Middle Class Tax Relief Act of 2010

[Guest LAW]

The House of Representatives took a critical step toward providing tax relief and economic certainty to middle-income families today by passing the Middle Class Tax Relief Act of 2010. Provisions included in the legislation would extend expiring tax relief targeted to middle-income families.

"Today the House took a critical step forward for hardworking middle-income families in need of economic certainty and security," said Ways and Means Committee Chairman Sander M. Levin (D-MI). "Republicans wanted to keep middle-income tax cuts hostage, to combine them with tax cuts for the wealthiest few, but today we freed millions of middle-income families from this hostage situation. This bill is about one thing – tax cuts for people and businesses struggling to rebuild in the wake of a recession. Provisions in this bill will lower taxes for every American taxpayer and small business to help them grow and create jobs.

"Today the House did the right thing and stood up for those families and businesses and I urge my colleagues in the Senate to follow suit and pass this tax relief immediately."

[Guest LAW]

Summary of the Middle Class Tax Relief Act of 2010

 

On February 12, 2010, President Obama signed H.J. Res. 45, the Statutory Pay-As-You-Go Act of 2010, into law (P.L. 111-139). The Statutory Pay-As-You-Go-Act of 2010 established a budget enforcement mechanism requiring that direct spending and revenue legislation enacted into law not increase the deficit. Recognizing that numerous tax provisions benefiting the middle class were scheduled to expire at the end of 2010 and that extending these provisions enjoyed broad bipartisan support, the Statutory Pay-As-You-Go Act of 2010 provided that extensions of these provisions would not be subject to the new budget enforcement mechanism. This bill extends these provisions consistent with the provisions of the Statutory Pay-As-You-Go Act of 2010 (i.e., extensions of provisions that apply to adjusted gross income of less than $200,000 ($250,000 in the case of joint filers).

 

I. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF

 

Two-year extension of alternative minimum tax relief. The alternative minimum tax (“AMT”) has the effect of taking back many of the benefits of the 2001 and 2003 tax cuts. In order to ensure that middle-class taxpayers are able to enjoy the benefits of extending these tax cuts, the bill would extend AMT relief for nonrefundable personal credits and increasing the AMT exemption amount to $72,450 for joint filers and $47,450 for individuals in 2010 and 2011. This will protect more than 25 million families from the AMT. This proposal is estimated to cost $134.609 billion over 10 years.

 

II. EXTENSION OF THE 2001 AND 2003 TAX CUTS

 

Permanent extension of marginal individual income tax rate reductions for middle-class taxpayers. The Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”) created a new 10-percent regular income tax bracket for a portion of taxable income that was previously taxed at 15 percent. EGTRRA also reduced the other regular income tax rates of 28%, 31% 36% and 39.6% to 25%, 28%, 33%, and 35%, respectively. These marginal individual income tax rate reductions are scheduled to expire for taxable years beginning after December 31, 2010. The bill would permanently extend the 10%, 25% and 28% rate brackets. It also permanently extends the 33% rate bracket to the extent that this bracket applies to income of $200,000 or less for single filers ($250,000 or less for joint filers). This proposal is estimated to cost $655.414 billion over 10 years.

 

Permanent reduced capital gains and dividend tax relief for middle-class taxpayers. The bill would make permanent the temporarily reduced rates on capital gain and dividend income for taxpayers with adjusted gross income up to $200,000 for single filers and adjusted gross income up to $250,000 for married couples filing jointly. The bill would maintain the current 15% rate for middle-class taxpayers. For taxpayers with income above $200,000 ($250,000 for married couples filing jointly), the capital gains rate would revert to the pre-tax cut rate of 20%, and the dividend rate would revert to the pre-tax cut ordinary income rates. This proposal is estimated to cost $99.113 billion over 10 years.

 

Permanent extension of EGTRRA and ARRA improvements to child tax credit. EGTRRA doubled the value of the child tax credit from $500 to $1,000, allowed the child tax credit to be claimed against the alternative minimum tax, and enhanced the refundable child tax credit. The American Recovery and Reinvestment Act of 2009 (“ARRA”) further enhanced the refundable child tax credit by allowing taxpayers to begin claiming the refundable credit once the taxpayer has received $3,000 of earned income (e.g., wages, tips, salaries). All of these enhancements are scheduled to expire for taxable years beginning after December 31, 2010. The bill would permanently extend these enhancements. This proposal is estimated to cost $432.748 billion over 10 years.

 

Permanent extension of PEP and Pease relief for middle-class taxpayers. Prior to 2010, certain taxpayers were subject to limitations on the amount that they could claim with respect to itemized deductions (the “Pease” limitation) and personal exemptions (the “PEP” limitation). These limitations reduced the value of itemized deductions and personal exemptions based on the amount that the taxpayer’s adjusted gross income exceeded a specific threshold. EGTRRA gradually phased out these limitations and these limitations were fully repealed in 2010. However, these limitations are scheduled to come back in full force for taxable years beginning after December 31, 2010. The bill would permanently set the threshold at which these limitations apply so that taxpayers with adjusted gross income under $200,000 ($250,000 for a married couple filing jointly), adjusted for inflation, would not be subject to these limitations. This proposal is estimated to cost $10.161 billion over 10 years.

 

Permanent marriage penalty relief for middle-class taxpayers. A “marriage penalty” exists when the combined tax liability of a married filing a joint return is greater than the sum of the tax liabilities of each individual computed as if they were not married. Prior to EGTRRA, numerous marriage penalties existed in the tax code. Among other things, EGTRRA increased the basic standard deduction for a married couple filing a joint return to twice the basic standard deduction for an unmarried individual filing a single return and also increased the size of the 15% regular income tax bracket for a married couple filing a joint return to twice the size of the corresponding rate bracket for an unmarried individual filing a single return. The bill would permanently extend this tax relief. This proposal is estimated to cost $85.713 billion over 10 years.

Permanent earned income tax credit simplification and increase. The bill would make permanent certain EGTRRA modifications and ARRA modifications to the earned income tax credit. The bill would retain the EGTRRA provisions to simplify the definition of earned income; simplify the relationship test, simplify the tie-breaking rule; provide additional math error authority for the IRS; repeal the prior-law provisions that would reduce an taxpayer’s earned income tax credit by the amount of the taxpayer’s AMT liability; and increase the beginning and ending points of the credit phase-out for married taxpayers. The bill would also make permanent the ARRA provision that increases the beginning point of the phase-out range for all married couples filing a joint return (regardless of the number of children) by $1,880. This proposal is estimated to cost $54.969 billion over 10 years.

