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The Obama administration and Congressional Republicans were close to finalizing a deal on the expiring Bush tax cuts late Monday afternoon. But a senior administration official cautioned that, as of 4:30 p.m., they remained "a phone call away" -- a conversation between the president and GOP leadership.
That said, the contours of a final package emerged with more detail than ever before. While it's clear that the White House gave in on its main front -- the desire to let the tax levels for the upper-income levels revert to pre-Bush rates -- administration officials claimed that they were able to secure major victories in return.
In exchange for allowing those rates to continue for two years, Republicans agreed to extend unemployment insurance for an additional 13 months, to offer a two-percent employee side payroll tax credit (at a cost of about $120 billion), and $40 billion in tax breaks for families and students (including a $1,000 child tax credit extended for two years and an expansion of the earned income tax credit)
Finally, the final deal would include a 100% expensing for businesses to write off purchases of outdated equipment -- another key element of Obama's fiscal plans. There also would be a compromise on the estate tax, which will be set for two years at 35 percent, with a $5 million exemption amount, according to the Daily Caller, which first reported the arrangement.
Briefing The Huffington Post about the deal, which could be announced as early as Monday night, the two senior administration officials claimed that they were able to get more bang for their buck than previously imagined. The costs for the payroll tax holidays, UI and other refundable credits come in at roughly $215 billion over two years. The extensions of the income tax rates strictly for the wealthy is estimated to cost about $95 billion. All of it is unpaid for. But the former provisions are more stimulative than the latter.
The question, of course, is whether that's enough to placate Democratic members of Congress. Earlier in the day, the president convened a meeting with Congressional Democratic leadership to lay out the forthcoming arrangement. And in speaking to the Huffington Post, Obama's aides seemed hopeful.
"[W]e look at this from the sense of the economy and I think that this is a very good deal for a fragile economic recovery, moving that fragile economic recovery to a sustained job producing economic recovery," the senior administration official said. "First and foremost, that's what animated this whole thing. I think that being able to keep the refundability of the recovery act, the tax credits for working families, for college, and for children is a big victory. Ensuring 99 weeks of unemployment [insurance] is important for those who were looking at a Christmas with their benefits disappearing."
The deal also sets up a re-litigation of the tax cut fight during the height of the 2012 presidential debate. Then, as now, the income rates will be set to revert for everyone to pre-Bush levels and there is no certainty that the economy will be on substantially better footing. Moreover, the administration would face a serious trust deficit after having just capitulated on the Bush tax cuts during the first go-round. Nevertheless, the White House seemed willing to muster up a campaign to let the rates for the wealthy expire in two years.
"We are in a tough economic time, so the argument is a tougher one to make," said the senior administration official. "This will help jolt the economy and 2012 will be about whether or not we can afford to borrow more money from China for tax breaks for the rich. That's what 2012 will be about and that's an argument we will be happy to make."
Source: AP
That said, the contours of a final package emerged with more detail than ever before. While it's clear that the White House gave in on its main front -- the desire to let the tax levels for the upper-income levels revert to pre-Bush rates -- administration officials claimed that they were able to secure major victories in return.
In exchange for allowing those rates to continue for two years, Republicans agreed to extend unemployment insurance for an additional 13 months, to offer a two-percent employee side payroll tax credit (at a cost of about $120 billion), and $40 billion in tax breaks for families and students (including a $1,000 child tax credit extended for two years and an expansion of the earned income tax credit)
Finally, the final deal would include a 100% expensing for businesses to write off purchases of outdated equipment -- another key element of Obama's fiscal plans. There also would be a compromise on the estate tax, which will be set for two years at 35 percent, with a $5 million exemption amount, according to the Daily Caller, which first reported the arrangement.
Briefing The Huffington Post about the deal, which could be announced as early as Monday night, the two senior administration officials claimed that they were able to get more bang for their buck than previously imagined. The costs for the payroll tax holidays, UI and other refundable credits come in at roughly $215 billion over two years. The extensions of the income tax rates strictly for the wealthy is estimated to cost about $95 billion. All of it is unpaid for. But the former provisions are more stimulative than the latter.
The question, of course, is whether that's enough to placate Democratic members of Congress. Earlier in the day, the president convened a meeting with Congressional Democratic leadership to lay out the forthcoming arrangement. And in speaking to the Huffington Post, Obama's aides seemed hopeful.
"[W]e look at this from the sense of the economy and I think that this is a very good deal for a fragile economic recovery, moving that fragile economic recovery to a sustained job producing economic recovery," the senior administration official said. "First and foremost, that's what animated this whole thing. I think that being able to keep the refundability of the recovery act, the tax credits for working families, for college, and for children is a big victory. Ensuring 99 weeks of unemployment [insurance] is important for those who were looking at a Christmas with their benefits disappearing."
The deal also sets up a re-litigation of the tax cut fight during the height of the 2012 presidential debate. Then, as now, the income rates will be set to revert for everyone to pre-Bush levels and there is no certainty that the economy will be on substantially better footing. Moreover, the administration would face a serious trust deficit after having just capitulated on the Bush tax cuts during the first go-round. Nevertheless, the White House seemed willing to muster up a campaign to let the rates for the wealthy expire in two years.
"We are in a tough economic time, so the argument is a tougher one to make," said the senior administration official. "This will help jolt the economy and 2012 will be about whether or not we can afford to borrow more money from China for tax breaks for the rich. That's what 2012 will be about and that's an argument we will be happy to make."
Source: AP