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Obama income/payroll tax cut, unemployment benefit deal: Background briefing

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What everybody who gets a paycheck gets in Obama tax deal: This agreement includes a 2 percent payroll tax cut for employees. Quite simply, under current law, employees pay 6.2 percent for Social Security. This proposal would be that for the year 2011, they would pay at a 4.2 percent tax level. So that means that a worker making $40,000 would get $800 in tax relief. A worker making $70,000 would get $1,400 in tax relief.

White House view on politics of the compromise and lame duck congressional session: This was a deal just simply to resolve the tax issue. It should not have impacts on the other things the President wants to get done in the lame duck session. Obviously that includes START, the DREAM Act, and the defense authorization bill, including the repeal of "don't ask, don't tell." The President still strongly supports all three of those things and is going to work to try to accomplish them in the Senate.

THE WHITE HOUSE

Office of the Press Secretary
_________________________________________________________________________________________________
For Immediate Release December 6, 2010


PRESS BRIEFING
BY SENIOR ADMINISTRATION OFFICIALS
ON TAX CUTS AND UNEMPLOYMENT INSURANCE

Via Conference Call

6:58 P.M. EST

MS. BRUNDAGE: Thanks, everyone, for joining the call. This call is on background. We are joined by three senior administration officials. Again, they'll speak on background as senior administration officials. And this call is not embargoed. They will provide an update on discussions on tax cuts and unemployment insurance.

With that, I will turn the call over to senior administration official number one.

SENIOR ADMINSTRATION OFFICIAL: Thanks, everyone, for joining us, and thanks for joining us so late in the day. I know we're hitting close to your deadline, so we will go as quickly as possible.

As you just heard, the President announced the framework for a bipartisan agreement that resolved the impasse on taxes and secured some very vital tax relief for all working Americans.

Once it became clear last week -- or this past weekend that the Senate would be unable to pass a permanent extension of the middle-class tax cuts while allowing the ones for the upper-income to expire, as the President has long advocated, we had two choices. One is to let taxes go up on every American, or to see if we could come to a compromise that was good for the economy, helped grow jobs -- or helped create jobs, and was fair to the middle class.

If we were going to have such a deal, this is an excellent deal. As we were going through these negotiations, the President made very clear to anyone and everyone that he would not accept a deal that allowed -- that gave tax breaks to the wealthy as well. The middle class and working class faced a tax increase because of the expiration of tax cuts that were outside of the Bush tax cuts, so we fought very hard for that.

This is -- we believe that this deal will -- which my colleagues will explain the details on quickly -- but this deal is a huge step forward. If we get -- this framework, if we can get this finalized, is a huge step forward. It includes a lot of really big provisions that help create jobs, grow the economy, things that a few weeks ago no one would have thought you could possibly get done because of the staunch Republican opposition to them. We think we're very close to making real progress that will be very good for the economy and the middle class.

SENIOR ADMINSTRATION OFFICIAL: Thank you. I'll describe very quickly the overview -- three most important principles underlying this. And then my colleague and I will tell you the four specific elements.

The first principle is that families will keep their tax cuts next year. For us it was very important that that was true of low- and moderate-income families because none of the Republican tax plans would have continued some of the critical tax cuts that those families rely on. And the President agreed with the Republicans' insistence that that apply to high-income as well.

The second principle underlying this is that the President was very focused on high-impact job creation measures. And we'll go into it in a little bit more detail, but things like unemployment insurance, tax credits for low- and moderate-income families, and a temporary payroll tax cut and business tax cuts are all among the highest bang-for-the-buck measures for job creation. And the total amount of jobs and growth you'll get out of this package as a whole far exceeds what you would have done if you had followed what many wanted to and allowed some of those tax cuts to go away, or not extend unemployment insurance, or not introduce new measures for business, a payroll tax cut.

Finally, the third principle underlying this is that it does not worsen the medium- and long-term deficit. These are responsible, temporary measures that support our economy but will not add costs by the middle of the decade.

The President continues to believe that a $700 billion permanent tax cut for the wealthy is not something this country can afford, and two years from now, when we continue to be in a serious fiscal debate and people see the type of sacrifices that we're having to make in terms of critical investments in our country, and priorities, it will be clear to them that we can't extend the high-income tax cuts or the additional estate tax relief above and beyond what the President thought was warranted for another day past the two years that we've done here.