 

Permanent extension of education tax incentives. The bill would make permanent certain modifications to the suite of education tax incentives included in the EGTRRA. Included in this extension would be the deduction of student loan interest (maximum of $2,500) for single filers with adjusted gross income up to $75,000 and married couples filing jointly with adjusted gross income of $150,000; allowance of up to $2,000 in contributions per beneficiary to a tax-preferred Coverdell education savings account for qualified education expenses; and extensions of tax-preferences for certain bond-financing mechanisms for education facilities. This proposal is estimated to cost $18.739 billion over 10 years.

 

Permanent extension of tax benefits for families and children. The bill would make permanent certain tax benefits for families and children enacted in the EGTRRA, including: the maximum $13,170 adoption tax credit (as well as the maximum exclusion of $32,170 per eligible child), the employee tax credit for employee child care (25 percent of qualified expenses for employee child care and 10 percent of qualified expenses for child care resource and referral services), and the increased dependent care tax credit (35% of up to $3,000 of eligible expenses for one qualifying individual up to $1,050, and 35% of up to $6,000 of eligible expenses for two or more qualifying individuals up to $2,100). This proposal is estimated to cost $6.314 billion over 10 years.

 

Permanent extension of enhanced small business expensing. The bill would make permanent the increased small business expensing amounts set to expire at the end of 2010 that were enacted prior to the ARRA and prior to the “Small Business Jobs Act of 2010”. In order to help small businesses quickly recover the cost of certain capital expenses, small business taxpayers may elect to write-off the cost of these expenses in the year of acquisition in lieu of recovering these costs over time through depreciation. The bill would provide that small business taxpayers be allowed to write-off up to $125,000 (indexed for inflation) of capital expenditures subject to a phase-out once capital expenditures exceed $500,000 (indexed for inflation). This proposal is estimated to cost $25.474 billion over 10 years.

[Guest ALWAYSRED]

The ball was in your court and you whiffed it away.

 

Camp Floor Statement: H.R. 4853- Middle Class Tax Relief Act of 2010

 

The unemployment rate in October, the latest data available, was 9.6 percent.

 

That marked 15 consecutive months we were at or above 9.5 percent unemployment in this country – the longest period since the Great Depression.

 

All told, 48 out of 50 states have lost jobs since the so-called $1 trillion stimulus bill and nearly 15 million Americans remain unemployed.

 

What is the Democrats’ answer to the Great Recession? Increase taxes. But not just any taxes. Democrats, in the bill before us today, are targeting half of all small business income in the country. Democrats are targeting the very employers we need hiring more workers and buying more equipment – not paying more taxes.

 

Let’s face it – this bill is as misguided as it is futile. This is the wrong policy at the wrong time and the Majority is wrong to bring it to the floor today. In fact, many of their own members agree with me. I have here in my hand a letter signed by over 30 Democrat members of the House. Let me read what they wrote.

 

“In recent weeks, we have heard from a diverse spectrum of economists, small business owners, and families who have voiced their concerns that raising any taxes right now could negatively impact economic growth. Given the continued fragility of our economy and slow pace of our recovery, we share their concerns.”

 

I want to repeat that: “…raising any taxes right now could negatively impact economic growth.”

 

Madame Speaker, I ask unanimous consent that this letter be submitted into the record.

 

Set aside for a minute the economists and the political rhetoric and let’s look at what small businesses say about the impact of this tax-hiking legislation. According to the National Federation of Small Business, “the businesses most likely to face a tax increase by raising the top two rates are businesses employing between 20 and 250 employees. According to U.S. Census data, businesses with between 20 and 299 workers employ more than 25 percent of the total workforce.”

 

Those who are most likely to be hit by these tax increases employ 1 out of every 4 workers in this nation. This Democrat tax hike is putting a target on the back of every worker in every small business in America.

 

As for the futility of this exercise, it would be comical if it weren’t so irresponsible. Democrats can barely muster the votes for this bill in the House. I’m told they had to whip the bill and hold a special caucus this morning just to move forward. Their position is so precarious they won’t even allow Republicans to offer amendments or any alternative. Why? Because Democrats know the Republican bill to extend the current tax rates for all taxpayers would pass with broad bipartisan support.

 

So, once again House Democrats have closed down the amendment process in order to pass a bill that will never see the light of day in the Senate. Just yesterday, 42 Senators sent a letter to Majority Leader Reid and stated in no uncertain terms that they “will not agree to invoke cloture on the motion to proceed to any legislative item until the Senate has acted to fund the government and we have prevented the tax increase that is currently awaiting all American taxpayers.” Madame Speaker, I ask unanimous consent that this letter be entered into the record.

 

Clearly, this bill is going nowhere. Democrats are wasting time, while Americans look for work. Democrats are playing games, while Americans struggle to make ends meet. The American people did not send us here to posture; they sent us here to provide solutions.

 

I had hoped that after the election we would get down to working together to solve the serious problems Americans are facing. That is why I was encouraged by the President agreeing to have Republicans and Democrats, House and Senate members sit down with his Administration to hammer out a deal on these expiring tax rates. I thought: maybe we have turned a corner.

 

Instead of letting that process work itself out, instead of working with Republicans to prevent job-killing tax increases, House Democrats are back at it again – putting politics ahead of everything else. This is a time for serious negotiations and solutions, not political stunts. Far too much is a stake, far too many families are out of work and far too many families will soon see real and sizeable amounts of money taken out of their paychecks if the Democrats continue with these games.

 

I urge my colleagues to reject this Democrat tax hike, this job-killing tax hike.

[Guest LAW]

I did not realize you even wanted to play.

 

Here’s a primer on the rhetoric the Republicans are using in the fight to hold tax cuts for middle-class Americans hostage.

 

Whopper #1: We don’t have a taxing problem; we have a spending problem.

 

TRUTH: A decade of Republican rule in Washington nearly doubled the national debt, and turned a record surplus into a record deficit. It’s time to stop exploding the deficit with a $700 billion giveaway to the wealthiest Americans – which economists have shown has not trickled down to the Middle Class.

