Obama, GOP Reach Deal on Bush Tax Cuts

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Republicans have won a major political victory before they take control of the House next year. President Barack Obama has agreed to extend the Bush tax cuts for two years.

The deal also includes a surprise -- a one-year cut in the payroll tax.

President Obama announced the deal Monday evening with his trademark cool and calm demeanor.

"For the next two years, every American family will keep their tax cuts," Obama said.

But not everyone is happy about the agreement. Among Democrats, discussions about the proposed deal likely will be full of emotion and displeasure.

CBN News White House Correspondent David Brody gave more insight on the recent tax cut deal, and the political implications it could have for President Obama. Click here to watch.

Many Democrats believe the White House simply caved in to Republicans.

"It seems like it goes from zero to fold in pretty fast time," Rep. Anthony Weiner, D-N.Y., said.

Democratic anger stems from the concessions Obama made to reach a compromise with Republicans.

The agreement includes extending:

  • The Bush tax cuts for another two years.
  • A one-year 2 percent cut in the payroll tax that would apply to nearly every American worker.
  • Unemployment insurance benefits for about 9 million out-of-work Americans for an additional 13 months.
  • Extending the earned income credit for low-wage workers.
  • Extending credits that benefit working families, like college tuition and the child tax credit.

To get all of this, the president had to renege on his campaign pledge to end the tax cuts on people making more than $200,000 or families earning more than $250,000. He also had to agree to Republican demands to extend the tax cuts across all income levels.

Obama acknowledged that the deal is far from perfect and not what he wanted. But he said it's essential for the country to recover from the longest recession in decades.

"It is the right thing to do for jobs," he said. "It is the right thing to do for the middle class. It's the right thing to do for business, and the right thing to do for the economy."

Still, some Democrats quickly denounced the plan.

"How can we rationalize tax cuts for the wealthiest Americans when we're facing this type of deficit," Sen. Dick Durbin, D-Ill., said.

It's important to remember while the GOP will have more seats in January, the proposed deal must be passed by the current Congress. Otherwise, taxes will go up for everyone beginning January 1.

To help garner support among Democrats, the president has dispatched Vice President Joe Biden to sell the plan to skeptical Democrats and get them on board with the proposal.

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