There are four specific critical things that the President secured in this agreement. My colleague will walk through the first two, and then I'll quickly do the two after that.

SENIOR ADMINSTRATION OFFICIAL: This agreement includes a 2 percent payroll tax cut for employees. Quite simply, under current law, employees pay 6.2 percent for Social Security. This proposal would be that for the year 2011, they would pay at a 4.2 percent tax level. So that means that a worker making $40,000 would get $800 in tax relief. A worker making $70,000 would get $1,400 in tax relief.

As was done with the HIRE Act, money would be shifted to the Social Security trust fund to ensure there is no negative impact at all, not one penny, not one dime, on the Social Security trust fund or solvency.

Two points to note on this is that -- two points to note on this is that, one, the payroll tax cut has been shown to be one of the higher-impact tax cuts for encouraging job growth and economic growth. It may not have as high a multiplier as things like unemployment insurance, but among tax relief it is one of the strongest.

The second thing I would note is that both of the recent fiscal commissions that came out -- the President's fiscal commission and the bipartisan Policy Center's debt reduction task force -- both called for or advocated for some form of temporary payroll tax relief, which just goes to show that a temporary payroll tax relief is completely consistent with a long-term plan for fiscal discipline in a time of high unemployment where the economy has still not reached its potential.

So that is obviously a major aspect. This will provide $120 billion into the economy next year, which we think would have a significant impact on growth, and job growth particularly.

Secondly, one of the things that was very important, as both my colleagues mentioned, was that tax cuts for all Americans did not disappear. And so, therefore, in this deal, in addition to extending the middle-class tax relief as was passed in 2001 and 2003, we also secured that for this two-year period, that the child tax credit would maintain the refundability levels that were established in the Recovery Act. This is critical -- that the additional tax relief in the Recovery Act for 10.5 million low-income families with 18 million children would be preserved.

Secondly, that the two provisions of the Earned Income Tax Credit, the increase in the phase-out -- so basically the marriage penalty tax relief and Earned Income Tax Credit -- and a provision that ensures that families with three children or more get extra Earned Income Tax cuts to recognize the higher costs they have for their families and for raising three or more children, that that also would be preserved over this two-year period.

Third, also in here was the extension of the American Opportunity Tax Credit fully as it was passed in the Recovery Act, which includes -- which we've already found to have provided as much as $800 in additional tax relief, for an average of up to $1,700, for over 8 million students last year. And this includes a partial refundability element as well.

This is very important for students who are in school this year who would not have -- without this being passed would not know what their tuition cost to their family would be in the coming year without this being passed. So this is very critical. And just to remind you, this allows families to get up to $2,500 per student -- $2,500, or if made permanent, up to $10,000 for a student for going for four years. So this is also extended for two years as fully as it was passed.

And again, these were just absolutely critical and what we talked to you about last week, in establishing the principle that the tax cuts were not going up for -- should not go up for the highest earners, they should certainly not go up for tens of millions of working families, for our most hard-pressed working families, and for college students who are currently in school.

With that, let me turn to my colleague to go over the unemployment insurance.

SENIOR ADMINISTRATION OFFICIAL: I'll just -- just very briefly, two more things. Unemployment insurance extended for 13 months at the current level of maximum level of 99 weeks -- so that's only in the hardest-hit states -- as states' unemployment rates fall, just as they do now, those number of weeks fall as well.

Putting that in context, recently the House was unable to pass a three-month extension of UI. A month ago most people thought it was impossible to get 12 or 13 months of unemployment insurance, or thought you'd have to accept a drastically scaled-back program in order to do it. In this agreement we get the full current parameters of unemployment insurance extended for 13 months. That means that 2 million people won't exhaust their benefits by the end of this month. It means that 600,000 people won't lose their jobs over the next year as we lose the purchasing power associated with those unemployment insurance benefits.

And finally, the fourth element in this is business tax cuts to increase investment and growth. Some of those are the standard ones that Congress does every year, like the R&D tax credit, which, nonetheless, are quite important. But also very important here is something that the President announced in early September which would allow businesses to expense or write off 100 percent of the cost of their investment in the year 2011. That's a critical way to accelerate over $150 billion of tax cuts for businesses, with much of that money recouped over the following decade -- very high bang-for-the-buck job creation will be a part of that agreement.

