December 7th, 2010
05:01 PM ET

Tax cut deal and surprise stimulus – the cost

FROM CNN MONEY: There is no official cost estimate for the compromise proposal. These numbers are ballpark estimates based on analysis of similar proposals.

Jeanne Sahadi
Senior Writer, CNN Money

The compromise on the Bush tax cuts announced Monday night between President Obama and Republicans could cost between $700 billion and $800 billion if ultimately signed into law as is - no sure thing given opposition from many Democrats.

About half of the measures in the announced package might be considered new short-term stimulus, meaning they may add to the deficits for two more years, but could help maintain the economic recovery and help spur economic activity and job creation.

Of course, there is some disagreement over just how stimulative some of the measures will be.

Many economists, for instance, don't consider an extension of the Bush tax cuts stimulus, because it merely keeps current rates in place. But letting taxes go higher, they say, could impede growth.

Several other measures announced Monday do count as stimulus, including a break on how much is deducted from workers' paychecks for Social Security and tax incentives that could encourage businesses to step up their investment.

Deficit hawks have been saying that a short-term run-up in debt is acceptable if it is paired with a serious long-term deficit-reduction plan.


Filed under: 360° Radar • Economy • President Barack Obama • Taxes
soundoff (9 Responses)
  1. mike

    here's an idea, Bush passes the tax cuts through budget reconciliation, and the house already passed a tax plan for those under 250,000. Tell the GOP to take their plan and shove it. I'm tired of all the whining by the Dems that they cant get anything done. If this passes I will be looking toward other candidates next election cycle.

    December 8, 2010 at 1:47 am |
  2. hsr0601

    In my view, Public opinion ought to be a determinant.

    December 8, 2010 at 1:16 am |
  3. Annie Kate

    Billions are better than trillions and it should help lessen the pain the economy is bringing to most American families. I would like long-term that there be a plan on how to reduce the deficit and still maintain a healthy economy and very low unemployment. If you don't have a job and can't support your family the size of the deficit doesn't really concern you that much.

    December 7, 2010 at 10:26 pm |
  4. Andy, PA

    The only tax CUT here is the 2% Social Security payroll tax rollback. The balance is un-needed stimulus. Extending the current tax rates is revenue-neutral, and does not have to be paid for (unless you've already spent the money, which Congress has). Things that do need to be paid for via cuts in other areas are the 40 Billion in Obama tax credits, the $56 Billion in unemployment extensions (Isn't 99 weeks long enough??), and the $120 Billion SS Tax Break.

    December 7, 2010 at 10:20 pm |
  5. Andy, PA

    Let's just quit with the class warfare already. Everyone who works for a living wants to keep as much of the fruits of their labor as they can. Don't hold success against someone who is good at what they do and becomes "wealthy" because of it.

    Rather than the progressive mess we have now, taxes need to be consistent for EVERYONE, and EVERYONE should pay them (47% of people pay no federal taxes now).

    December 7, 2010 at 10:18 pm |
  6. Gbickley

    I watch too much (TCN) cable tabloid news, but heard on a recent broadcast that federal taxes are lower now than most of the past sixty years. Well, why not a truly graduated tax, say for every $1000 of income and/or a VAT while freezing/reducing government spending? America is going broke, owned by the rest of the world and unable to solve it's own issues.
    America's hegemony may be over. China, it's your turn.

    December 7, 2010 at 9:47 pm |
  7. Tim

    Can someone tell me why the tax cuts are called bush tax cuts? We have a democrat in the white house, a democratic senate and house of reps. Isn't this the Democrats tax cuts? Call it what it is. Cowards.

    December 7, 2010 at 8:46 pm |
  8. zenovia

    Two years ago we elected President Obama on the Democratic ticket to make the changes we so badly needed. His campaign promises have not been kept. My question today, why does it seem that we still have a Republican President in office?

    December 7, 2010 at 8:46 pm |
  9. Cody

    This is good for the fact that were working together but I believe taxes NEED to go up to get us out of this debt. It will be hard and painful but it needs to be done.

    December 7, 2010 at 5:55 pm |