In the Senate, there was a different tone. A plan was laid out that complied with the White House's deal. There is also expected to be a vote on Saturday. Obama's plan keeps the tax rates lower for another two years and gives the wealthy a lower estate tax. In exchange, Republicans have allowed him to extend unemployment insurance and benefits for those with lower incomes.
Obama's plan, according to most economists, is supposed to boost the economy. By extending the Bush tax cuts, he has effectively increased the money supply, which can be a stimulus. He has also reduced consumer uncertainty for those who may have been holding back their spending in anticipation of future tax decisions. These measures are helpful to the economy at a time when Congress has become less interested in stimulus spending to boost GDP growth.
One of the problems with the Obama tax deal, however, is that by giving the Republicans their wish of allowing the wealthiest two percent of Americans to keep tax breaks, they are undermining efforts to reign in the federal debt. The deal is expected to cost the American people over $800 million during the next 10 years, according to the Joint Tax Committee. Make no mistake about it - our debt will eventually cripple us.
I'm not quite sure how any Democrat would have negotiated better with the Republicans with so much on the line. Given that the loss of unemployment insurance would have had a dramatically negative impact on the lives of hundreds of thousands of people, any ideological grand-standing would have made the Democratic Party look ridiculous. President Obama did the right thing.
Dr. Boyce Watkins is the founder of the Your Black World Coalition and a Scholarship in Action Resident of the Institute for Black Public Policy. To have Dr. Boyce commentary delivered to your email, please click here.