So, in summary, on the policy side, four major, important things -- payroll tax cut for workers, number one. Number two, a continuation of all of the tax credits including the refundability in the child, the EITC, and the American Opportunity for college. Number three, unemployment insurance for 13 months. And number four, business tax cuts for investment -- not just the standard extenders, but also the largest temporary investment tax incentives in the country's history, allowing companies to write off 100 percent of their investments next year.

Those are the four major policies -- all of which are part of making sure no one loses their tax cuts, we have high job creation, and we don't worsen the medium- and long-term deficit.

SENIOR ADMINISTRATION OFFICIAL: I just wanted to make a point that -- two points. One is that this is a compromise, and like most compromises there are pieces with which we disagree -- obviously like the continuation of the high-income tax cuts -- and others that we support and Republicans disagree with. So no one is going to be happy with all of this, on either side. But that's what compromise is.

And second, it's important to note, as the President said today, that we obviously are strongly opposed to extending the tax cuts for the wealthiest, but when they come up again it will be in the middle of a presidential campaign, and we expect that this will be a central piece of the debate. It's a debate that we had in 2008 and won, but it's a debate that we think the American people should have about whether we should make these tax cuts permanent or not. We feel very good about that.

So you can expect that this will be -- we are close to finding a way to break this impasse and make sure that taxes don't go up on every American and endanger our economic recovery. But you've not heard the last word about this in what I suspect will be a very vigorous debate over the next two years about which direction the country should go.

Q Yes, thank you. I'd like to know the two-year cost for having an estate tax that's set at 35 percent with a $5 million threshold, instead of 45 percent at a $3.5 million threshold.

SENIOR ADMINSTRATION OFFICIAL: So, as people know, with the Bush tax cuts expiring, it would go back to current law in 2011, or the previous law, which has been $1 million at a 55 percent rate. What was in the PAYGO exemption was at the 2009 levels, which were $3.5 million exemption at a 45 percent rate. That, which was PAYGO exempt, was around $45 billion over two years. But that was already part of the PAYGO exemption. So the question is what's the additional by going to $3.5 million at 35 percent.

And just to be totally honest, we have not gotten back a score from Joint Tax Committee, and you may be able to. But I don't have a precise number to give you at this moment.

SENIOR ADMINSTRATION OFFICIAL: But it's important to tell folks who may be less steeped in this than either you or Chuck Babington is to what the estate tax is right now.

SENIOR ADMINSTRATION OFFICIAL: That's what I was trying to say, was that right now we are in a year where it's been fully repealed at the last year of the Bush tax cuts. So it goes back to an exemption level of a million at a 55 percent rate.

The President -- neither the President or the Senate or House Democrats had supported it staying at that level. What we support is that going back to the 2009 levels, where it's a $3.5 million exemption per person -- $3.5 million where there is no estate tax, and then anything over that has a 45 percent rate.

What was one of the two things that the Republicans insisted on for the rest of this package was what's called the Kyl-Lincoln proposal, where it takes that personal exemption from $3.5 million to $5 million and it lowers the rate on the amount over that from 45 percent to 35 percent.

But I will say also that it has a couple of other reforms in this that have interactions, and I just would rather be cautious than give you the wrong information. But Joint Task Committee may have an estimate. But that's the increment for two years that is part of this agreement. This could be at 35 percent over the exemption of $5 million.

Q Thank you. I've got two quick questions. One, I'm curious to know why you'll be successful in letting the tax cuts expire for the wealthy in two years, at a time when the Federal Reserve forecasts 8 percent unemployment, which is still dramatically above what we consider full employment. That's one.

Number two, over the past three months the President has described the tax cuts for the rich, the wealthy as tax cuts for the millionaires and billionaires. I'm wondering what's changed in the past three months that makes it now palatable for the White House. Thank you.

SENIOR ADMINISTRATION OFFICIAL: Let's be as clear as we can. We do not support the extension. We did not support, advocate for, or think it is wise policy or efficient use of federal resources to be extending tax cuts for those over $250,000, or adjusting the estate tax cut for the wealthiest estates.

