By Jueseppi B.
By Colleen Curtis January 01, 2013
President Obama has repeatedly called this a make-or-break moment for the middle class. That’s why we worked with Republicans and Democrats in Congress to reach an agreement that keeps income taxes low for the middle class and helps to grow the economy. And as the President promised, millionaires and billionaires will also begin doing more to help pay down the deficit through a combination of permanent tax rate increases and reduced tax benefits.
This is the first time in twenty years that a bipartisan agreement has increased tax rates on the wealthy. Additionally, this deal ensures that America will continue to invest in education, clean energy, and manufacturing to strengthen our economy and the middle class.
As President Obama noted in a statement about the deal, while neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country. And the President looks forward to working with Republicans to reduce the deficit in a balanced and bipartisan way.
The agreement passed by an overwhelming bipartisan majority in the Senate last night permanently extends the middle-class tax cuts and also extends credits for working families. It provides additional measures to protect families and promote economic growth. The lower tax rates, an expanded Child Tax Credit, and marriage penalty relief will provide certainty for 114 million households and together will prevent the typical family of four from seeing a $2,200 tax increase.
By raising income tax rates on the wealthiest and keeping taxes low for the middle class, it means we will now have the most progressive tax code in decades. The agreement also prevents two million people from losing unemployment insurance benefits in January by extending emergency UI benefits for one year.
The agreement avoids a 27 percent cut to reimbursements for doctors seeing Medicare patients for 2013 by fixing the sustainable growth rate formula through the end of next year (the “doc fix”).
Tax credits that encourage the production of clean domestic energy, such as the Production Tax Credit (PTC), will be extended through the end of the year. And businesses will get to immediately write off 50 percent of capital investments made next year, helping to create jobs in manufacturing and other sectors.
The deal also postpones the sequester for two months, which will give Congress time to work on a balanced plan to prevent the automatic spending cuts that would threaten our national security and slash investments that build our economy. The postponement is paid for with $1 of revenue for every $1 of spending, with the spending balanced between defense and domestic: The agreement saves $24 billion, half in revenue and half from spending cuts which are divided equally between defense and nondefense.
There’s more work to do to reduce the deficit, and President Obama is prepared to work with Congress to do it. But this agreement builds on the $1 trillion in spending cuts the President has already signed into law.
The White House Office of the Press Secretary
January 01, 2013
Statement from the President on the Senate Deal to Extend Middle Class Tax Cuts
Leaders from both parties in the Senate came together to reach an agreement that passed with overwhelming bipartisan support today that protects 98 percent of Americans and 97 percent of small business owners from a middle class tax hike. While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay.
This agreement will also grow the economy and shrink our deficits in a balanced way – by investing in our middle class, and by asking the wealthy to pay a little more.
What’s more, today’s agreement builds on previous efforts to reduce our deficits. Last year, I worked with Democrats and Republicans to cut spending by more than $1 trillion. Tonight’s agreement does even more by asking millionaires and billionaires to begin to pay their fair share for the first time in twenty years. As promised, that increase will be immediate, and it will be permanent.
There’s more work to do to reduce our deficits, and I’m willing to do it. But tonight’s agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans. And as we address our ongoing fiscal challenges, I will continue to fight every day on behalf of the middle class and all those fighting to get into the middle class to forge an economy that grows from the middle out, not from the top down.
The White House Office of the Press Secretary
January 01, 2013
Fact Sheet: The Tax Agreement: A Victory for Middle-Class Families and the Economy
At this make or break moment for the middle class, the President achieved a bipartisan solution that keeps income taxes low for the middle class and grows the economy. For the first time in 20 years, Congress will have acted on a bipartisan basis to vote for significant new revenue. This means millionaires and billionaires will pay their fair share to reduce the deficit through a combination of permanent tax rate increases and reduced tax benefits. And this agreement ensures that we can continue to make investments in education, clean energy, and manufacturing that create jobs and strengthen the middle class.
In 2011, the President cut spending. In 2012, he kept his promise of asking the wealthiest 2 percent of Americans to pay more while protecting 98 percent of families and 97 percent of small businesses from any income tax increase—raising $620 billion in revenue. As we move forward to address our ongoing fiscal challenges, both spending cuts and continuing to ask the wealthy to do a little more will be part of a balanced approach. It is critical for our economy and future generations that we reduce the deficit. We cannot keep racking up this debt on our kids. And the President looks forward to working with Republicans to reduce the deficit in a balanced and bipartisan way.
