President Barack Obama surprised the nation by announcing an earlier-than-expected tax cut deal with Republican lawmakers Monday night. The plan includes: extending the Bush-era income tax cuts for two years; reducing payroll taxes for one year; temporary reinstatement of the estate tax at 35%–a big win for Republican lawmakers; a 13-month extension of unemployment benefits; and extending current tax rates on capital gains and dividends for two years as well as reforming the Alternative Minimum Tax (AMT).
While Obama said in his comments Monday night that “We have arrived at a framework for a bipartisan agreement,” he must now convince dissatisfied Democrats to back the plan. Published reports say that Obama will likely rely heavily on Republicans to get the plan through Congress.
One of the major complaints regarding the deal is that it will add significantly to the nation’s mounting debt. In a letter to House Speaker Nancy Pelosi, Rep. Peter Welch, D-Vt., called the plan “fiscally irresponsible” and “grossly unfair.” Welch said, “We support extending tax cuts in full to 98% of American taxpayers, as the President initially proposed. He should not back down. Nor should we.”
He went on to tell Pelosi that he and his House colleagues “oppose acceding to Republican demands to extend the Bush tax cuts to millionaires and billionaires” because it would add “$700 billion to our national debt,” and it “handcuffs our ability to offer a balanced plan to achieve fiscal stability without a punishing effect on our current commitments, including Social Security and Medicare.”