Tax Cut Plan Approved, but Adds 858 Billion U.S. Debt

Armen Hareyan's picture

As the Senate approved the tax cut plan adding 858,000 Billion dollars to U.S. debt, president Obama spoke and said he understands that some people are unhappy on both sides, but added this is the nature of the compromise.

The current tax cut plan now goes to the House of Representatives, which is expected to vote Thursday on the measure. The democrats are steadfastly opposing to the extension of the measures that exempts the rich and the affluent according to the plan that the president has negotiated with the Republicans in the Senate. Congressional democrats consider possible changes wanting the rich to contribute more. However, they believe the tax plan will be approved in the House.

If the plan is not passed the American taxpayers will see a substantial increase in their taxes as of January 1 of 2011. On the other hand the president's understanding and work with the republicans may pave the groundwork to revive his political image path to his campaign for reelection in 2012. As intended the plan is aimed at strengthening the economy.

If economic forecasts are correct, the agreement will help stimulate economic growth and reduce unemployment sharply over the next 10 years. Such achievement may help the president re-elected, even after hard loses of the midterm elections. In fact, this was the case of Ronald Reagan and Bill Clinton.

A McClatchy-Marist poll released last week showed that only 42 percent of voters, and 39 percent of independents, approve of Obama's performance in office, and that if the elections were held today, the president would be in a vulnerable position.

Yet, the public likes the tax cut. Pew poll shows that nearly 60 percent approve the tax agreement and only 22 percent are opposed.

Moody's expects the economy to be stimulated by the lower taxes. However, the president's strategy will only work if the economy improves.

Politicians believe the tax cut plan will be a big cloud hanging over the next elections. If the economy improves most people will point to the tax cuts and site it as one of the reasons for the improvement.

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