Having won the endorsement of the man dubbed America’s “First Black President,” Bill Clinton, the Obama administration on Dec. 10 peddled the tax deal made with Republicans as a boon for the African- American community.

“We feel we really were winners in this deal because we got a lot of priorities through that not only helps economic recovery but helps families that really need that assistance in this pivotal time,” White House spokeswoman Jen Psaki said during a conference call with the Black press.

Cecilia Rouse, a member of President’s Council of Economic Advisers, reaffirmed that the president had not been happy about acceding to Republican demands for an increased estate tax cut and a two-year extension of President Bush’s high-income tax credit, which together costs $114 billion in revenue.

But the benefits of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act far outweigh the negatives, she said.

Among the wins—which together accounts for $238 billion of the bill’s price tag—was the 13-month extension of the unemployment insurance benefits.

“That is critical,” Rouse said of the measure. “Economists on the left and right agree that unemployment insurance benefits are the most effective way to stimulate short-term growth. And that’s because are so important to these families.”

With the average payment of $300 a week representing about half of what the now unemployed worker used to make, “that unemployed worker is not taking that money and saving it to buy a Lexus. That unemployed worker is using that to buy food, pay rent, to pay the mortgage, to buy other necessities for his or her family.”

If the insurance was not extended, about 300,000 African Americans would have lost their benefits this month alone, and 1.1 million in the coming year, Rouse said. But if continued for another year, the measure could produce as much as 600,000 jobs and GDP would grow by about 0.6 percent.

Additionally, the Earned Income Tax Credit and Child Tax Credit will also be expanded and extended for two years, benefitting 12.2 million lower-income families, including 2.2 million Black households.

The $2,500 college credit, established by the Recovery Act and of which eight million students took advantage, will also be extended.

Also counted in the administration’s “win” tally was a 2 percent payroll tax cut for over 155 million workers – providing tax relief of $112 billion next year. That translates to about $700 more in salary receipts for the average African American.

And to ensure Social Security isn’t weakened, every dollar paid toward the tax cut will be reimbursed to the trust fund from General Revenue.

All of these were intended to shore up and stimulate the economy, while also easing the burden on families, the officials said.

“We have a fragile economy and to have a gigantic tax increase come Jan. 1, the president just didn’t want to risk that,” Rouse said.

The White House teleconference came hours after the Congressional Black Caucus announced their official objection to the tax deal, particularly the estate tax cut and the tax holiday for wealthy Americans. The Capitol Hill lawmakers said the bill’s toll on the nation’s debt would result in “draconian” cuts on social programs important to African Americans and other vulnerable communities.

“There are tough choices that will have to be made next year we know what will happen—it’s going to be low-income communities, poor communities of color that are going to pay,” CBC Chairwoman Rep. Barbara Lee, D-Calif., told reporters.

But Rouse said because the tax cuts are temporary, they will not affect the long-term deficit in “any meaningful way.” And, she said, economic stimulation—such as that promised by the tax relief package—is the surest way to protect programs from funding cuts.

Additionally, Psaki said, while President Obama recognizes the need for fiscal discipline—which is reflected in policies such as health care reform—he has also been “committed since the day he entered public service not to balance any budget on the backs of working people.”


Zenitha Prince

Special to the AFRO