Statements of Support on the Framework Agreement for Middle Class Tax Cuts and Unemployment Insurance
Below please see some statements of support on the framework agreement on middle class tax cuts and unemployment insurance from various economists, advocacy groups, pundits and editorial boards.
Economists and Economic Research
Michael Linden and Michael Ettlinger, Center for American Progress
“The deal as announced would save or create 2.2 million jobs [through 2012], excluding jobs saved by extending the broad based Bush tax cuts, on which everyone agreed.” [CAP, 12/07/2010]
Peter Cardillo, Chief Market Economist, Avalon Partners in New York
“From a psychological standpoint, this probably will continue to boost the markets in the sense that this most likely will lead to an expansion in economic activity. People are going to be feeling a little bit better, and that means they'll be maybe even spending a little bit more.” [Avalon Partners, 12/07/2010]
Bank of America Merrill Lynch
“When the deal does get signed into law, it will force us to boost our GDP estimates for 2011. Now, the early reports show that many Democratic lawmakers are agitated with the deal struck by the Obama administration. This implies there will be some political maneuvering, particularly in the House of Representatives. Democrats in Congress may pressure the President to make changes that Republicans are almost certain to resist. Remember, what is critical for the economic outlook is whether the two parties can work together and our sense is that the President has too much invested in this deal to let it be scrapped. And, when the deal does get signed into law, it will force us to boost our GDP estimates for 2011. Our current forecast assumes that unemployment benefits do not get extended and that the ‘Making Work Pay’ credit ends. So, we are talking about a $130 billion hit to disposable household income that does not materialize. In addition, this also implies a higher budget deficit and more Treasury issuance. And, since Bernanke is getting some help from fiscal policymakers, it implies somewhat less pressure on the Fed to extend QE2.” [Bank of America Merrill Lynch, 12/07/2010]
Greg Mankiw, Professor of Economics at Harvard University
“I am generally pleased with the compromise over taxes the President and Republicans struck yesterday… As the policy was described yesterday, this payroll tax cut goes entirely to the worker. This increases work incentives, but the main motivation is probably to increase take-home pay, consumer spending, and aggregate demand… I should note that, as part of the deal, the President also got his proposal to allow businesses to expense investment spending. As I have said previously, this is a good idea, but the impact is likely to be modest.” [Greg Mankiw, 12/07/2010]
John Silvia, Chief Economist of Wells Fargo
“[The deal] suggests more positive outlook for economic growth, corporate profits [and] employment.” [Wells Fargo, 12/07/2010]
Pundits and Editorials
Jonathan Bernstein, The New Republic
“Oh, it’s clear that Barack Obama and the Democrats are making a trade they didn’t want, and in that sense are losing. But they’re winning something, too. Actually, the best way to think of this is in the context of a post that Klein wrote (if I recall correctly) last spring, in which he noted that Republicans could have had whatever they wanted on health care in exchange for their votes. What I think happened here is that instead of the rejectionist strategy Republicans have used on most issues, on taxes Republicans and Democrats both wanted substantive results -- and that, given the party breakdown in the Senate, made a trade-off close to inevitable.” [The New Republic, 12/07/2010]
Ezra Klein, Washington Post
“…It's something of a hopeful sign: The White House sat in a room with Republicans and Democrats and managed to negotiate an actual compromise. The final deal includes some things that Democrats will like and some things they won't like, and it includes some things Republicans will like and some things they won't like. But it's a deal, and a better one than many -- myself included -- thought they'd reach. These tax cuts were a bit of a special legislative case, as their scheduled expiration forced action, but if you want to be optimistic, this process suggests that the next two years might be a bit more productive than some of us have been predicting.” [Washington Post, 12/07/2010]
Boston Globe Editorial Board
“If given a choice between a Washington showdown that prevents all action until the next Congress, and a half-a-loaf compromise with some clear benefits, most Americans would choose the latter. Obama has rightly stated that the outcome of the 2010 election reflected a desire for more compromise and less partisan gridlock. In dealing with the Republican leadership, Obama is acting in the national interest, if not necessarily pleasing his party’s faithful.” [Boston Globe, 12/07/2010]
Derek Thompson, The Atlantic
“Let's think about what this means from both a short-term stimulus perspective and a long-term deficit perspective. In the near future, this means significant help for American families and businesses that seemed out of reach just a few days ago. Unemployment benefits are considered the most effective form of stimulus. The payroll tax holiday will double the relief from the Making Work Pay tax credit, giving average worker thousands -- yes, thousands -- of dollars in additional after-tax income. The extensions to the refundable portions of the Child Tax Credit and EITC will also target low income families hit hardest in the downturn. In short, a $60 billion tax cut for the richest will be unsavory to some people, but it's become a vehicle for historic tax relief for average Americans. Of the six stimulus ideas analyzed by the CBO in the summer, this deal has four, including the two most stimulative: jobless benefits and a payroll tax cut, both of which target the middle- and low-income Americans.” [The Atlantic, 12/07/2010]
David Leonhardt, New York Times
“What actually seems to be happening: Democrats and Republicans agree to extend all the tax cuts and also agree to an extension of unemployment benefits, a cut in the payroll tax and, according to my colleagues, ‘continuation of a college-tuition tax credit for some families, an expansion of the earned income tax credit and a provision to allow businesses to write off the cost of certain equipment purchases.’ The amount of money pumped into the ailing economy: about $900 billion over years. Subtract the $400 billion cost of the Bush tax cuts. Subtract another $140 billion or so, which is the cost of extending the Alternative Minimum Tax patch (and almost certainly would have happened regardless). You’re then left with more than $300 billion in net stimulus over two years. And while that sum will not be enough to fix the economy all by itself, it is serious money… the outcome is not all bad, especially for the short-term sake of the economy.” [New York Times, 12/07/2010]
