*Note: This was written by a Yahoo! contributor. Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
Recently The House of Representatives approved a bill that would extend unemployment benefits and limit tax cuts for the wealthy, but that bill was shot down by the Senate. A new agreement was quickly forged and has since gone to Congress for final approval. There is reason to believe a final decision could be reached this week, the second week of December 2010. The new bill is considered a huge setback for a major campaign promise of President Obama’s, to end tax cuts for the wealthiest Americans. The Republicans adamantly opposed this and threatened to oppose any bill presented that would attempt to cut the so called “Bush-era” tax deal.
Since, as the President has stated, he does not want to sacrifice the middle class and unemployed at the cost of keeping his promise, he found it necessary to adapt to the situation and not only allow the tax cuts to continue for the middle class, but for the most wealthy as well (those making over $250,000). This allows unemployment benefits to continue for the unemployed for (hopefully) another year, up to but not more than 99 weeks in total. The recent news suggests that the current debate is not whether or not to approve this extension, but how to fund it. Of course, the irony here is that it would easily be funded by ending the tax cuts for the rich, but the Republicans will not allow it, and have called for this to be extended indefinitely. Of course, the Democrats will not allow this either and so it seems the current compromise will be to extend tax cuts for all for another two years.
What this means to the rest of us is that the country’s debt continues to rise (it currently stands at around $4 trillion), unemployment will get a “band-aid” but the “wound” will not yet be healed, and the government can proceed to focus on other objectives such as the “Don’t Ask, Don’t Tell” policy for the military and a new arms treaty with Russia (among other goals) to close out the year.
Most people realize that the President did not have much choice in the current situation, but some have wondered why the Democrats didn’t push harder earlier in the year. However, although most people have agreed the rich should not be getting tax breaks, no one can argue with the fact that tax cuts for everyone are still good for, well… everyone, as no one wants to pay taxes. Most people will enjoy receiving an extra check in the mail to help with expenses, and the tax rate will not be going up this year since the economic “recovery” is still in such a precarious state. The stock market is on a modest rally and, although the job market is not anywhere near healthy, at least it seems that families that desperately need it will continue to receive their benefits. Hopefully we will see a more effective and bi-partisan law-making process as we begin 2011.