President Obama announced late Monday the “framework” for a compromise deal that would extend existing tax cuts at all income levels for two years and extend jobless benefits for the long-term unemployed for 13 months.
You can read the president’s statement, as released by the White House, here.
The package would cost about $900 billion over the next two years. The deal includes reducing the 6.2 percent Social Security payroll tax on employees by two percentage points for a year, putting more money in the paychecks of workers. That tax cut would replace the central tax break for middle and low-income Americans included in last year’s economic stimulus measure, White House officials said.
It also includes continuation of a college-tuition tax credit for some families, an expansion of the earned income tax credit and a provision to allow businesses to write off the cost of certain equipment purchases.
The tentative agreement represents a reversal on the president’s campaign position — as well of that of many other Democrats — that tax cuts for high-income earners should be discontinued. While many Democrats supported keeping the cuts in place for incomes up to $200,000 for individuals and $250,000 for families, Republicans demanded that tax rates stay the same for all income brackets, blocking a Senate measure over the weekend that would have let the tax cuts expire for the wealthy.
“We cannot play politics at a time when the American people are looking for us to solve problems,” President Obama told reporters in the statement at the White House. “I am confident ultimately that Congress is going to do the right thing.”
Mr. Obama said the compromise was necessary to prevent a tax increase of $3,000 for the typical American family next year. He also emphasized the importance of the 13-month extension of unemployment benefits.
The Associated Press reported that officials said that under the plan, unemployment benefits would remain in effect through the end of next year for workers who have been laid off for more than 26 weeks and less than 99 weeks
“There is no doubt that everyone will find something in this compromise that they don’t like. In fact there are things in here that I don’t like,” President Obama said.
“There’s been a lot of debate in Washington about how this would ultimately get resolved. I want everyone to remember … these are not abstract fights for the families who are impacted. Two million people will lose their unemployment insurance if we don’t get this resolved,” he said.
Senate Republican leader Mitch McConnell praised the White House in a statement released after the president’s announcement.
“Their efforts reflect a growing bipartisan belief that a new direction is needed if we are to revive the economy and help put millions of Americans back to work,” the statement said. “Members of the Senate and House will review this bipartisan agreement, but I am optimistic that Democrats in Congress will show the same openness to preventing tax hikes the administration has already shown.”
But Democratic Senate Majority Leader Harry Reid’s office issued a much shorter statement .
“Now that the President has outlined his proposal, Senator Reid plans on discussing it with his caucus tomorrow,” the entire statement read.
We’ll have more on the tax cut compromise Tuesday on The Rundown. Stay tuned.
The Associated Press contributed to this report.