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December 7th, 2010
04:06 PM ET

Tax deal amounts to second stimulus

Ed Henry
CNN Senior White House Correspondent

The metaphorical ink is still barely dry on the long, flowery press release President Obama sent out last Friday reacting to the drastic budget cuts proposed by the National Commission on Fiscal Responsibility and Reform that he appointed.

"Jobs and growth are our most urgent need," the President said Friday. "But if we want an America that can compete for the jobs of tomorrow, we simply cannot allow our nation to be dragged down by our debt. We must correct our fiscal course."

What a difference three days make. On Monday Obama signed off on a tax deal that independent budget analysts I've spoken to - including Stan Collender of Qorvis Communications - believe will add as much as $900 billion to the national debt. That expense would be higher than the $814 billion Obama stimulus package from 2009 and could basically cost as much as a second stimulus package.

"Yes, absolutely," Collender said when I asked whether this will be a second stimulus package by another name. "Whether it will have as much of an impact [as the first stimulus] is another question," because of the fact that the tax deal largely keeps existing policy in place, rather than creating many new tax cuts to spark the economy.

But Collender's point was that even if this second package is not very stimulative (the Bush era tax cuts will stay in place rather than create new spending), it will cost taxpayers about the same or maybe more than the first stimulus due to the inclusion of items such as the social security tax holiday and estate tax exemption.

It's no wonder then that even while the president acknowledged there will need to be "hard choices" about government spending in the days ahead when he addressed reporters on Monday, he essentially said that difficult conversation will wait for another day down the road because the bipartisan tax deal was too good to resist.

"It's the right thing to do for jobs," Obama said. "It's the right thing to do for the middle class. It is the right thing to do for business. And it's the right thing to do for our economy. It offers us an opportunity that we need to seize."

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Filed under: Ed Henry • President Barack Obama • Raw Politics • Taxes
soundoff (7 Responses)
  1. J.V.Hodgson

    Well its easy to criticise as Republicans have done for 2 years everything literally that has been done by Democrats.
    Now if they are in charge and have the American people behind them lets see just how they are going to create jobs improve the economy and reduce budget deficits and debt.
    I am just wondering how long it take Republicans
    to claim credit for the debt commissions ideas, which please all remember they refused to Join
    officially.
    Sorry to say its clear that they have no
    intention of passing the defense bill with DADT attached nor of allowing Start to pass. I just hope procedures to extend the session to 24th December cannot be filibustered.
    The fact that Military pay increases 1.4 % while the rich get 70bn in relief is a disgrace tothe American political system.
    Regards,
    Hodgson.

    December 8, 2010 at 12:56 am |
  2. VLB

    What wasn't the right thing to do was to give tax breaks for the wealthy, those words should not be in the same sentence. What sense does it make to give tax breaks to people that can more than afford to fairly pay their taxes? Wasn't it obvious that the Republican's would use this piece to make a deal so that they would then vote for extending unemployment benefits, which everyone should have voted for without having to make any sort of a deal?! Politics is disgusting, they no longer care about their constituents, unless they are multi millionaires. They are motivated by greed and ego.

    December 7, 2010 at 11:02 pm |
  3. jay

    I have four weeks left of unemployment benefits. I'm on week 95, with the 13 month extension am I and thousands others like me included in this extension? I live day to day searching hard and wondering what will happen next.

    December 7, 2010 at 10:51 pm |
  4. Annie Kate

    To enable Americans to be able to compete for jobs in the new economy we also need to focus on our education systems and what our children are learning. In an article about the amount and depth of education worldwide the US dropped from the top ten to number 26! In math and science, which are the two areas that will continue to be the main areas to contribute to future advancements, the US ranks even lower. So where is our discussion on what we need to do on improving our education system?

    December 7, 2010 at 10:39 pm |
  5. Peter Giblin

    Are the people running this country totally stupid? We are running a deficit and so let us cut the amount of money coming in. Oh and Social security is running out of funds so let us cut the amount we take in. All this just to appease the RICH Republican Congress. You know , the ones that have Federal health insurance and Federal retirement.

    December 7, 2010 at 8:28 pm |
  6. Plato

    The unemployment extension doesnt cover the longterm unemployed,how come the media is not reporting this?
    There are currently 4-5 million unemployed Americans who stopped receiving a check weeks,months ago.

    December 7, 2010 at 8:25 pm |
  7. John Moore - PA

    More than ever it is evident that we need a movement from the center to take over the management of our national affairs. The two existing parties have yet again proven to be unable to get the job done. Depending on your leanings it is easy to blame one party over the other but given the baggage they both bring a fresh start is the best option. Unlike those playing polotics in DC the american people are really in the center so that is where any new group should be positioned.

    December 7, 2010 at 4:38 pm |