Round One, Tax Cuts

Americans woke up to a surprise on Tuesday morning; "President Obama closed in on a deal with Congressional Republicans on Monday to extend the Bush-Era Tax Cuts to all income levels for two years as part of a package that would extend jobless aid for long-term unemployed, cut payroll taxes for all workers for a year and take other steps to bolster the economy," reported The New York Times. The news came as a surprise to many who were ready for a fight in Washington; Obama versus the Republican party--Round One, Tax-Cuts.

In light of the political culture of Washington, many expected the "People's Champ", President Obama, to roll up his sleeves and throw blows back at the right. After all, what does the administration have to lose? Playing nice earned results like watered down universal health care, the loss of extended unemployment benefits, a diminished DREAM Act. However, when backed into his corner by the Senate's failure to pass the House's proposal to extend tax cuts for only Americans making less than $250,000 a year as well as the denial of unemployment benefits extensions, President Obama compromised. 

What is Proposed?

From the New York Times:

The package would cost about $900 billion over the next two years. The deal includes reducing the 6.2 percent Social Security payroll tax on employees by two percentage points for a year, putting more money in the paychecks of workers. That tax cut would replace the central tax break for middle and low-income Americans included in last year’s economic stimulus measure, White House officials said.

It also includes continuation of a college-tuition tax credit for some families, an expansion of the earned income tax credit and a provision to allow businesses to write off the cost of certain equipment purchases.

The deal, which is not yet finalized, would include a 13-month extension of jobless aid for the long-term unemployed. Benefits have already started to run out for some people, and as many as 7 million people would potentially lose assistance within the next year, administration officials said.

Why did he do it?

 In a New Conference at the White House Tuesday morning, President Obama defended his actions, making note of his options, or the lack thereof.

"Here's the choice--its very stark....I have an option to say you know what I'm gonna keep fighting a political fight...holding fast to my position and as a consequence two million people may not be able to pay their bills and tens of millions of people who are struggling right now are suddenly gonna see their see their paychecks get smaller or...I can stick to my position, that those folks will get relief and people get help for unemployment insurance and I will continue to fight before the American people to make the point that the Republican position is wrong."

The president killed the notion that he was willing to play political games with Washington as a whole. His allegiance, instead, was to the American people.

"My number one priority is to do what is right for the American people, for jobs, and for economic growth....But in the mean time I'm not here to play games...."

Full video: White House Media Conference 12/7/10

Does America Approve?
With President Obama's main focus being on the well-being of Americans, the natural question is do Americans approve? In a recent poll by the Gallup institute, 66% of Americans are in favor of a two year extension of the Bush-era tax cuts for all Americans. 66% of the people polled are also in support of extending benefits for unemployed Americans. To no surprise, in terms of party affiliation, most republicans supported the extension of tax cuts, while majority of the democrats polled were more in favor of extending unemployment benefits.

What Now?
The proposal will become a bill and be voted on by Congress. While the bill will mostly likely meet little to no republican opposition, democrats might still be ready for a fight. No matter what, doomsday, January 1st, is drawing near.