 

Whopper #2: Democrats want to raise taxes on America’s small businesses.

 

TRUTH: Led by Democrats, this Congress has cut taxes eight times for small businesses – over the objections of Republicans.

 

Not giving a deficit-busting tax cut to the wealthiest few would ALSO not affect the vast majority of America’s small businesses. The nonpartisan Pulitzer Prize-winning PolitiFact labeled this GOP claim a “pants on fire” falsehood. As PolitiFact concluded:

 

Two independent studies that looked at the impact of the Democratic proposal on small businesses found that only between 2 to 3 percent of tax filers who report having what can be thought of as small business income will be affected.

 

Whopper #3: Okay so it’s only 3% of small businesses – but that 3% includes 750,000 businesses and accounts for 50% of small business income.

 

TRUTH: Who are they? Included in that small percentage of “small businesses” affected (2-3 percent) is anyone who receives any type of partnership or business income – and many of them are not what you would consider “small business owners.” They include hedge fund managers, private equity fund managers, owners of privately held multinational companies, lobbyists, and partners in major law firms.

 

Whopper #4: Tax cuts for the rich create jobs.

 

TRUTH: America is just starting to come out of the worst economy since the Great Depression after a decade of a giant tax cut for the rich. Conversely, we had our strongest economy in years – creating 22 million jobs – and four years of budget surpluses at the end of the Clinton administration. Democrats would like to return to that kind of economic growth, deficit control, and tax rate for the wealthiest few.

 

In fact, top economists have busted the myth that tax cuts for the rich create jobs.

 

Alan Blinder, Co-Director of Princeton University’s Center for Economic Policy Studies and former Vice Chairman of the Fed

“Not all budgetary dollars are created equal. Some have a lot of bang for the buck, and some have very little. The GDP increase per dollar of budgetary cost is in the range of 1.6, 1.7 for things like food stamps and unemployment benefits, and in the range of .35 for extending the Bush tax cuts. We could get some substantial job creation by simply reprogramming the $75 billion that would be saved over the next two years by not extending the upper-bracket Bush tax cuts and spending it instead on unemployment benefits, food stamps, and the like.”

 

William Gale, Co-Director of the Tax Policy Center

“Are there other ways to use that same amount of money that would give a bigger bang for the buck? The answer is definitely yes…Extending the Bush tax cuts came in No. 11 [in a recent CBO analysis] – the worst option, the lowest bang for the buck of any of the other options.”

 

Paul Krugman, New York Times Columnist and Winner of Nobel Prize for Economics

“…it’s hard to think of a less cost-effective way to help the economy than giving money to people who already have plenty, and aren’t likely to spend a windfall.”

 

Whopper # 5: We shouldn’t raise taxes on Americans in a recession.

 

TRUTH: That’s not what’s being proposed. Congressional Democrats and President Obama will permanently cut taxes for 98 percent of Americans and 97 percent of small businesses – and help get the Bush deficit under control.

[Guest NAM]

The National Association of Manufacturers (NAM) Executive Vice President Jay Timmons issued the following statement today on the Middle Class Tax Relief Act of 2010 (HR 4853):

 

“Manufacturers oppose the Middle Class Tax Relief Act of 2010 because it would result in a tax increase for many manufacturers. The tax relief enacted in 2001 and 2003 played a key role in stimulating our economy as it repealed the estate tax and lowered both the individual tax rates and tax rates on investment.

 

Unfortunately, the House bill being voted on today does not include this critical relief. As a result, in January 2011 many manufacturers will see a top tax rate of nearly 40 percent, a 164 percent increase in the dividend tax and the return of a 55 percent estate tax on family-held companies.

 

Over 70 percent of American manufacturers file as S-corporations or some other pass thru-entity and will be significantly impacted by these higher rates. Americans want jobs, and this bill will only hinder job creation and economic growth.

 

Manufacturers strongly support extending the 2001 and 2003 tax rates for all taxpayers. According to the non-partisan Congressional Budget Office, fully extending the 2001 and 2003 tax cuts would add between 600,000 and 1.4 million jobs in 2011 and between 900,000 and 2.7 million jobs in 2012.

 

We will continue to work with Congress and the Administration to find a path forward on extending all the current tax rates.”

[Guest PBSNewsHour]

House Democrats passed a continuation of tax cuts aimed at the middle class, but that largely symbolic vote appears headed for certain blockage in the Senate as Republicans push for extended cuts in all income groups. Judy Woodruff looks at how the tax cut battle is playing out in the lame-duck Congress.

[Guest ALWAYS RED]

Today, the U.S. Department of Labor released yet another “weak,” “disappointing,” “ugly” jobs report showing that the unemployment rate ticked up to 9.8 percent in the month of November, leaving 15.1 million Americans out of work. With the unemployment rate stuck at or above 9.5 percent for 16 straight months – the longest stretch since the Great Depression - it’s clear to everyone that the last thing Washington should be doing right now is raising taxes – everyone, that is, except Democrats in Washington.

 

Today’s sobering jobs report comes just one day after House Democrats voted to impose a job-killing tax hike on American families and small businesses - a plan favored by their liberal allies - despite warnings by economists and small business owners that doing so would only make it harder to create jobs:

 

“mall business owners, like Drew Greenblatt, would be hit too. When ABC News visited his 30-employee wire basket company in Baltimore earlier this year, he said an increase in the top tax rate would cost him about $40 thousand -- and likely at least one employee.

 

“‘This is going to pull cash out of our company so we are going to have less money to invest,’ Greenblatt said. ‘We have less money to hire more people.’

 

“And today, Bob McCutcheon, who runs an apple orchard in Frederick, Md., told ABC News an increase in the top rate would hurt his ability to expand and hire more workers.

 

“‘I think if they voted tomorrow to not extend the tax cuts, I think that would really affect us in terms of our expansion,’ McCutcheon said.” (ABC News, 12/2/10)

 

Last month, America sent a message to Washington Democrats that they will no longer tolerate a Congress that puts its own agenda ahead of the people’s top priorities – cutting spending and creating jobs. For months, Republicans have been calling on Democrats to allow an up-or-down vote on stopping all the tax hikes, but Democrats proved yesterday that they are still desperately clinging to the politically-driven, job-killing agenda the American people voted against – with devastating consequences for our nation’s economy. Enough is enough. As economist Douglas Holtz-Eakin notes in a National Review post “this [jobs report] is an alarm bell for the lame-duck Congress. No more games — extend all the tax cuts for two years, patch the AMT, and turn to cutting spending and tax reform.”