What the President believes was that it was very important for us not to let the divisions keep us from uniting to go forward on creating jobs and making sure that over a hundred million American families did not see their taxes go up in 2011 or fear significant uncertainty about that.

So this is a compromise. And I think what is important to note, though, is that there is not only significant progress in protecting middle-class families from seeing their taxes going up, but in protecting tax relief for the most hard-pressed working families, and the fact that we were able to secure the expansions in the Earned Income Tax Credit, the American Opportunity Tax Credit, and the child tax cut refundability are just also very important.

And the second thing is that we have 9.8 percent unemployment and it has always been the top priority of this President to focus on restoring this economy to the strength it should be at, and to getting job creation [up] and unemployment down. And I think that this package is significantly stronger for creating jobs and adding -- and helping to accelerate job growth next year than I think most would have thought possible before this negotiation started. And that was the compromise that made this President feel that it was right for the country, right for jobs, right for workers, right for students and small businesses to go forward.

Q Hi, guys. Thanks for doing the call. I wonder if you can broaden this a little bit about what you think we have -- what this tells us about the future of governance in Washington in the new political environment. Is this a different style of governance between the two parties that we haven't seen in the last two years? What do you think it means for the next two years?

SENIOR ADMINISTRATION OFFICIAL: Well, I think -- let's get this all finalized before we make grand predictions about what it means the next two years. But I think we have, when faced with an intractable problem, tax cuts expiring at the end of the year, thus far the President, working with both parties, has been able to make real progress towards an agreement that is good for the economy and will help create jobs. And I think that's a hopeful sign.

As you know, and we've had this conversation with many of you over the last few months, is that the President is someone whose entire history is around finding -- bringing people together, people who don't always agree on everything, and finding things they can agree on to make progress. It's something we tried from the beginning -- from the moment he came to Washington after being elected President, where he went up to both the Republican House and Senate caucuses to talk about the Recovery Act. We worked, as has been documented many times -- worked for many months to bring Republicans onboard to health care and weren't able to do that. We've been able to make some progress here and we think that's a good sign. But let's get it finalized before we usher in a new dawn in Washington.

Q I wanted to ask what kind of support do you think you'll get for this in the House of Representatives and the U.S. Senate? One of our Ohio senators today, a retiree named George Voinovich, says that he's not going to back anything that would extend any of the tax cuts unless it would be paid for.

SENIOR ADMINISTRATION OFFICIAL: We're hopeful that we can get good support for this -- for the potential agreement that we're discussing tonight. We're going to begin the process -- or continue the process of talking to members in the House and the Senate to bring them onboard.

It's very important to understand that once it was clear that -- because Republicans were able to block any expiration of the upper-income tax cuts, there were only two choices. Choice number one: Let taxes go up for everyone, which would hurt families who are already struggling in this economy and inject a significant amount of uncertainty into what is a fragile recovery. And two, try to find a deal that was good for -- that while Republicans got some things they want, we also got some things that we think are very good for the economy and very good for middle and working-class families. And we think that deal does this.

And as we make the case for this both on the Hill and elsewhere, we hope people will agree.

Q Three very short, quick questions. The first sort of goes back to the first one. Can you approximate an overall cost of this? My back of the envelope puts it about $700 billion to $800 billion. I don't know how off the mark that might be. Are there any caps on the payroll tax holiday like there was on some of these other lower-income credits? And what can you tell us about the status of all those business extenders -- things like the Build America bond program?

SENIOR ADMINISTRATION OFFICIAL: On your first question, we just don't have a JTC score so we can't -- we don't have that for you. On number two, it's a straight 2 percentage point reduction in the employee side of the payroll tax. There's no limit on that. And it's also important to note the Social Security trust fund would be reimbursed for that money, so it has no impact on the solvency of Social Security, in the same way that the HIRE Act passed this year didn't.

On number three, there's a set of extenders which are traditional and have always been extended, like the R&D. And we'll definitely be extending those. This is just a framework for an agreement, and certainly the House, the Senate, the administration need to work out some of the other long list of relatively small extenders. But I don't think there are any major philosophical differences when it comes to those other items.

