The Tax Issue...Resolved?

On this evening, 19 days before Christmas, Obama caved...sort of.

Obama and Congress came to an agreement on the tax issue which has been the cause of much of the economic uncertainty in the country. It must now pass Congress before the new year before the "compromise" can be enacted. Here are the nuts and bolts. The Bush Tax Cuts will be extended for another two years for all earners, unemployment will be extended for another 13 months, Social Security taxes will be cut for one year, and the inheritance tax, aka "death tax," did not make the cut and will return.

Let's look at the situation that led to this "compromise." The first Friday of every month, the unemployment numbers come up and on Friday December 3, they came out and U-3 is at 9.8%, up from the last report, and U-6 is at 17%! Jobs the government cites as "new jobs created" are temporary. For the United States, this is an absolute catastrophe and Washington had to have a response to stop the bleeding. The spectre of the sunset of the Bush Tax Cuts, along with the uncertainty of health care reform and its higher costs the new laws will incur on job creators have kept them on the job creating sidelines, contributing to this current report.

Here is Obama's statement on the "compromise:"



The President realized what he had to do politically and in studying his demeanor, he doesn't seem to be too happy about it, taking shots at the "rising deficit" (while conveniently leaving out how ObamaCare is contributing to the deficit) yet is still attempting to take credit for it with his consistent use of the word "I." At the same time, Obama is attempting to remind the incoming Republicans they need to work with him and cancel out what the Midterm Elections of 2010 told us: Obama needs to work with the incoming Republicans. Not a surprise considering he is always the first to remind his opponents he won, and on numerous occasions, sometimes using really bad metaphors.

Those on both sides of the aisle are asking themselves if they could have gained more out of this "compromise." Liberal Democrats seem spitting mad and some in the media are already predicting Obama will have a primary challenge. This has been said for a long time on "The 'Right' Solutions," but the tax "compromise" gives it further credence. The "Blue Dog" Democrats in Congress who survived, as well as those Democrats in the Senate who face very tough re-elections in 2012 and live in reality about it, knew this was the most politically expedient move to make and implored the ideologue president to give.

Republicans, on the other hand, could have gained more out of this. Let's not forget, Republicans won Congress back with one of the largest party net gains (one short of the prediction made here) in well over 50 years! They are in great position to have a greater impact on the decisions of this president and I believe Republicans could have successfully ridden this wave for more, be it a payroll tax holiday, capital gains tax cut, shorter extension of unemployment and/or more incentives for unemployed Americans to return to work such as an allowance of greater part time salary without UI penalty, as well as the full continuation of the inheritance tax.

The President and Congress are kicking the can down the road, this will be a 2012 Campaign issue and the "compromise," along with the Social Security tax holiday, allows the president to claim he cut taxes. (Even though we know it took a Midterm shellacking for him to get to this point.) The Republican running in 2012, whoever it is, must campaign to make the Bush Tax Cuts permanent as it will benefit that candidate and anoint them with more valid and realistic street creds of advocating for lower taxes.