A collection of newsworthy information as reported from newspapers, magazines, and blogs.
Tuesday, December 14, 2010
5 Things You Should Know About The Bipartisan Compromise on Taxes
The Bipartisan Compromise
The White House explains the compromise. Heated discussions ensued as the compromise was being discussed. Representative Anthony Weiner of New York got up and asserted that Mr. Obama was acting like a “negotiator in chief” instead of a “leader” who gets things done. Mr. Biden erupted. “There’s no goddamned way I’m going to stand here and talk about the president like that,” the vice president said, according to two people in the room.
This is a hopeful sign that Obama has learned the lessons of the health-care debate, when he acceded too easily to the wishes of Hill Democrats, allowing them to slow the legislation and engage in a protracted debate on the public option. Months of delay gave Republicans time to make their case against "socialism" and prevented action on more pressing issues, such as job creation. Democrats paid for that with 63 seats.
Things began the same way this time. The White House left matters up to congressional Democrats, who postponed a vote on taxes until after the election. But when lawmakers continued their foot-dragging, Obama cut them out of the negotiations.
Payroll tax cut worries Social Security advocates. If the payroll tax is indefinitely lowered by 2.0 percentage points, then Social Security's finances will appear much more shaky. As it stands, Social Security is fully funded through the year 2037, but that doesn't keep The Washington Post and National Public Radio from running endless scare stories about the program's funding crisis.
Social Security is funded by a 6.2 percent payroll tax on the first $106,800 earned by a worker. The tax is matched by employers. The package negotiated by Obama would reduce the tax paid by workers to 4.2 percent for 2011. Employer rates would stay unchanged. A payroll tax cut is an efficient way to stimulate the economy by immediately increasing take home pay for about 155 million workers. The nonpartisan Congressional Budget Office agrees, and many business groups and Republicans support it.
The payroll tax cut would provide relief to any worker earning a wage. The payroll tax credit would be more generous to individuals making more than $20,000 and married couples making more than $40,000. Workers making $106,800 — the maximum amount of wages subject to Social Security taxes — would see their payroll taxes reduced by $2,136. That worker's spouse could also get a payroll tax cut of up to $2,136, if he or she makes at least $106,800.
Obama's Making Work Pay tax credit, which has provided modest increases in most workers' paychecks for the past two years. Making Work Pay, which expires at the end of the year, gives workers a tax credit of 6.2 percent of their wages, but it is capped at $400 for individuals and $800 for couples. The credit is phased out for individuals making more than $75,000 and couples making more than $150,000.
A worker would have to make $20,000 in wages for the payroll tax cut to equal the $400 Making Work Pay tax credit; couples would have to make $40,000. For those making less, the payroll tax cut would be less than the Making Work Pay credit.
"The payroll tax cut has absolutely no effect on the solvency of Social Security," said White House economic adviser Jason Furman. Social Security has accumulated a $2.5 trillion trust fund since the 1980s. But the government has borrowed that money to pay for other programs. The Treasury Department has issued special bonds to Social Security, guaranteeing the money will be repaid, with interest. This year, for the first time since the 1980s, Social Security will pay out more in benefits than it collects in payroll taxes.
"Barack Obama showed me one thing - that, above all the hype, he's a man of immense compassion. He put his neck on the line and put his people, the people of America - white, black and brown and anything in between - first" by Joe McKee
Democrats need to learn how to stick together. No matter how damaging Sarah Palin has been to the Republican party, no revolt has been led against her by Fox News, Rush or any of the other loud voices. Our progressive media - is providing a disservice to the Democrats when they speak anti-Obama sentiments. I have no doubt that President Obama is doing everything he can for middle class Americans.
Posted by Jo Ann Brown at 12:44 PM