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March 3, 2021

Obama announces proposed deal on taxes, jobless benefits

House Democrats slam tax proposal, complain of being left out of final negotiations.

President Barack Obama announced a deal with Republican leaders that would extend Bush-era tax cuts for two years and unemployment benefits for 13 months while also lowering the payroll tax by two percentage points for a year, according to CNN. The compromise, worked out in negotiations involving the White House, the Treasury and congressional leaders from both parties, includes provisions that each side doesn’t like, Obama said in a hastily arranged statement to reporters after discussing the proposed deal with Democratic leaders. “It’s not perfect,” Obama said of the plan, which also would continue tax breaks for students and families contained in the 2009 stimulus bill and allow businesses to write off all investments they make next year. “We cannot play politics at a time when the American people are looking for us to solve problems.”

As outlined by Obama and sources, the deal would add up to hundreds of billions of dollars in more federal spending or lower revenue in coming years at a time when the president, Republican leaders and a federal deficit commission appointed by the president all say that the growing federal debt must be brought under control.

In a closed-door meeting Tuesday night however, Congress Democrats vented their frustrations with Obama’s tax proposal, with rank-and-file members slamming the White House for leaving House Democrats out of final negotiations, and agreeing too quickly to a GOP proposal on the estate tax.
According to several Democratic members and aides, much of the discussion centered on the addition of the estate tax exemption to the package extending all the Bush-era tax cuts for two years. Democrats are fuming that the administration agreed to exempt inheritances up to USD 5 M and to set the tax rate at 35%. The estate tax is scheduled to be reinstated at a higher rate of 55% next year, with the exemption up to USD 1 M. A bill passed the House a year ago that set the threshold for the exemption at USD 3.5 M and the tax rate at 45%. Pennsylvania Democrat Allyson Schwartz said, “My sense is people are not happy with this,” telling reporters that Democrats plan to “push back at little” at the White House to try to change the estate tax back to the version that passed the House. Schwartz said if the administration agreed to do that, she could support the package, but she could not predict how many other Democrats would do the same.

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