Permanently extends the middle-class tax cuts and also extends credits for working families, with additional measures to protect families and promote economic growth.
- Permanent extension of the middle class tax cuts: This will provide certainty for 114 million households including lower tax rates, an expanded Child Tax Credit, and marriage penalty relief—steps that together will prevent the typical family of four from seeing a $2,200 tax increase next year. In addition, it includes a permanent Alternative Minimum Tax (AMT) fix.
- Most progressive income tax code in decades: By raising income tax rates on the wealthiest and keeping taxes low for the middle class, the agreement will ensure we have the most progressive income tax code in decades.
- Extension of Emergency Unemployment Insurance benefits for 2 million people: The agreement will prevent 2 million people from losing UI benefits in January by extending emergency unemployment insurance benefits for one year.
- Extension of tax cuts for 25 million working families and students: The deal extends President Obama’s expansions of the Child Tax Credit, Earned Income Tax Credit, and the President’s new American Opportunity Tax Credit, which helps families pay for college. The President fought hard to extend these credits, overcoming Republican insistence that income taxes go up by an average of $1,000 for 25 million working families and students. The agreement would extend them for five years.
- Extension of renewable energy incentives, the R&E tax credit and other business incentives: The agreement extends tax relief for businesses through the end of next year. This means extending the Production Tax Credit, a key incentive for renewable energy that many Republicans had been trying to end, as well as the Research & Experimentation tax credit. In addition, the agreement extends 50 percent bonus depreciation, a cost-effective temporary measure to support investment and growth. All of these would be extended through the end of 2013.
- Fixes the SGR (“doc fix”) with no cuts to the Affordable Care Act or to beneficiaries: The agreement avoids a 27 percent cut to reimbursements for doctors seeing Medicare patients for 2013 by fixing the sustainable growth rate formula through the end of next year (the “doc fix”). The President stood firm against Republican proposals to pay for this fix with cuts to the Affordable Care Act or the beneficiaries.
- Postpones the sequester for two months, paid for with $1 of revenue for every $1 of spending, with the spending balanced between defense and domestic: The agreement saves $24 billion, half in revenue and half from spending cuts which are divided equally between defense and nondefense, in order to delay the sequester for two months. This will give Congress time to work on a balanced plan to end the sequester permanently through a combination of additional revenue and spending cuts in a balanced manner.
Raises $620 billion in revenue according to Congress’ Joint Committee on Taxation by achieving the President’s goal of asking the wealthiest 2 percent of Americans to pay more while protecting 98 percent of families and 97 percent of small businesses from any income tax increase.
- Restores the 39.6 percent rate for high-income households, as in the 1990s: The top rate would return to 39.6 percent for singles with incomes above $400,000 and married couples with incomes above $450,000.
- Capital gains rates for high-income households return to Clinton-era levels: The capital gains rate would return to what it was under President Clinton, 20 percent. Counting the 3.8 percent surcharge from the Affordable Care Act, dividends and capital gains would be taxed at a rate of 23.8 percent for high-income households. These tax rates would apply to singles above $400,000 and couples above $450,000.
- Reduced tax benefits for households making over $250,000 (for singles) and $300,000 (for couples): The agreement reinstates the Clinton-era limits on high-income tax benefits, the phaseout of itemized deductions (“Pease”) and the Personal Exemption Phaseout (“PEP”), for couples with incomes over $300,000 and singles with incomes over $250,000. These two provisions reduce tax benefits for high-income households. This sets the stage for future balanced approaches to deficit reduction, which could include additional revenue through tax reforms that reduce tax benefits for Americans making over $250,000.
- Raises tax rates on the wealthiest estates: The agreement raises the tax rate on the wealthiest estates – worth upwards of $5 million per person – from 35 percent to 40 percent, in contrast to Republican proposals to continue the current estate tax levels.
- The agreement’s $620 billion in revenue is 85 percent of the amount raised by the Senate-passed bill, if that bill had been enacted and made permanent: The agreement locks in $620 billion in high-income revenue over the next ten years. In contrast, the bill passed by Democrats in the Senate achieved approximately $70 billion through one-year provisions; these same provisions could have raised a total of $715 billion over ten years if Congress acted again to extend it permanently. However, the Senate bill itself locked in only one year’s worth of savings so would have required additional extensions to achieve those savings.
