President Barack Obama"s compromise on tax cuts isn"t pleasing some of the members of his own party. They may be the hardest sells when the proposed bill goes to a vote.
Yet in the wacky world of politics, a parallel universe of sorts, Obama"s proposal is getting support from GOP lawmakers, the generally critical U.S. Chamber of Commerce and the business community.
(We do kinda feel in the middle of a series on the SciFi channel. Even Senate Republican leader Mitch McConnell got all warm and fuzzy about the president"s plan.)
And how did it all come about? Republicans despite their alleged concerns for the deficit refused to retain the cuts for the middle class without an extension of the cuts for the wealthy. That provision for about 2 percent of Americans will add $700 billion to the deficit.
Yet while some Democrats see it as a defection from the party"s core, Obama did what he had to do to ensure that the hardest hit in the recession wouldn"t be further harmed by a tax increase in January.
By extending the hand of compromise to Republicans, Obama got something else he and his party wanted: extended jobless benefits for the unemployed and an almost one-third cut in workers" Social Security payroll taxes.
That should put a few more dollars of disposable income at middle America"s disposal. And since consumers make up the bulk of the economy, something that gets us all out there consuming (with care) is a good move.
For Democrats to refuse to OK the package would be risky. And for Republicans to add to the deficit is risky, too. Some voters will be angry either way. But millions of Americans would be even madder at Democrats for blocking it and Republicans for making demands that Democrats wouldn"t support if the new year dawns with higher taxes.
Talk about a hangover. It could last until 2012 and a brand-new election cycle.
Senior White House adviser David Axelrod defended Obama"s actions. Millions would lose unemployment benefits and millions more would pay higher taxes in 2011 without the president"s concessions, Axelrod told ABC"s SGood Morning America.
A few specifics of the proposal, per an e-mail from the White House:
n A typical working family faced a tax increase of more than $3,000 on Jan. 1. That"s avoided under this framework agreement, and working families won"t see their tax cuts go away next year.
n The agreement includes, in addition to extension of unemployment benefits, a $120 billion payroll tax cut for working families. Workers would pay a 4.2 percent tax rate instead of 6.2 percent.
n Tax breaks for businesses that hire new workers are included.
n A two-year extension of the American Opportunity Tax Credit of up to $2,500 will help students and families cover the cost of college tuition.
According to the Associated Press, the sticking point for some Democrats is the 35 percent federal estate tax rather than the 55 percent rate scheduled to be reinstated in 2011.
Also, each spouse can exempt up to $5 million from taxation. Five million dollars protected? That"s chicken feed for the wealthy but could help keep family businesses viable.
The White House frames the compromise as a proposal that will Screate jobs and accelerate economic growth. The way we see it, extending the tax cuts even to the wealthy will put more money in circulation and perhaps create a thaw in business hiring freezes that are essentially stopping the progress of an economic recovery.
Barely mentioned in any of the news reports we read and tacked on at the end of the White House e-mail was a reminder that, in September, the president proposed that businesses should be allowed to expense all investments in 2011.
According to the U.S. Treasury, that would generate more than $50 billion in investment in the U.S. economy and provide an incentive to about 2 million businesses to create jobs. That is also a part of the proposal.
We hope Democrats won"t forget the bottom line when this proposal comes to a vote. The middle class has been hurt the most by the recession. Don"t penalize the majority of Americans for concessions made that benefit the wealthy.
And a word of advice to Republicans: Don"t gloat. It"s unattractive.
Besides, blackmailing the chief executive can come back to haunt you.
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