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December 7th, 2010
03:00 PM ET

White House seeks Democrats' backing for tax deal

CNN Wire Staff

The White House was fighting Tuesday to persuade Democrats to support a compromise on taxes that President Barack Obama and Republican leaders have reached.

The overall compromise will cost between $600 and $800 billion over two years, according to CNN estimates.

At the heart of the deal: an extension of the Bush-era tax cuts for two more years, which would keep income tax rates at their current levels for everyone, as Republicans have advocated. Obama and other Democrats had argued that tax rates should stay the same for most people but rise for people earning more than $200,000 a year and families making $250,000 or more a year.

The deal Obama and Republicans have struck also includes a one-year cut in payroll taxes, from 6.2% to 4.2% on a worker's first $106,800 of wages. If implemented, it would mean that someone earning $50,000 a year would pay $1,000 less in Social Security contributions next year. Someone earning $100,000 would pay $2,000 less. The payroll tax rate would go back up to 6.2% in 2012.

Agreeing to extend the Bush-era tax cuts for the wealthiest Americans represented a major concession for Obama. In a concession to Democrats, Republican negotiators agreed to leave in place for 13 months the option to file for extended federal unemployment benefits. That will not, however, affect how long someone can collect unemployment benefits - the maximum will remain 99 weeks in states hardest hit by job loss.

"It's not perfect," Obama said in revealing the compromise, but "we cannot play politics at a time when the American people are looking for us to solve problems."

Several Democrats have said they have reservations about the deal. One reason: It would cost hundreds of billions of dollars.

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Filed under: Democrats • President Barack Obama • Raw Politics • Republicans • Taxes
soundoff (6 Responses)
  1. James King

    This is an outrage. The President wants Federal wages froozen for 2 years. Most of these workers make way way less than 80,000. a year. And in the same week wants to give tax incentives to the very rich. Those making over 500,000. a year. You are taking from the poor and giving to the rich now!

    December 7, 2010 at 8:27 pm |
  2. Gary Jones

    Does this mean that the people who are out of benefits because they have already drawn unemployment for 99 weeks will not get an extension?

    December 7, 2010 at 4:20 pm |
  3. Nancy Del Monte

    We cannot vote "yes" on these recent events in Washington! One has to ask, "What is the President's motive for voting with the Republicans?" It darn sure isn't because he's for the hardworking, middle class American!! Our British Columbian, Canadain, brother-in-law, has ask the question, "How dummy-down are you Americans going to get?" We truly thought that we were voting for a President who had strength and fortitude to standup for the working-class Americans; man-o-man, we were ever wrong!!

    December 7, 2010 at 4:00 pm |
  4. JIM STONE

    The Republicans have Obama running scared and he is going as fast as he can Backwards!! Why give in to there demands? what happened to lets work together for the People?? Or,,do the people matter any more,do we have a say on what we want?

    December 7, 2010 at 1:15 pm |
  5. tim

    So those of us that have exhausted our unemployment are still stuck with no jobs to find, and no money to be had. I can't decide which party is worse, the GOP or the DFL, either way it's a fail.

    December 7, 2010 at 1:11 pm |
  6. james demers

    You have got to be kidding me!!! What stimulus can they think of next: how about a Million for everyone in the U.S.A.? Hey Greed...Ireland – Move over the U.S. is next.

    December 7, 2010 at 1:09 pm |