Annenberg Classroom - Speak Outs - What’s the deal with the tax cuts?

Speak Outs

Speak Out

What’s the deal with the tax cuts?

President Barack Obama had to make a tough decision. He wanted to extend unemployment benefits and prevent the Bush tax cuts from expiring for middle- and lower-class Americans. What he did want to expire was the tax break for every dollar someone makes over $250,000. President Obama argued that all of this was good for the economy.

Why did the president have to work “across the aisle,” meaning make compromises with the opposing party, to get the tax break accomplished? It’s because Article I, Section 8 of the U.S. Constitution gives the power to raise and levy taxes to Congress, not the president. In cases like this, the president creates a tax proposal, then has a member of Congress sponsor the legislation. Then it is up to Congress to debate, often change and then pass the legislation before it ends up on the president’s desk to be signed or vetoed, a power granted to the office by Article II of the Constitution.

For congressional Republicans, this was a no-go. They wanted to let the unemployment benefits stop and extend the tax cuts to everyone, also saying that it was good for the economy.

So what does the president do? He compromises. After meeting with congressional Republicans, the president put forward a tax cut that would be extended to all Americans, regardless of how much they make for the next two years. The Republicans then agreed to extend unemployment benefits until 2012 and agreed to support tax breaks aimed at the working class and poor.

The tax package comes with a $950 billion price tag, but the tax cuts will save working-class couples up to $4,200 in taxes. The money saved in taxes, the president says, will help stimulate the economy because taxpayers will spend that money, giving a needed boost to the economy.

If passed, the tax package means that you will not see more money taken away in taxes next year. If you are unemployed and you have been paying into unemployment insurance, your jobless assistance will continue.

This agreement has not sat well with many in Congress. Independent Sen. Bernard Sanders is disappointed that the president conceded the upper-class tax increase, saying that Americans are sick of giving the rich tax breaks while the middle and lower classes foot the bill. Sanders said, “I think (the president) has not fully understood that the American people are prepared for a fight. The American people do not want to give tax cuts to billionaires.”

In a press conference on Tuesday, the president responded to the criticism, saying “I understand the desire for a fight. I’m sympathetic to that. I’m as opposed to the high-end tax cuts today as I’ve been for years. But in the meantime, I’m not here to play games with the American people or the health of our economy.”

What do you think?

Do you think the tax breaks will help the economy? Do you think everyone should get a tax break? Why would the president want tax cuts for everyone who makes less than $250,000 but would want to tax any money someone earns past $250,000? How will extending unemployment benefits help or hurt the economy? Join the discussion and let us know what you think!

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Comments

1/5/2011

Taylor C.
Metzger/MHS, Montgomery, Texas
I believe it was a good decision. 1. It is unanimous that the deal will prompt a modest additional increase in U.S. growth in 2011 and a small drop in unemployment. We need to work toward reducing the deficit and this is a better start than anything we've done so far. 2. Have you seen the economy lately? During an economic downturn, any tax increase on anybody is a bad idea. 3. Even if you don't like extending tax cuts for the rich, the compromise extends long-term unemployment benefits for the next 13 months, a longer extension than ever approved in American history. And that's really saying something. There's a bigger picture here than just temporarily relieving the wealthy. The facts are there, if you ACTUALLY did your research you'd see the Pros out weigh the Cons.

12/15/2010

Giselle
Bradley/Nimitz, Irving, TX
What is the point of tax cuts if they aren't going to reduce taxes for the middle-class; the ones who need it the most. Why in the world would you give a tax break to the upper-class instead of the middle and lower-class, it's ridiculous and stupid to actually think that people like this idea. The president wants tax cuts for those who make less than $250,000 because they NEED the tax cuts, and he wants to tax those who make more than $250,000 because they can actually afford it. Extending unemployment benefits are going to help the people because more and more people are losing they're jobs, if the unemployment benefits were to be terminated that would lead to more homeless people. More homeless people means less people that have money to spend which means no help for the economy, so I think that extending the unemployment benefits would actually help the economy not hurt it.

12/14/2010

Conner
Montgomery, Texas
Should he have compromised with the republicans? I say no because he only accomplishes two things. 1:Staying in the same rut we've been since the last screwball president. 2: now his own party cant support him nearly as hole heartedly as before. Besides, If you make more than $250,000 a year you really don't need a tax cut anyways.

12/10/2010

Jennifer
La Place/Centennial High School, Columbus, OH
No, I believe that thsoe who make more than $250,000 per year should not be included in the tax cuts.

12/8/2010

Chris
Montgomery, Texas
I think Obama should not have conceded the tax cut to the Republicans. Giving a tax cut to people making over $250,000 will add to the deficit and they won't help the economy. How could staying with what we have been doing be good for the economy. It hasn't worked.