And then, as I said before, a hundred percent expensing. And just to be clear, that's the President's proposal, so that's not -- sometimes we talk at a hundred percent of expensing for small businesses. This is a hundred percent expensing for all businesses in the year 2011, and then step down to bonus depreciation in 2012.

Q My question is about the AMT. Is that at all part of this?

SENIOR ADMINISTRATION OFFICIAL: Yes, two years of the AMT. That's something everyone agreed to. So that would extend -- do it retroactively for 2010 and then through the end of 2011.

Q Thanks for holding the call today. In terms of the process that led to this deal, I was wondering if there was any thought of consideration of the NDAA including "don't ask, don't tell" repeal, in terms of getting this framework worked out, as well as START and/or the DREAM Act.

SENIOR ADMINSTRATION OFFICIAL: This was a deal just simply to resolve the tax issue. It should not have impacts on the other things the President wants to get done in the lame duck session. Obviously that includes START, the DREAM Act, and the defense authorization bill, including the repeal of "don't ask, don't tell." The President still strongly supports all three of those things and is going to work to try to accomplish them in the Senate.

Q Yes, thanks again for the call. My question is, was there any thought at all given to paying for any of these measures, and if not, why not? And second of all, how are you going to convince Blue Dog Democrats, particularly those who may have lost election in November, to support this legislation?

SENIOR ADMINSTRATION OFFICIAL: I'm sorry, was your first question about paying for it -- was that what you said?

Assuming that was it, look, this is -- as was always discussed, things like the payroll tax relief, 2 percent payroll tax relief, is a one-year payroll tax relief that is being done in what we consider a very high, unacceptable unemployment scenario and is justified as a temporary tax relief to spur growth and job creation.

And truthfully, one of the critical things for what our fiscal situation is going to be in 2014 and 2015 is not only the tougher policies that the President will talk about in his State of the Union but ensuring that we get growth going in 2011 and 2012.

And as I mentioned, both of the bipartisan commissions, both of them, put forward payroll tax relief. In fact, Domenici put forward a complete year -- not just 2 percent but a full $600 billion to$700 billion tax relief, and the President's bipartisan commission also called for payroll tax relief.

So I think that doing something like this two-year, 2 percent, $120 billion is going to be very important for working families -- $1,000 for a worker making $50,000; something that has a strong bang for the buck on the economy for job growth. And when this type of thing is temporary, it should not have negative effects on our medium- and long-term fiscal situation. Indeed, it should have a positive effect if it helps get economic growth going. And I think the fact that both fiscal commissions endorse exactly a payroll tax cut in 2011 should give a lot of comfort even to those who are especially focused on medium- to long-term fiscal discipline.

Q Yes, I was wondering why you are extending the tax cuts for everyone but the unemployment compensation for only 13 months.

SENIOR ADMINSTRATION OFFICIAL: I am pretty sure -- I'll have to check, but I am almost positive the 13 months would be the longest extension in the history of emergency extended unemployment insurance. I believe the previous record was in the Recovery Act, where we did nearly a year.

So it's a program that one would have -- that we'll want to see where the economy is -- where the unemployment rate is to figure out where it is going forward. But this is -- and we'll check and try to confirm later on this call -- I believe the longest extension in the history of the program.

Q You mentioned earlier a long list of extenders that will have to be talked about. I'm particularly interested in the energy-related tax provision, the ethanol tax credit and similar things. Is that in this list of -- long list of extenders that has to be talked about?

SENIOR ADMINSTRATION OFFICIAL: There's a number of details that still need to be discussed, and the six-pack talks have been the forum for working out things like the AMT that I talked about before, like some of these extenders issues.

It is -- there's a lot of very small items. They're very technical. There aren't major philosophical issues at stake here, but we need to work through those and don't want to do that on the call with all of you tonight.

SENIOR ADMINSTRATION OFFICIAL: And for those of you who are wondering, who may not have followed this as closely as everyone else, the six-pack talks are the ones with Secretary Geithner, Jack Lew and members of the House and the Senate that were going on late last week coming out of the bipartisan summit.

SENIOR ADMINSTRATION OFFICIAL: It's not as fun as it sounds.

