President Obama today hailed congressional passage of a $143 billion economic package that will extend a Social Security payroll tax cut and unemployment benefits through the end of the year, while urging Republican and Democratic lawmakers to work with him to do more for the middle class before the November election.
The bipartisan package hammered out late last week by the White House and GOP and Democratic congressional leaders is widely viewed by budget and policy experts as the last major piece of business that will get done this year because of the bitter relations between the two parties as they head towards a crucial November election.
The legislation averted the possibility of a tax increase on 160 million Americans amid the economic recovery and booming stock market – although it meant having to add $100 billion to this year’s deficit and could speed up the deadline for having to deal with the politically poisonous debt ceiling again. The typical family will see an extra $40 in every paycheck because of the extension of the 2-percentage point cut in the tax rate, while millions of unemployed people will continue to receive extended unemployment insurance benefits.
“The entire economy gets another boost just as the recovery is starting to gain some steam,” Obama said of the bipartisan compromise legislation during a White House gathering. “So in the end, everyone acted in the interest of the middle class and people who are striving to get into the middle class. That’s how it should be . . . Now my message to Congress is don’t stop here.”
Obama said lawmakers should act on measures to help homeowners pay their mortgages and assist small businesses. He also wants Congress to pass the so-called Buffett rule, which would make people earning more than $1 million a year pay at least 30 percent of their incomes in federal taxes.
While Obama repeatedly heaped praise on the package, he won’t actually sign it until later this week, when the bill is formally transmitted from Capitol Hill to the White House. And while Congress and the administration agreed to offset the cost of extending unemployment insurance and averting a sharp 27 percent cut in Medicare rates for physicians treating the elderly, the nearly $100 billion cost of the payroll tax cut extension will simply be added to this year’s deficit.
The decision by House Speaker John Boehner of Ohio and other House and Senate GOP leaders to go along with the payroll tax cut extension without requiring offsetting spending cuts marked a dramatic turnabout by Republicans, who in the end were unwilling to accept responsibility for a tax increase before the November election. But that decision to add $100 billion to this year’s estimated $1.3 trillion budget deficit could push the debt ceiling to its limit sooner than either party wants to deal with it again.