[Guest Jim Scheibel]

The fact that there is even a debate about this astounds me. Middle class families have been struggling for two years now, while the wealthiest 1%, those that may reap the benefits from the Republican tax cuts, actually increased their overall wealth.

 

They made money during a recession and now they want a tax cut? That’s just plain and pure greed. This just goes to show where Republicans priorities lie. They block unemployment benefits for Americans families who are suffering, while demanding tax cuts for millionaires.

[Guest Mitch]

Some in Congress are proving that they're willing to put politics over people, no matter what the cost.

[Guest human]

I've been stating that for years about the Democrats, and the American public just seemed not to care.

 

Even with the Republicans holding unto the house; the companies out there are still going to be squeamish about getting into this economy. Why?

 

Obama Administration, and that's another key. It's going to be a rocky road back any way you look at it. At least the democrats can't keep on doing social re-engineering at every ones expense.

 

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Some in Congress are proving that they're willing to put politics over people, no matter what the cost.

[Guest American4Progress]

Financial firms like Goldman Sachs are discussing moving up bonus payouts from next year to this month, underscoring the industry's focus on "protecting every dollar. Without the extension, a typical worker who earns a $1 million bonus would pay $40,000 to $50,000 more in taxes next year than this year, depending on base salary.

 

http://www.nytimes.com/2010/12/06/business/06bonus.html

[Guest human]

Oh God!! Red, My group wants me back in. I Told them NO THANK YOU. It's nice being in the private sector.

 

The pay is a heck of alot better, and I am having fun. Wait till the general public gets a look at the unemployment rate for the next quarter.

 

I disected the stats, and it's worse then I thought.

 

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Today, the U.S. Department of Labor released yet another “weak,” “disappointing,” “ugly” jobs report showing that the unemployment rate ticked up to 9.8 percent in the month of November, leaving 15.1 million Americans out of work. With the unemployment rate stuck at or above 9.5 percent for 16 straight months – the longest stretch since the Great Depression - it’s clear to everyone that the last thing Washington should be doing right now is raising taxes – everyone, that is, except Democrats in Washington.

 

Today’s sobering jobs report comes just one day after House Democrats voted to impose a job-killing tax hike on American families and small businesses - a plan favored by their liberal allies - despite warnings by economists and small business owners that doing so would only make it harder to create jobs:

 

 

 

Last month, America sent a message to Washington Democrats that they will no longer tolerate a Congress that puts its own agenda ahead of the people’s top priorities – cutting spending and creating jobs. For months, Republicans have been calling on Democrats to allow an up-or-down vote on stopping all the tax hikes, but Democrats proved yesterday that they are still desperately clinging to the politically-driven, job-killing agenda the American people voted against – with devastating consequences for our nation’s economy. Enough is enough. As economist Douglas Holtz-Eakin notes in a National Review post “this [jobs report] is an alarm bell for the lame-duck Congress. No more games — extend all the tax cuts for two years, patch the AMT, and turn to cutting spending and tax reform.”

[Guest Mere Dog]

Apparently because of the results of the last election the consensus of the majority of those who voted were to protect the wealthy from paying more in taxes and to stop unemployment benefits for the poor and needy. Hope you guys are happy.

 

[Guest Arnold]

Why do you think that Republicans are fighting so hard for tax breaks for the rich. Because that will stimulate investment in jobs? No! Because it will stabilize the economy? No! It is for the very reason that it WILL increase the deficit, forcing program cuts. Will those program cuts effect the rich? Why, certainly not! It will be the poor, the middle class, and the workers of America who will bear the burden of those cuts. The rich will still be sending jobs overseas where labor is cheaper, and they don’t have to pay benefits. When will we wake up? We are being sold a bill of goods about the economy! We have been convinced that we have to cow-tow to the rich, or we might not get a handout.

[Guest LAW]

The President had to compromise in order to help the working class.

 

U.S. Senate Republican Leader Mitch McConnell made the following statement Monday regarding a framework of a bipartisan agreement to prevent tax hikes on every American taxpayer :

 

“I appreciate the determined efforts of the President and Vice President in working with Republicans on a bipartisan plan to prevent a tax hike on any American and in creating incentives for economic growth. Their efforts reflect a growing bipartisan belief that a new direction is needed if we are to revive the economy and help put millions of Americans back to work. Members of the Senate and House will review this bipartisan agreement, but I am optimistic that Democrats in Congress will show the same openness to preventing tax hikes the administration has already shown."

[Guest LAW]

Sen. Bernie Sanders (I-Vt.) issued the following statement today on the agreement announced Monday between the White House and congressional Republicans:

 

“In my view, it is a moral outrage that at a time when this country has a $13.8 trillion national debt, a collapsing middle class and a growing gap between the very rich and everybody else that the Republicans would deny extended unemployment benefits to 2 million workers who are desperately struggling to pay their bills and maintain their dignity. It is also beyond comprehension that the Republicans would hold hostage the entire middle class of this country so that millionaires and billionaires would receive huge tax breaks. In my view, that is not what this country is about and it is not what the American people want to see. Our job is to save the disappearing middle class, not lower taxes for people who are already extraordinarily wealthy and increase the national debt that our children and grandchildren would have to pay.

“The immediate political task in front of us is to rally the American people so that in the next several weeks we can find at least a few Republicans who will join us in saying no to increasing the deficit by giving tax breaks to the wealthy and no to holding the unemployed and the middle class hostage.

 

“I believe that we have the American people on our side on this issue. My office, and I come from a small state, has received more than 600 calls today, 99 percent of them in opposition to this so-called compromise that the president negotiated with the Republicans.

 

“I will do everything in my power to stand up for the American middle class and defeat this agreement.”

[Guest LAW]

Even Republican Senator Jim DeMint does like this deal.