Q Hi, thanks so much. Two questions. The tax credits for middle-class families like the American Opportunity Tax Credit, is that going to be extended for two years? Are they all in for two years, one? And two, when you said that this won't add to the medium- and long-term deficit, what did you mean? Especially since you don't know the total cost of the --

SENIOR ADMINSTRATION OFFICIAL: Yes, this is two-year for all of those. And there are no tax cuts in this agreement past 2012. And as a result, when you look at something like 2015, which has been the focus of the President's fiscal goals, it doesn't affect that in terms of the deficit.

SENIOR ADMINSTRATION OFFICIAL: And to your other question, yes, the American Opportunity Tax Credit, the Earned Income Tax Credit, they are for two years. So that's very -- obviously very important to have that certainty for two years. And for college students it gives them comfort that they will have up to $2,500 in tax relief for the next two years to come.

Q Great, thanks. I assume that the payroll tax cut is in lieu of Making Work Pay. Can you sort of compare and contrast the two and talk about why you were willing to let that expire and put this in its place?

SENIOR ADMINSTRATION OFFICIAL: Sure. The Make Work Pay was about $55-$60 billion a year over two years. We had -- the President has considered that to be a temporary tax relief. And in this negotiation, we felt that if there was the opportunity to give more significant tax relief to working families in 2011 that that would have -- would be the most compelling thing for the economy.

So in a sense, what you have is a $60 billion Make Work Pay proposal that has been replaced by $120 billion tax relief that would go to all workers.

And I think that what is very attractive about it -- what is very attractive about this is that you don't have to get into any of the issues that are often -- have more controversy about refundability or anything like that. If you are working, your payroll tax for one year on the employee side, instead of being 6.2 percent, will be 4.2 percent. So we felt it was simple. It was a way of getting tax relief to all working Americans. And we felt it was a way of getting twice the impact into the economy in 2011 when it's most needed.

Q Oh, thanks. I guess I wanted to see what your reaction is to the concern that's being expressed by some Democrats, especially in the House, especially about the estate tax position, but some of the other -- I think the payroll tax holiday makes some Democrats uncomfortable. What do you say to them? What are you saying to them?

SENIOR ADMINSTRATION OFFICIAL: Well, I think that actually, in some of the conversations we've had, there has been a warm reception when people have heard the details for a few reasons.

One, when you look at what people like Mark Zandi, CBO, some of the other people who do kind of bang-for-the-buck analysis, they see that a payroll tax cut has one of the better bang-for-the-buck impacts of any tax cut.

Secondly, they recognize that this is on the employee side. And so this is $120 billion that is going on the employee side, and that for a lot of middle-income families, this will be significantly more than they would have gotten under Make Work Pay.

And I think that there was -- one of the things that was expressed by one prominent House Democrat was that this has a universality to it, which is that it doesn't get you into the issues of what bracket somebody is, is it refundable. Every American has to pay payroll taxes. They pay 6.2 percent for Social Security. They pay another 1.4, 1.5 percent on the Medicare side. From the Social Security side, this is saying that whether -- whatever you make, you will get 2 percent tax relief. You don't have to get into some of the other issues that often are more controversial. And it's a very simple principle: All Americans -- all working Americans pay payroll taxes.

And one point that you know, John, is that for the -- over three-quarters of Americans, they pay more in payroll taxes than they pay in income tax, so this is one of the most significant types of tax relief that you can provide. And I think that it will be -- I think the more people realize the impact it has, the significance that this can have in the economy next year and for working families, I think the more momentum it will gain.

SENIOR ADMINSTRATION OFFICIAL: Sorry to just correct one small thing. This is the longest extension of unemployment insurance at this scale that we've ever had. It's also the longest we've done in a while. And rarely have we done very much longer, but there have been times when smaller-scale ones were done for a little bit longer a while ago.

SENIOR ADMINSTRATION OFFICIAL: Just -- the number from the Tax Policy Center is that 78 percent of taxpayers pay more in payroll taxes than income taxes, and 94 percent of those in the bottom 40 percent pay more in payroll taxes than income taxes.

Q Thanks. My question has been answered.

Q Thanks for doing this, guys. I'm wondering if you have a back-of-the-envelope or ballpark figure for how much stimulative tax cuts and tax relief you got into this package, not counting the extension of the '01 tax rates.

