Political India: Engaging America

From The Hindu

United States President Barack Obama must be thinking to himself that he's damned if he does and damned if he doesn't — and he's probably right, at least so far as the latest controversy surrounding the expiration of the Bush-era tax cuts is concerned.

This week, the President was roundly criticised by the liberal section of his party for striking a deal with Republicans, under which tax cuts enacted by the former President, George W. Bush, and set to expire on December 31 2010, would be extended across the board for two more years.

While the Senate tax proposal, whose price tag is estimated to be a whopping $858 billion over the next 10 years, is firmly supported by Republicans for allowing the cuts to remain for the richest Americans, it has come under fire from Democrats in the House of Representatives for the same reason.

The chagrin of House Democrats became obvious on Thursday evening when, in a behind-closed-doors vote, they called for the package to not be brought to a floor vote “without changes scaling back tax breaks for the rich”.

Republicans are also keen on the bill's proposal to lighten the tax burden on the estates of the wealthy. The Obama compromise includes a plan to raise the estate tax floor from $3.5 million to $5 million. Yet the alternative, to allow the tax cuts to expire and face Republican blockades against the bill's proposals to extend unemployment insurance and similar benefits for the middle class, might well have been political suicide for all concerned.

Mr. Obama on Friday argued that “Nobody — Democrat or Republican — wants to see people's pay-cheques smaller on January 1 because Congress did not act.”

Yet he appeared to hold out hope that his solution would make it through Congress.

He said, “I think that the framework that we have put forward, which says not only that people's taxes do not go up on January 1, but also that we extend unemployment insurance for a year, that we make sure that key provisions like the college tax credit, the child tax credit, the earned-income tax credit are included.”

That aspect of the framework would serve as the basis for compromise, he said ; and he was optimistic about how this compromise would ultimately be perceived: “At the end of the day, people are going to conclude we do not want 2 million people suddenly without unemployment insurance and not able to pay their rent, not able to pay their mortgage,” he said.

Labels: House Democrats, Republicans, tax cuts, U.S. President Barack Obama