 

I don’t want to second-guess my leadership, but frankly, I think we need to come away with a lot better than this. We cannot increase the deficit, or keep increasing deficit spending. So again, I’m trying not to be too hard on the people who’ve done this, but we’ve worked too hard, and Americans worked too hard to elect us. And like you said, I think our new members should have a say in what we’re doing here. So it wouldn’t hurt my feelings at all if we pushed this whole things into next year.

 

I’ve talked to a number of the conservatives today who have grave concerns. I know a lot of them won’t vote for it unless it’s paid for. I don’t think the Democrats are going to cut spending enough to pay for this, because it’s getting close to $200 billion dollars in more deficit spending. So I think there’s going to be a lot of fallout on the Republican side.

[Guest LAW]

Remarks by President Obama and Former President Clinton
James S. Brady Press Briefing Room

4:20 P.M. EST

PRESIDENT OBAMA: Hey, everybody. I thought it was a slow day, so I’ve --

Q Slow news day, huh?

PRESIDENT OBAMA: -- bring the other guy in.

Obviously, there’s a big debate going on about taxes, and about the need to grow the economy and to create jobs. And just about every day this week, I’ve been making an argument as to why the agreement that we’ve struck to provide billions of dollars in payroll tax cuts that can immediately help rejuvenate the economy, as well as tax cuts for middle-class families, unemployment insurance for folks who desperately need it, credits for college, Child Tax Credits, as well as a range of business investments credits are so important to make sure that we keep this recovery moving.

I just had a terrific meeting with the former President, President Bill Clinton. And we just happened to have this as a topic of conversation. And I thought, given the fact that he presided over as good an economy as we’ve seen in our lifetimes, that it might be useful for him to share some of his thoughts.

I’m going to let him speak very briefly. And then I’ve actually got to go over and do some -- just one more Christmas party. So he may decide he wants to take some questions, but I want to make sure that you guys hear it from him directly.

FORMER PRESIDENT CLINTON: Thank you very much, Mr. President. First of all, I feel awkward being here, and now you’re going to leave me all by myself. (Laughter.)

Let me just say a couple of things. First of all, I still spend about an hour a day trying to study this economy. And I’m not running for anything, and I don’t have a political agenda. I just -- I try to figure out what to do.

I have reviewed this agreement that the President reached with Republican leaders. And I want to make full disclosure I make quite a bit of money now, so the position that the Republicans have urged will personally benefit me. And on its own, I wouldn’t support it because I don’t think that my tax cut is the most economically efficient way to get the economy going again. But I don’t want to be in the dark about the fact that I will receive the continuation of the tax rates.

However, the agreement taken as a whole is, I believe, the best bipartisan agreement we can reach to help the largest number of Americans, and to maximize the chances that the economic recovery will accelerate and create more jobs, and to minimize the chances that it will slip back, which is what has happened in other financial collapses. Like, that’s what Japan faced, and it’s something that we have to avoid in America.

Why do I say that? First of all, because clearly the extension of unemployment, which gives people a percentage of the income they were previously making, will -- that money will be spent and it will bolster the economy for the next couple of years.

Secondly, the conversion of the Make Work Pay Tax Credit, which the President passed before, which goes to -- went to 95 percent of the American people, converting that into an $120 billion one-year payroll tax relief act is, according to all the economic analyses, the single most effective tax cut you can do to support economic activity. This will actually create a fair number of jobs. I expect it to lower the unemployment rate and keep us going.

Thirdly, and one thing I haven’t seen much about in the reports, this agreement will really help America over the long term, because it continues the credits for manufacturing jobs related to energy coming in to America. And I’ll remind you, just in the last two years, there have been 30 high-powered battery factories either opened or presently being built in America, taking us from 2 to 20 percent of the world’s share of that. And we’re going to probably be at 40 percent by 2014. This is a really important thing, bringing manufacturing back to America, because it’s a huge multiplier to create new jobs.

So in my opinion, this is a good bill. And I hope that my fellow Democrats will support it. I thank the Republican leaders for agreeing to include things that were important to the President.

There is never a perfect bipartisan bill in the eyes of a partisan. And we all see this differently. But I really believe this will be a significant net-plus for the country. I also think that in general a lot of people are heaving a sigh of relief that there’s finally been some agreement on something.

But don't minimize the impact of the unemployment relief for working families, of the payroll tax relief, and of the continuation of the incentives to grow jobs, which will trigger more credit coming out of the banks.

Keep in mind, ultimately the long-term answer here is to get the $2 trillion, which banks now have in cash reserves uncommitted to loans, out there in the economy again, the $1.8 trillion in corporate treasuries not now being invested out there in the economy again. I think this is a net-plus.

And you know how I feel. I think the people that benefit most should pay most. That's always been my position -- not for class warfare reasons; for reasons of fairness in rebuilding the middle class in America. But we have the distribution of authority we have now in the Congress and what we’re going to have in January, and I think this is a much, much better agreement than would be reached were we to wait until January. And I think it will have a much more positive impact on the economy.

So for whatever it’s worth, that's what I think.

PRESIDENT OBAMA: That’s worth a lot.

FORMER PRESIDENT CLINTON: I would like to say one other thing on another subject, just to be recorded on the record. They don't need my support on this because we have some good Republican support, including the first President Bush. I think this START agreement is very important to the future of our national security.

And it is not a radical agreement. Boris Yeltsin and I agreed in principle on this same reduction, and there was no way in the wide world he could get it through the Russian Duma that existed at the time in his second term. So we didn't proceed because it couldn’t be ratified there. I’m not sure the Senate would have ratified it then, but I think they will not with enough encouragement.

But the cooperation that we will get from the Russians, and the signal that will be sent to the world on nonproliferation, when all these other things are going on which threaten to increase nuclear proliferation, is very important. One of the things you know is that when people fool with these weapons, they're expensive to build, expensive to maintain, and expensive to secure the material that goes into making the weapons.

This is something that is profoundly important. This ought to be way beyond party. They’ve worked very hard. They’ve worked out, in my opinion, the details. And I hope it will be ratified.

Q Mr. President.

FORMER PRESIDENT CLINTON: Yes.

Q First of all, a lot of Democrats on Capitol Hill say this is a bad deal; that President Obama could have gotten more. What’s your message to them? And then if I could also just ask -- well, go ahead. You can answer --

FORMER PRESIDENT CLINTON: First, my message is, I don't believe that's true because in January, they will be in the majority. And this would dramatically reduce their incentive to extend unemployment benefits, to support the conversion of the Make Work Pay tax credits President Obama enacted into this payroll tax deduction, which as I said, I read all these economic studies. Every single, unbiased, economic study says the best thing you can do if you’re going to take a tax-cut path to grow the economy is to give payroll tax relief.