Part of a balanced process of deficit reduction and stronger growth.
- Strengthens our recovery next year by cutting taxes for the middle-class: The independent, non-partisan Congressional Budget Office (CBO) estimated that allowing the full effect of the “fiscal cliff” would cause our economy to enter a recession and actually shrink next year primarily as a result of higher taxes on the middle class and across-the-board spending cuts. The final agreement prevents taxes from rising on the middle class and delays the across-the-board “sequester.”
- Temporary measures to support consumer spending and business investment: Extending unemployment insurance is one of the more effective ways to encourage consumer spending. And bonus depreciation will give companies incentives to invest.
- Provides greater economic certainty for families and businesses: The agreement will make it easier for families and businesses to plan and will help our economy grow.
- Cuts the deficit and reduces the debt as a share of the economy over the next five years: Since April last year, the President has signed into law 1.7 trillion in deficit reduction, including $700 billion in spending cuts from enacted appropriations bills in 2011 and 2012, and $1 trillion in the Budget Control Act. This tax agreement not only further reduces the deficit, but raises $620 in new revenue from high-income households. Together with a strengthening economy these steps will bring down the deficit as a share of the economy over the next five years.
- Establishes a foundation for additional balanced, pro-growth deficit reduction through tax and entitlement reform: The agreement leaves substantial scope for reducing tax expenditures for high-income households, reforming corporate taxes to broaden the base and cut the rate to make America more competitive, and to take further steps to reform entitlements.
Extends the farm bill through the end of the fiscal year, averting a sharp rise in milk prices at the beginning of 2013.
The White House Office of the Press Secretary
December 31, 2012
Remarks by the President on Fiscal Cliff Negotiations
South Court Auditorium
Eisenhower Executive Office Building
1:45 P.M. EST
THE PRESIDENT: Hello, everybody! (Applause.) Thank you. Please, everybody have a seat. Well, good afternoon, everybody.
AUDIENCE: Good afternoon!
THE PRESIDENT: Welcome to the White House.
AUDIENCE: Thank you!
AUDIENCE MEMBER: Thank you for having us. (Laughter.)
THE PRESIDENT: Now, I realize that the last thing you want to hear on New Year’s Eve is another speech from me. But I do need to talk about the progress that’s being made in Congress today.
For the last few days, leaders in both parties have been working toward an agreement that will prevent a middle class tax hike from hitting 98 percent of all Americans, starting tomorrow. Preventing that tax hike has been my top priority, because the last thing folks like the folks up here on this stage can afford right now is to pay an extra $2,000 in taxes next year. Middle-class families can’t afford it. Businesses can’t afford it. Our economy can’t afford it.
Now, today it appears that an agreement to prevent this New Year’s tax hike is within sight, but it’s not done. There are still issues left to resolve, but we’re hopeful that Congress can get it done. But it’s not done.
And so part of the reason that I wanted to speak to all of you here today is to make sure that we emphasize to Congress and that members of both parties understand that all across America, this is a pressing concern on people’s minds.
Now, the potential agreement that’s being talked about would not only make sure that taxes don’t go up on middle-class families, it also would extend tax credits for families with children. It would extend our tuition tax credit that’s helped millions of families pay for college. It would extend tax credits for clean energy companies that are creating jobs and reducing our dependence on foreign oil. It would extend unemployment insurance to 2 million Americans who are out there still actively looking for a job.
I have to say that ever since I took office, throughout the campaign, and over the last couple of months, my preference would have been to solve all these problems in the context of a larger agreement, a bigger deal, a grand bargain — whatever you want to call it — that solves our deficit problems in a balanced and responsible way, that doesn’t just deal with the taxes but deals with the spending in a balanced way so that we can put all this behind us and just focusing on growing our economy.
But with this Congress, that was obviously a little too much to hope for at this time. (Laughter.) It may be we can do it in stages. We’re going to solve this problem instead in several steps.
Last year in 2011, we started reducing the deficit through $1 trillion in spending cuts. Those have already taken place. The agreement being worked on right now would further reduce the deficit by asking the wealthiest 2 percent of Americans to pay higher taxes for the first time in two decades, so that would add additional hundreds of billions of dollars to deficit reduction. So that’s progress, but we’re going to need to do more.