The Economist
“On Monday Barack Obama and Republican and Democratic leaders in Congress struck a deal on a massive new package of stimulus and tax cut extensions, worth some $800 billion (around 5% of GDP). Though it must still pass the parties’ respective caucuses, this is good news for the economy: the prospect of inadvertent fiscal tightening was the biggest cloud hanging over the 2011 outlook… Economists had generally projected growth next year at only 2.5%, and the biggest risk to that already tepid outlook had been the prospect that some or all of Mr Bush’s tax cuts would expire at the same time as much of Mr Obama’s temporary stimulus. Tonight’s deal is likely to lead to a round of upward revisions.” [The Economist, 12/07/2010]
Steve Kornacki, Salon
“There's also a longer term calculation at work. Note that the deal also includes a reduction in the Social Security payroll tax and an expansion of the earned income tax credit and the college tuition tax credit. This is on top of the extension in unemployment benefits. These measures have one thing in common: They are stimulative in nature. (So, for that matter, is the fact that middle class Americans won't face a tax hike -- something that would have happened had Obama balked at the deal and played a long-term game of chicken with the GOP). Granted, this isn't the type of stimulus that, by itself, will restore the economy to good health, but it will help -- and it's more than Obama was on course to get from the GOP. The compromise, in other words, gives Obama a chance to take further action to boost the economy and bring unemployment down...” [Salon, 12/07/2010]
Bill Scher, Campaign for America’s Future
“It's impossible to know exactly what the political ramifications are and how it affects future policy. But the 13-month extension on support for the long-term unemployed is real money, right now, for those who need it most… Unemployment benefits for those out of work between 26 and 99 weeks beats no benefits for any long-term unemployed workers. That's a compromise, where we get something. Not a capitulation, where we get nothing. The deal is taking action .. our government taking action. That should be embraced. We need to keep fighting for robust investment in America's future to spark a sustainable recovery. And the best way to do that is to build on what's good in this deal, tout what middle-class voters are getting and bring back their appetite for more action by our government.”[Campaign for America’s Future, 12/07/2010]
Steve Goldstein, MarketWatch
“Wall Street economists were tapping into their spreadsheets Tuesday, ready to ratchet up their economic growth forecasts for next year in light of the tax deal struck by President Barack Obama and congressional Republicans, particularly the surprise one-year reduction in payroll taxes. The proposal… would extend all Bush-era income-tax cuts as well as federal unemployment insurance and lower the payroll tax by $120 billion with a 2-percentage-point reduction. The plan would also extend the 15% capital-gains rate and proposes a 35% estate-tax rate with a $5 million exemption. Emergency unemployment-insurance benefits would be extended through the end of 2011.” [MarketWatch, 12/07/2010]
Advocacy Groups
John D. Podesta, Chief Executive Officer of the Center for American Progress
“At the end of the day, President Obama decided he couldn’t abandon the millions of Americans who are struggling to keep their families afloat, who are diligently searching for work, and who simply cannot afford higher taxes right now, even though the Congressional Republican Leadership was more than happy to do so if we wouldn't pay their ransom. It was a steep price, but this deal will mean about 2 million jobs saved or created over the next two years. On balance, I think the President was right to choose helping working Americans over a December conflagration.” [CAP, 12/07/2010]
Lawrence Mishel, President of the Economic Policy Institute
“Who got what out of the deal is clear. The Republicans got tax cuts for the best-off two percent and lower estate taxes for the very wealthiest families, neither of which will do much if anything to create jobs. President Obama won policies that will put or keep money in the pockets of the families of the unemployed and middle and low-income families, which will increase spending and create jobs. That’s what a payroll tax holiday for workers, unemployment benefits and the various tax credits will do: create customers for business and create jobs, which is our biggest need right now. In two years, the American people will have a clear choice about who the tax code will favor. That debate will, I hope, highlight the hypocrisy of those wanting to deepen the deficit by extending tax cuts for the rich while simultaneously cutting health care, Social Security and domestic public investments.” [EPI.org, 12/06/2010]
Business Roundtable
“We are pleased that congressional leadership and the President have made considerable progress toward a comprehensive bipartisan agreement. It reflects a compromise by all sides to extend tax relief and help provide certainty for American workers and businesses. This tax relief – including the extension of the dividends and capital gains rate – will provide a needed boost to job creation and investment. We applaud the inclusion of the R&D credit and other important business tax provisions that expired at the end of 2009. These provisions include long-standing features of the tax code that businesses rely on when they undertake hiring and investment decisions. Restoration of these provisions lifts an uncertainty for businesses that will improve their ability to employ more workers and grow the economy. Additionally, an employee payroll tax deduction and an increased incentive to undertake investment in machinery and equipment in 2011 should help to assist in the recovery.” [BusinessRoundtable.org, 12/07/2010]
Bob Greenstein, President of the Center on Budget and Policy Priorities
"It’s a bigger deal than anyone expected… Both sides gave more expected and both sides got more than expected." [Washington Post, 12/07/2010]
Judy Conti, National Employment Law Project
"While it is a deal that gives much to the top 2 percent of wage earners in this country, and far less to those struggling the most in this economy, we commend the White House and all negotiators for realizing that the long-term unemployed need our continued support. There is much more to be done, especially for those who are beyond the reach of the UI system, but this is a very positive first step." [National Employment Law Project, 12/07/2010]