I just got back from a trip to Asia with my foundation. Hong Kong, super free-market place, had a stimulus. Well, I guess we’re not supposed to use that word any more. (Laughter.) You know what they did? They gave almost 10 percent of the people -- low-income, working people -- two months free rent in public housing. They gave some money to the seniors. But the most important thing they did was payroll tax relief for a year.

This is -- all the people who study this believe it’s the number one thing, so I don't believe they can get a better deal by waiting.

And I think the other thing that nobody is talking about, but I’m telling you it’s important, I live out there now, and I do a lot of this energy work, these tax credits have made us competitive again.

I didn't see a single story that credited Senator Reid’s election with the fact that with three weeks before the election, two new plants were announced in Nevada, which has the highest unemployment rate in the state, a thousand people making LED lights, a thousand people making wind turbines for that big wind farm in Texas, both companies owned by Chinese interests who said in no uncertain terms we’re here because you decided to compete with us for the future, and you gave us tax credits so we can pay higher labor costs because we save the transportation costs because of these credits. I don't believe there is a better deal out there.

Q And then as a follow-up, you mentioned the Republican Congress taking office in January. What was your advice to President Obama today about how to deal with the Congress from the opposition party?

FORMER PRESIDENT CLINTON: I have a general rule which is that whatever he asked me about my advice, and whatever I say should become public only if he decides to make it public. He can say whatever he wants, but --

Q What do you think? (Laughter.)

PRESIDENT OBAMA: Here’s what I’ll say, is I’ve been keeping the First Lady waiting for about half an hour, so I’m going to take off, but --

FORMER PRESIDENT CLINTON: I don't want to make her mad, please go.

PRESIDENT OBAMA: You’re in good hands, and Gibbs will call last question.

FORMER PRESIDENT CLINTON: Yes, help me. Thank you.

Yes, go ahead.

Q Mr. President, is there anything else that can be done in your opinion to loosen up the private credit markets that have been so tight? I mean if people can’t get their hands on capital, how can they be the entrepreneurs that they want to be? And this is something that the Republicans have fought all along. What’s the next step?

FORMER PRESIDENT CLINTON: First of all, let me just run through the numbers again. We’re not talking about high-risk stuff. That's what the financial regulation bill tries to stop and charges the federal regulators with -- even if the Wall Street banks get -- we all know they have to be able to have more leverage than the traditional community banks tend to want up in the Dakotas or Arkansas or anyplace else.

But let’s start with the community banks. If they loan money conservatively, they can loan $10 for every dollar they have in the bank. If they have $2 trillion uncommitted to loans, even though some of them may have a few mortgage issues unresolved, most of that mortgage debt has been off-loaded to Fannie Mae or Freddie Mac or has vanished into cyber-sphere with those securitized subprime mortgages. I don't like the securities, but they happened.

So what I believe is going on is, first of all, the business community has not come forward as aggressively -- the small business community. And this bill did preserve all those small business incentives that were enacted by the Congress in the previous two years. There are like 16 different measures that give incentives for small businesses to take loans and loan guarantees and that kind of thing.

It appears to me that the community banks, at least, are somewhat uncertain about how the financial reform bill, which I supported, applies to them and what the costs of compliance might be. You remember, the two big things that bill did was to require the federal regulators to monitor every month the big banks that caused the meltdown and to require them to set aside more capital.

And then it set up an orderly bankruptcy mechanism and banned future bailouts. It said -- that bill actually says: If this happens again, the shareholders and the executives have to eat it.

But there’s a whole lot of other things in credit cards and other matters that deal with it. I think it is really, really important just to do an aggressive, 100 percent information drench. I mean I would go so far as to do it bank by bank by bank by bank so that everybody knows exactly what they have to do, exactly what it costs and how quickly this can all be resolved.

And then I think it’s important to make sure that all these community banks and the people who might borrow from them understand where the small businesses of America are and where the manufacturers are with the various loan guarantees and credits and deductions that are available under these laws.

I still think -- you know, we too often assume that when a law passes, people know it passed, and they know what’s in it, and they know how it applies to them. That may not be true in this case because there’s been so much activity and so much debate about it that was a debate that occurred in the context of a campaign rather than in the context of, “Let me tell you how this works, come here, let’s figure out how to get you a loan.” So in my opinion, that's what needs to be done over the next two or three months.

The money is there to get this country out of this mess. Two trillion dollars in the bank is $20 trillion in loans. Now, there’s not that much guaranteed, but there’s plenty.

And I also believe the same thing with big companies. We should analyze the situation of every company that at a minimum has got a $1 billion or more in cash and ask them to be honest with us about what would it take to get you back in the investment business.

These companies clearly have a preference for reinvesting in America, or they’d have put this money somewhere else already. They have got -- it’s an amazing thing, $1.8 trillion in corporate treasuries, 6.2 percent of their capitalized value. It’s been since 1964 that they had those kind of cash balances relative to their value.

So those are the things that I think we have to do now, so I can’t answer your question, except the bankers I talked to in Arkansas, in small places that I visit around where I live in New York, they all say, we know we need to ramp up the activity. We got to get the green light about how we’re going to comply with these laws, and then we’ll go.

And you might be able to actually use your program to do it. You might be able to bring some community bankers on, bring some regulars on, work through this stuff for people. I just think they don't know yet.

Yes.

Q Some of your fellow Democrats are saying that the President just didn't go in and fight hard enough for his core principles; that he caved in. Politically, some say that he should be a one-term President. Has he damaged not only his own political path, but has he let the party down?

FORMER PRESIDENT CLINTON: I don't believe so. I think -- I just respectfully disagree about that. I think that a lot of -- look, a lot of them are hurting now. And I get it. And you know I did 133 events for them. I believe the Congress in the last two years did a far better job than the American people thought they did, at least the American people that voted in the midterms.

And I went to extraordinary efforts to try to explain what I thought had been done in the ways that I thought were most favorable to them. But we had an election. The results are what they are. The numbers will only get worse in January in terms of negotiating.

