Obama Announces Deal on Tax Cuts

By MichaelJames

Dec 6, 2010 8:26pm

ABC News' Sunlen Miller reports:

Admitting that without willingness to give on both sides, there’s reason to believe a “stalemate” would continue well into next year without a deal, President Obama announced a “bipartisan framework” on tax cuts and unemployment benefits extension.

“What is abundantly clear to everyone in this town is that Republicans will block a permanent tax cut for the middle class unless they also get a permanent tax cut for the wealthiest Americans, regardless of the cost or impact on the deficit,” Obama said, “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.”

Speaking from the Eisenhower Executive Office Building, the president made the announcement following a meeting with Democratic leadership. He admitted that the deal is not perfect, and that not everyone is going to be happy with everything.  Including him.

“I have no doubt that everyone will find something in this compromise that they don’t like," he said. "In fact, there are things in here that I don’t like — namely the extension of the tax cuts for the wealthiest Americans and the wealthiest estates.  But these tax cuts will expire in two years.  And I’m confident that as we make tough choices about bringing our deficit down, as I engage in a conversation with the American people about the hard choices we’re going to have to make to secure our future and our children’s future and our grandchildren’s future, it will become apparent that we cannot afford to extend those tax cuts any longer.”

The president mentioned the particulars of the bipartisan agreement. For the next two years, every American family will keep their tax cuts in exchange for a temporary extension of the tax cuts for the wealthiest Americans. The Democrats, Obama said, will be able to protect key tax cuts for working families — the Earned Income Tax Credit, the Child Tax Credit  and the American Opportunity Tax Credit.

Under the agreement, unemployment insurance also will be extended for another 13 months, and the deal calls for a 2 percent employee payroll tax cut for workers next year.

In exchange, the Republicans will get – as Obama described himself — a “more generous treatment of the estate tax than I think is wise or warranted,” he said, “but we have insisted that that will be temporary.”

In perhaps a message to some of the members of his own party who wanted him to fight harder on the compromised issues, the president said that he will not let the economy slip backwards.

“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," he said. "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.”

The president said that while he is sympathetic to those who prefer to fight, it would be the wrong thing to do in this situation.

“The American people didn’t send us here to wage symbolic battles or win symbolic victories," he said. "They would much rather have the comfort of knowing that when they open their first paycheck on January 2011, it won’t be smaller than it was before, all because Washington decided they preferred to have a fight and failed to act.”

The president said it would have been a “grave injustice” to let taxes increase for Americans if a deal were not worked out, creating a “serious blow” to the economic recovery. 

-Sunlen Miller

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