The Obama administration is willing to trade extending the Bush tax cuts for higher incomes for a federal joblessness extension in a tax compromise announced Tuesday. Investors flocked back to stocks on the news, pushing the marketplaces to highs not seen since Lehman Brothers hit bottom to trigger the financial meltdown. In the take-no-prisoners Congress, however, both Democrats and Republicans insisted that the tax compromise was unacceptable.
Tax compromise facts
The Bush tax cuts would be extended for all tax brackets for another 2 years with the tax compromise the Obama administration put together. Dec. 31 is when the Bush tax cuts are expected to expire right now. It would have another year on the federal joblessness extension also. Other parts of the tax compromise consist of renewing the estate tax at a lower rate, which Congress allowed to lapse in 2010 and that Republicans want to end permanently. The Republicans were hoping the Stimulus Act income tax cut would be stretching. The tax compromise instead drops Social Security contributions to 4.2 percent from 6.2 percent.
Bipartisanship with market surge
The Obama administration tax compromise was given credit by analysts for a stock industry surge Tuesday that pushed Wall Street to highs not known since the Sept 2008 collapse of Lehman Brothers plunged the U.S. into an epic monetary crisis. Congress has yet to pass the tax compromise, although it seems likely. After an excellent November, the stock industry is doing better too. As riskier investments like stocks become more attractive, the price of bonds fell while their yield rose. News of the tax compromise fuels a recent resurgence in United States of America marketplaces that defies the fear in global marketplaces over sovereign debt in Europe.
Problem with political figures not considering public
The world has had optimistic reactions to the tax compromise. That has not stopped many in Congress from saying they'll never vote for it. It seems like the tax compromise could be considered "a moral outrage" and "an absolute disaster." This is exactly what liberal Democrats have been saying. A filibuster may be within the future with Bernie Sander, D-Vt., promising it will occur. Right wing Republicans groused at the prospect of the Obama administration getting anything it wanted within the deal. Michelle Bachmann, R-Minn., told Fox News the GOP would not support an extension of federal unemployment benefits, even as more than 2 million jobless Americans are set to lose them December 31.
Articles cited
Christian Science Monitor
csmonitor.com/Commentary/the-monitors-view/2010/1207/Tax-compromise-Obama-finally-sets-a-bipartisan-model
Fox News
foxnews.com/politics/2010/12/07/bipartisan-heat-obamas-tax-cut-compromise/
New York Times
nytimes.com/2010/12/08/business/08markets.html?_r=1&src=busln
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