And the President -- look, if we had 5 percent growth and unemployment was dropping like a rock, maybe you could have a so-called Mexican standoff, and you could say, it will be you, not me, the voters will hold responsible for raising taxes on middle-class people if they all go down next year. That is not the circumstance we face.

The United States has suffered a severe financial collapse. These things take longer to get over than normal recessions. We must first make sure we keep getting over it. We don’t want to slip back down as Japan did.

And in order to make it happen over the long run, that’s why the question I was just asked is so good, is we have to go beyond direct investments, whether they’re stimulus projects or tax cuts, to private growth. But to get there, we have to achieve a higher level of growth that triggers a confidence.

So I personally believe this is a good deal and the best he could have gotten under the circumstances.

I just disagree. I understand why -- people have a right to disagree with him. But I disagree.

Yes, sir.

Q Mr. President, you’ve made a number of very effective calls for the health care plan last year. Have you been asked to make any calls to Democratic members on the tax deal?

And, secondly, there are a lot of comparisons being made between the ’94 election and the 2010 election. Do you think those are analogous? Are they similar situations?

FORMER PRESIDENT CLINTON: It’s like all these things -- all of you will be under enormous pressure to develop a storyline. And there are some parallels, and some that are different. And you know, I’m -- I’ll let you do that. I’m out of politics now, except to say that I care about my country and I want to get this economy going again.

And I believe that it is necessary for these parties to work together. And I think, for example, the storyline is how well we work with the Republicans and all that. But we’ve played political kabuki for a year, had two government shutdowns. We can’t afford that now. The only reason we could do that is if the deficit was already coming down in a time when interest rates were the problem, and the economy was coming out. People just didn’t feel it yet in ’94.

We can’t afford that. We have got to pull together. And both sides are going to have to eat some things they don’t like, because we cannot afford to have the kind of impasse that we had last time over a long period of time. We don’t want to slip back into a recession. We got to keep this thing going and accelerate its pace. I think this is the best available option.

Mark.

Q -- any calls --

Q Mr. President --

FORMER PRESIDENT CLINTON: Oh, I’m sorry, George, I have not. But in fairness, as soon as the election was over, I took my foundation trip to Asia. Then I came back -- I just got back from the West Coast, doing my annual trip out there. There are people that support the work I do and my foundation. I flew overnight to get here today. And I have to leave again tonight.

If I were asked to, I would be happy to talk to anyone. But I have not been asked. But, in fairness, the President didn’t have a chance to. He asked me to come down today, because he knew I was going to -- Hillary and I were appearing before the Brookings Saban Forum on the Middle East tonight.

Yes, Mark.

Q Mr. President, I get the feeling that you’re happier to be here commenting and giving advice than governing.

FORMER PRESIDENT CLINTON: Oh, I had quite a good time governing. (Laughter.) I am happy to be here, I suppose, when the bullets that are fired are unlikely to hit me, unless they’re just ricocheting.

No, I’m glad to be here because I think the President made a good decision and because I want my country to do well. And after the ’94 election, I said the American people, in their infinite wisdom, have put us both in the same boat. So we’re going to either row or sink. And I want us to row.

Q Can you give us a Haiti update?

FORMER PRESIDENT CLINTON: What?

Q Can you give us a Haiti update? I know you were there.

FORMER PRESIDENT CLINTON: Yes. I had a long talk with the Prime Minister today. And he, first of all, has done I think a remarkable job of being a loyal prime minister, but not being involved in the political imbroglio that’s going on, except to try to keep calm.

There was a decision made by the electoral council to review the vote in its entirety and to ask some outside observers to come in who are not only credible but knowledgeable. And they will announce exactly how they propose to do that. Today was a pretty calm day. And they expect the weekend to be pretty calm.

We are going to have our commission meeting next week. We may move it to the Dominican Republic. But I think the best thing that we can do for the people of Haiti is to prove that Haitians on the commission, and the donors, are still committed to the long-term reconstruction process, whoever gets elected president.

The best thing they can do is -- everyone understands they had to carry out this election under enormously difficult circumstances. Even getting the ID cards to everybody, as you know, proved difficult, because they were in those tented areas.

But what I can say is it was calmer today. It appears they are going to try to have a recount procedure, which they hope will acquire more support from across the political spectrum. And, meanwhile, we want the commission to keep working.

The World Bank just released about $70 billion of the $90 billion in projects we approved four months ago. So that will go in. We’ll be hiring more people immediately on those projects. And we’re going to approve a lot more projects on the 14th. And that’s my focus now.

Yes.

Q Mr. President, I have to ask, do you think your appearance here today will help sway votes where they’re needed the most right now, among House Democrats?

FORMER PRESIDENT CLINTON: I have no idea.

Q The reason I ask you that is because a lot of them are sort of antsy. And I know you never used the term back in your first term, but they’re antsy about the precedent of triangulation. They’re still smarting over that. And your appearance here today might not necessarily push them in the direction that the President wants them to be pushed.

FORMER PRESIDENT CLINTON: That’s right, it may not. But I would like to -- you know, I told President Obama, and I’ll tell you, you ought to go back and read a lecture that Franklin Roosevelt gave in 1926 before he was the Vice Presidential nominee, before he came down with polio, to his old alma mater (inaudible), in which he discussed the dilemma of the progressive movement in American politics.

I have an enormous amount of respect for the Democrats in the House. And I’ve already told you I regret that so many of them lost. I think some of our best people lost. And I get where they’re coming from.

I can only tell you that my economic analysis is that given all the alternatives that I can imagine actually becoming law, this is the best economic result for America. And I think it is enormous relief for America to think that both parties might vote for something, anything that they could both agree on. And there is no way you can have a compromise without having something in the bill that you don’t like.

So I don’t know if I can influence anybody. Heck, I couldn’t -- you know, I’d go some places and the people I campaigned for won. In some places, the people I campaigned for lost. I don’t know. All I can tell you is what I think.

Q Considering your credibility on the deficit, what do you think about concerns about the short-term deficit and the long-term deficit, and where our country is going?

FORMER PRESIDENT CLINTON: I’m happy to address that because I don’t think that -- I don’t think I did a good enough job in this election season, obviously, and I’m not sure we did.

