Dec 6, 2010

Obama makes deal: Unemployment extension in exchange for tax cuts for millionaires

Town Hall, Osceola, IA, 9/22/07Image by Barack Obama via Flickr
President Obama has struck a deal with republican lawmakers who had promised to block all legislation unless the Bush tax cuts for the wealthy were extended. The compromise announced by the president on Monday, includes a 13 month extension for unemployment benefits and a 2 year extension of the Bush tax cuts for all Americans, including the wealthiest top 2%.

Other parts of the Obama deal include a 2% reduction in the employment tax. However, the president said he was not happy about extending the Bush tax cuts for the rich because they will increase the federal deficit.

Republican leaders claimed that increasing taxes during a recession would have a negative effect on the economy, and that the wealthy are the ones who create jobs.

In September, the National Bureau of Economic Research announced that “The recession ended in June 2009, 18 months after it began in December 2007,” according to the Washington Post. ” Yet there is little physical evidence to suggest that the statement is supported. The US department of Labor said the national unemployment rate increased in November to more than 9.5%.

If the tax breaks for the wealthy the republicans pushed so hard for do not create the promised jobs, they may face serious political fallout in the 2012 elections.

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