Well, at least we finally know what the result of all the political posturing is: the Bush tax cuts will be extended for all taxpayers, including the highest earning taxpayers. Yesterday the White House released their official statement regarding the deal on the Bush tax cuts. The President explained why he compromised:
We saw that in two different votes in the Senate that were taken this weekend. And without a willingness to give on both sides, there’s no reason to believe that this stalemate won't continue well into next year. This would be a chilling prospect for the American people whose taxes are currently scheduled to go up on January 1st because of arrangements that were made back in 2001 and 2003 under the Bush tax cuts.
I am not willing to let that happen. I know there’s some people in my own party and in the other party who would rather prolong this battle, even if we can't reach a compromise. But I'm not willing to let working families across this country become collateral damage for political warfare here in Washington. And I'm not willing to let our economy slip backwards just as we're pulling ourselves out of this devastating recession.
In addition to the official statement, the White House press secretary also released their "Fact Sheet on the Framework Agreement on Middle Class Tax Cuts and Unemployment Insurance." According to the document, the President’s plan will accomplish the following three things:
Working families will not lose their tax cuts.
A typical working family faced a tax increase of over $3,000 on January 1st. That’s avoided under this framework agreement, and working families won’t see their tax cuts go away next year.
Focused on high impact job creation measures.
The framework agreement includes some of the best measures for jumpstarting growth and job creation, including a full year of emergency unemployment insurance benefits, about $120 billion in payroll tax cuts for working families, and a continuation of tax credits for working families. This is on top of growth generated by extension of the middle-class income tax rates.
Does not worsen the medium- and long-term deficit.These are responsible, temporary measures to support our economy that will not add costs by the middle of the decade. The President does not believe it is affordable to make the high-income tax cuts permanent and will continue to have that debate in the years ahead.