. How could it possibly decrease revenue to extend existing tax cuts that are already 7 years, old and resulted in substantial increases in tax receipts following their inception?

December 07 2010 at 10:38 PM Report abuse +2 rate up rate down Reply