Keep in mind that just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans. Obviously, the agreement that’s currently being discussed would raise those rates and raise them permanently. (Applause.)
But keep in mind, we’re going to still have more work to do. We still have deficits that have to be dealt with. We’re still going to have to think about how we put our economy on a long-term trajectory of growth, how we continue to make investments in things like education, things like infrastructure that help our economy grow.
And keep in mind that the threat of tax hikes going up is only one part of this so-called fiscal cliff that everybody has been talking about. What we also have facing us starting tomorrow are automatic spending cuts that are scheduled to go into effect. And keep in mind that some of these spending cuts that Congress has said will automatically go into effect have an impact on our Defense Department, but they also have an impact on things like Head Start. And so there are some programs that are scheduled to be cut that we’re using an axe instead of a scalpel — may not always be the smartest cuts. And so that is a piece of business that still has to be taken care of.
And I want to make clear that any agreement we have to deal with these automatic spending cuts that are being threatened for next month, those also have to be balanced — because remember, my principle has always been let’s do things in a balanced, responsible way. And that means that revenues have to be part of the equation in turning off the sequester, in eliminating these automatic spending cuts, as well as spending cuts.
Now, the same is true for any future deficit agreement. Obviously, we’re going to have to do more to reduce our debt and our deficit. I’m willing to do more, but it’s going to have to be balanced. We’re going to have to do it in a balanced, responsible way.
For example, I’m willing to reduce our government’s Medicare bills by finding new ways to reduce the cost of health care in this country. That’s something that we all should agree on. We want to make sure that Medicare is there for future generations. But the current trajectory of health care costs is going up so high we’ve got to find ways to make sure that it’s sustainable.
But that kind of reform has to go hand-in-hand with doing some more work to reform our tax code so that wealthy individuals, the biggest corporations can’t take advantage of loopholes and deductions that aren’t available to most of the folks standing up here — aren’t available to most Americans. So there’s still more work to be done in the tax code to make it fairer, even as we’re also looking at how we can strengthen something like Medicare.
Now, if Republicans think that I will finish the job of deficit reduction through spending cuts alone — and you hear that sometimes coming from them, that sort of after today we’re just going to try to shove only spending cuts down — well — (laughter) — shove spending cuts at us that will hurt seniors, or hurt students, or hurt middle-class families, without asking also equivalent sacrifice from millionaires or companies with a lot of lobbyists, et cetera — if they think that’s going to be the formula for how we solve this thing, then they’ve got another thing coming. That’s not how it’s going to work. We’ve got to do this in a balanced and responsible way. And if we’re going to be serious about deficit reduction and debt reduction, then it’s going to have to be a matter of shared sacrifice — at least as long as I’m President. And I’m going to be President for the next four years, I think, so — (applause.)
So, anyway, for now, our most immediate priority is to stop taxes going up for middle-class families, starting tomorrow. I think that is a modest goal that we can accomplish. Democrats and Republicans in Congress have to get this done, but they’re not there yet. They are close, but they’re not there yet. And one thing we can count on with respect to this Congress is that if there’s even one second left before you have to do what you’re supposed to do — (laughter) — they will use that last second.
So, as of this point, it looks like I’m going to be spending New Year’s here in D.C.
AUDIENCE: Awww —
THE PRESIDENT: You all are going to be hanging out in D.C., too. (Laughter.) I can come to your house? Is that what you said? (Laughter.) I don’t want to spoil the party.
AUDIENCE MEMBER: You are the party. (Laughter.)
THE PRESIDENT: But the people who are with me here today, the people who are watching at home, they need our leaders in Congress to succeed. They need us to all stay focused on them — not on politics, not on special interests. They need to be focused on families, students, grandmas, folks who are out there working really, really hard and are just looking for a fair shot and some reward for that hard work.
They expect our leaders to succeed on their behalf. So do I. And so, keep the pressure on over the next 12 hours or so. Let’s see if we can get this thing done.
And I thank you all. And if I don’t see you, if I don’t show up at your house — (laughter) — I want to wish everybody a Happy New Year. Thank you very much. (Applause.)
1:56 P.M. EST