SENIOR ADMINSTRATION OFFICIAL: Well, we don't have the scores on everything, but I think the two simplest things you can know is that there's $120 billion in the payroll tax relief -- or at least that is our estimate at this moment for what a 2 percent employee-side payroll tax relief would be. And we estimate about $56 billion for the extension of the unemployment insurance.

Q The CBO put that estimate out for that, right?

SENIOR ADMINSTRATION OFFICIAL: So there you have $176 billion in additional positive impact on growth and jobs in the economy next year. And then obviously there are the other elements that we've talked to in terms of the Earned Income Tax Credit and American Opportunity Tax Credit.

The other thing I would mention is that the expensing provision has a very high positive impact in 2011 and 2012 while having minimal cost over the 10 years. So because that is -- because it allows expensing, that may only -- that will accelerate an enormous amount of tax relief into 2011. And so those three together we think will have a very significant positive impact on job growth and unemployment. And that was really one of the things that was most important to the President, was one of our top goals and one of the things that we think is strongest about this compromise.

Q Hi, I've got two quick questions. First, for the extenders part of the package, can you say if it's going to be one year or two years? And then also there have been efforts up here to repeal the enhanced 1099 reporting. Is that going to be a part of this package?

SENIOR ADMINSTRATION OFFICIAL: I'm sorry, I only caught your first question. The extenders are two years, so that's retroactive for 2010, and then extend them for the full year of 2011. And what was your second question?

Q The second question was about the efforts to repeal the expanded 1099 reporting that's been going on up here in the Capitol. Is that part of this package?

SENIOR ADMINSTRATION OFFICIAL: That's not part of the framework for the bipartisan agreement.

Q Yes, hi, do you have any estimate as to how many jobs this package might create or how many jobs it might save over the next two years?

SENIOR ADMINSTRATION OFFICIAL: We don't have an estimate for it as a whole. Certainly if you look at the unemployment insurance, CEA did a study that found it would prevent 600,000 from being lost over the next year if that went away.

CBO has done estimates of pieces; other people have done estimates. I suspect, as we often see with these things, people will have jobs estimates. But just the unemployment insurance alone is 600,000 jobs.

Q If you guys don't mind taking one more, if I could just -- I know you don't have a JTC score, but is it reasonable for us to look at these numbers, again, back of the envelope, and conclude that the two-year cost of this package is roughly in the ballpark of the stimulus bill?

SENIOR ADMINSTRATION OFFICIAL: I mean, I wouldn't think so in the sense that the -- most people would feel the middle-class tax cuts were kind of in most people's baselines expected to be in our budgets. So I think our feeling was more that if those were withdrawn, it would have a negative impact, but that one doesn't think of extending the middle-class tax cuts, which were in our baseline, PAYGO exempt as part of the agreement, as being kind of new additional tax cuts.

So I think as the question before implied, I think we would probably think of the kind of additional impact as being the new measures that went above the two-year extension of the middle-class tax relief.

Q Thank you for taking my call. I just wanted to go back to the point of pay-fors. You talked about why you folks were happy not to (inaudible) of the unemployment insurance extender. But that never was really an issue for you; it was an issue for the other side. Is there something that they -- I mean, how did they cave on that? What was the argument to persuade them?

SENIOR ADMINSTRATION OFFICIAL: Hopefully part of that argument is that historically we've almost never paid for unemployment insurance extensions. Republicans and Democrats have all agreed that they're about as genuine a temporary emergency measure as we get in the economy, and about as countercyclical a measure as we get in the economy.

Obviously that's the logic that has prevailed historically with both Democrats and Republicans. You'll have to ask them why they're willing to do that. Certainly obviously both sides moved off of positions that they had previously staked out. And that's part of coming together on an agreement.

MS. BRUNDAGE: Okay, great. Folks, just a reminder that our speakers today were speaking as senior administration officials. There's no embargo for this call. And we appreciate you joining.

Thanks a lot.

END 7:45 P.M. EST












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Lynn Sweet

Lynn Sweet is a columnist and the Washington Bureau Chief for the Chicago Sun-Times.

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This page contains a single entry by Lynn Sweet published on December 7, 2010 12:27 PM.

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