Despite disagreeing with Republicans, the President remains committed to the middle-class and to the millions of unemployed Americans
By Yussuf J. Simmonds
Sentinel Managing Editor
In an effort to keep his promise to the middle-class and to continue to provide some relief to the masses of unemployed Americans–while he aggressively works to improve the nation’s economy–President Barack Obama–declared last Tuesday that a compromise with Republicans on tax cuts was necessary to help the economy and protect recession-weary Americans. He passionately defended his record against Democrats who complain he’s breaking campaign promises saying “Take a tally. Look at what I promised during the campaign. There’s not a single thing that I haven’t done or tried to do.
The President staunchly defended his decision to deal with the GOP in order to extend about-to-expire tax cuts for all Americans adding, “My number one priority is to do what’s right for the American people, for jobs, and for economic growth. I’m focused on making sure that tens of millions of hardworking Americans are not seeing their paychecks shrink on January 1st just because the folks here in Washington are busy trying to score political points. And because of this agreement, middle-class Americans won’t see their taxes go up on January 1st, which is what I promised–a promise I made during the campaign, a promise I made as President.”
Economists from many of the leading financial institutions, elected officials including mayors and governors have agreed with the President’s decision as being the right thing to do for the American people despite some in his own party who disagreed. According to one economist, “The deal as announced would save or create 2.2 million jobs through 2012 excluding jobs saved by extending the broad based Bush tax cuts, on which everyone agreed.”
A spokesman for one of the nation’s leading banks said, “When the deal does get signed into law, it will force us to boost our GDP estimates for 2011. Now, the early reports show that many Democratic lawmakers are agitated with the deal struck by the Obama administration. This implies there will be some political maneuvering, particularly in the House of Representatives. Democrats in Congress may pressure the President to make changes that Republicans are almost certain to resist. Remember, what is critical for the economic outlook is whether the two parties can work together and our sense is that the President has too much invested in this deal to let it be scrapped.”
Locally, Mayor Antonio Villaraigosa added to the chorus of optimistic voices by issuing the following statement in response to the White House’s bipartisan tax cuts package that will extend unemployment insurance for unemployed Americans: “I would like to commend President Obama for his unwavering commitment to working families and those hardest hit by the recession and his refusal to sign onto any tax cut agreement that didn’t extend employment insurance or give additional tax cuts to small businesses. The President’s decision to build this bi-partisan compromise will give relief for another thirteen months to the hundreds of thousands of unemployed Angelenos and will be another crucial step forward on our city’s road to economic recovery.”
According to the White House, the overall framework of the agreement will accomplish a significant boost to the economy by extending the 2001/2003 Income-Tax Rates for Two Years; and providing additional provisions designed to promote vigorous economic growth. This will result in growth-orientation payroll tax cuts of about 2 percent for over 155 million workers, including high impact, job creating tax cuts for working families; child tax credit (CTC); earned income tax credit (EITC) and American opportunity tax credit for two years which in turn will help lower-income working families benefit by expansions in EITC and CTC.
To illustrate the above: a working family with three children making $20,000 will continue to receive a tax cut of more than $2,000 as a result of the EITC and Child Tax Credit expansions in this framework agreement. The same family would receive an additional $400 tax cut from the new payroll tax cut.
In addition to the above, unemployment insurance and business tax cuts to increase investment and growth will also be impacted in the growth curve cycle as visualized by the President. Furthermore, economic studies consistently find that lower-income households are the most likely to spend additional money, creating jobs and helping overall growth. That’s why the Congressional Budget Office, for instance, has concluded that “policies aimed at lower-income households tend to have greater stimulative effects.
The President fought to secure a two-year increase of the full CTC and EITC which will also provide ongoing tax cuts to 12 million lower income families, with a total of 24 million children. In addition, the deal fully extends the American Opportunity Tax Credit for two years which according to the Council of Economic Advisers that passing this provision will create 600,000 jobs in 2011 alone.
The fact is that the Framework Agreement on Middle Class Tax Cuts and Unemployment Insurance as the President outlined it is a ” Win for Our Economy, Jobs, and Working Families.” It also secures vital tax relief and investments in our workers that will create jobs and accelerate economic growth.
Finally, the President took on the naysayers: Now, I know there are some who would have preferred a protracted political fight, even if it had meant higher taxes for all Americans, even if it had meant an end to unemployment insurance for those who are desperately looking for work. And I understand the desire for a fight. I’m sympathetic to that. I’m as opposed to the high-end tax cuts today as I’ve been for years. In the long run, we simply can’t afford them. And when they expire in two years, I will fight to end them, just as I suspect the Republican Party may fight to end the middle-class tax cuts that I’ve championed and that they’ve opposed.”