|
Obama wanted to let the tax cuts expire for the richest of Americans, while leaving it in place for middle and lower class. His argument was the rich don't spend their tax cuts but save it, where as the middle and lower class spend their tax breaks, thus helping grow the economy. The expiration of the tax cut on the rich would continue to help close the budget deficit and strengthened the dollar, long term. Closing the budget deficit to 3% of GDP is a big priority for our long term health.
He couldn't get the support through for his original plan, he was blocked because much of the GOP wanted to renew the tax cuts for the wealthiest. If he didn't get a bill through before the new year, then the tax cuts for ALL americans, both poor, middle-class, and rich would expire, and everyone would have a tax raise, and that was seen as incredible damaging to any chance of recovery, so he had no choice but compromise and change paths and renew the tax cuts for the wealthy.
He felt the short-term was more important to deal with, and later on, after more of a recovery, he can go back and attempt to raise taxes on the rich while helping to close the budget deficit. Part of his compromise meant renewing lower tax rates on estate tax, which is a lot of $ to the government.
|