The difference between now and when I became President, when we immediately went after the deficit, is quite simple. When I became President, it was after 12 years in which the accumulative debt of the country had risen from $1 to $4 trillion. It was the first period in American history when we had ever run structural deficits of any size.

And so we were having to pay too much for money. It was costing us a lot to borrow money in the public sector, taking I think it was 14 cents of every dollar on the debt at the time. And it was crowding out the opportunity of the private sector to borrow money, and raising their cost. And that’s sparked the recession that we had in the early ‘90s.

What happened this time was totally different. This time there was a collapse of a financial system, which took interest rates to zero. Now, I know there’s a lot of alarm now. People say, oh, the interest rates went up on bond and in debt in the last couple of days. And they said, oh, is it because of the increase in the -- increasing the deficit in the short term? Is it because of the economy growing? That doesn’t bother me. We have to get out of deflation. The biggest problem we have now is deflation.

So, look, I’m a Depression-era kid. I don’t like deficits ever, really. We had four surpluses when I was President. That’s what I like. I like balanced budgets and surpluses; when you have growth.

But if I were in office now, I would have done what the President has done. You have to first put the brakes on a contracting economy. And then you have to somehow hold it together until growth resumes. When growth resumes, you have to have interest rates higher than zero.

So you should actually -- now, if they get too high, you’ll be alarmed. But you should be encouraged that interest rates are beginning to creep up again. It’s the sign of a healthy economy, and the idea that there would be competition for money.

I do believe that we’ll have to take aggressive and disciplined action to eliminate the structural deficit again. And I think it was a mistake to go back to structural deficits. I think if America were out of debt on a normal basis, and we didn’t have to borrow money from our major trading partners, we would have more economic freedom and economic security. So I want to see what comes out of this, but I expect to support some very vigorous actions to eliminate the deficit and get us back to balance.

Yes, one more. I’ve got to get out of here. Go ahead.

Q Thank you, Mr. President. Beyond this pending tax deal, there are enormous issues of importance that are unfinished, from education to energy, the deficit. And this is still a very dividing country. Do you think the American people want a President to compromise with the opposing party? And is that a message that you think Democrats are going to have to accept?

FORMER PRESIDENT CLINTON: Yes, but I also believe that it’s a message Republicans are going to have to accept. Keep in mind that many of the -- the really interesting thing was -- is that a lot of the hardcore conservatives think the Republicans gave too much. Read Charles Krauthammer’s column in the Post today. He’s a brilliant man, and he pointed out that they got the divisive tax cuts, but most of them were targeted to middle-class working people -- that's what the payroll tax cut is -- that the unemployment benefits were extended, which some of them did not want to do, and that the American people, by two to one, support them both.

So there are some conservatives who don't believe in the economic theory I just advanced to you; who believe that the President and Democrats got more out of this than the Republicans did.

So I think that's healthy, too, because everybody has got to give a little.

Yes, I think the one thing that always happens when you have divided government is that people no longer see principled compromise as weakness. This system was set up to promote principled compromise. It is an ethical thing to do. In a democracy where no one is a dictator, we would all be at each other’s throats all the time, and we would be in a state of constant paralysis if once power is divided, there is no compromise.

Q What’s the political fight worth having? What would you tell Democrats the political fight worth having is right now?

FORMER PRESIDENT CLINTON: Well, I think it’s worth fighting against the repeal of the health care law. I would be in favor -- and I can give you four or five things off the top of my head I think should be done to improve it.

I think it’s worth a ferocious fight to avoid repeal of the student loan reform, which I believe is the best chance we’ve got to take America back to number one from number nine in the percent of adults in the world with four-year college degrees.

I think it’s worth fighting against repeal of the financial reform and the assurance it gives us that we won’t have another meltdown, and if we do, there won’t be another bailout.

I think there are a lot of fights worth having, and I presume the Republicans want to fight those, too, since they ran on that. And they’ll be able to have these differences. But this holds the promise that after the fights are over, we’ll be able to find principled compromises on those areas, as well. And to me that's worth doing.

But first, the economy first. We can’t go back into a recession. We have to keep crawling out of this mess we’re in. And this is a good first step, both on the substantive merits and on the psychological relief it gives to the American people in general, and the small business people and community bankers and others who can start doing things that will help get better in particular.

Thank you.

END
4:50 P.M. EST

[Guest Byron W.]

Gosh, I miss President Clinton. He was the best president we had in 10 years.

[Guest Anne]

Not really. He was just lucky to be in office when the internet got deregulated and free trade was opening up.

[Luke_Wilbur]

No need to mud-sling. The elections are over. I just heard that a tax relief deal is close at hand. Let's not blow it again.

[Guest HUMAN]

I will keep my fingers off the keyboard, BUT having a former President pitching tax relief at a Presidential briefing gets me real nervous.

 

It tells the rest of the world that this guy "Barack Obama" does not know what he is doing.

 

--------------------------------------------------------------------------------------------------

No need to mud-sling. The elections are over. I just heard that a tax relief deal is close at hand. Let's not blow it again.

[Guest LAW]

Former President Clinton endorsed President Obama's decision. So, did many in your party.

 

 

Republicans got to comfort the rich, Obama got to help create jobs.

[Guest HUMAN :)]

Wow!! Law, that is like soooooooooooooooo deeeeeeeeeeep.

 

Still playing the class warfare game.

 

Let the government be the answer to EVERYTHING out there huh?

 

Yeah!! Cameras at every street corner just to make sure that there is no crime.

 

Let the government have absolute authority on how we live our lives.

 

Let some one else think for you.

 

[i don't post the information that I have online. I give it to people offline. Those who take the information I give them; ARE off and RUNNING. They can't believe it, but it's there on paper.

 

Can you imagine that Jack, or in your case Jacket?

 

You should see the faces of the folks that I help "at least the ones who take my info to heart".

 

They know that I am not B.S.ing. They know that I am for very real.

 

There is a price for my type of help. That they help others.]

 

<I do want to thank “spell checker” for all the help it’s giving me.>

 

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Former President Clinton endorsed President Obama's decision. So, did many in your party.

Republicans got to comfort the rich, Obama got to help create jobs.

[Guest LAW]

I recall that you wrote that you were doing database consulting for the Chinese and Brazilians. How is that going?

 

I am sure you had the 6000 estate owners close to your heart. Rant all you want.