UPDATE: The American Taxpayer Relief Act of 2012 was also passed
by a bipartisan majority in the House of Representatives on January 1,
President Obama has repeatedly called this a make-or-break moment for
the middle class. That's why we worked with Republicans and Democrats
in Congress to reach an agreement that keeps income taxes low for the
middle class and helps to grow the economy. And as the President
promised, millionaires and billionaires will also begin doing more to
help pay down the deficit through a combination of permanent tax rate
increases and reduced tax benefits.
This is the first time in twenty years that a bipartisan agreement
has increased tax rates on the wealthy. Additionally, this deal ensures
that America will continue to invest in education, clean energy, and
manufacturing to strengthen our economy and the middle class.
As President Obama noted in a statement about the deal,
while neither Democrats nor Republicans got everything they wanted,
this agreement is the right thing to do for our country. And the
President looks forward to working with Republicans to reduce the
deficit in a balanced and bipartisan way.
The agreement passed by an overwhelming bipartisan majority in the
Senate last night permanently extends the middle-class tax cuts and also
extends credits for working families. It provides additional measures
to protect families and promote economic growth. The lower tax rates, an
expanded Child Tax Credit, and marriage penalty relief will provide
certainty for 114 million households and together will prevent the
typical family of four from seeing a $2,200 tax increase.
By raising income tax rates on the wealthiest and keeping taxes low
for the middle class, it means we will now have the most progressive tax
code in decades. The agreement also prevents two million people from
losing unemployment insurance benefits in January by extending emergency
UI benefits for one year.
The agreement avoids a 27 percent cut to reimbursements for doctors
seeing Medicare patients for 2013 by fixing the sustainable growth rate
formula through the end of next year (the “doc fix”).
Tax credits that encourage the production of clean domestic energy,
such as the Production Tax Credit (PTC), will be extended through the
end of the year. And businesses will get to immediately write off 50
percent of capital investments made next year, helping to create jobs in
manufacturing and other sectors.
The deal also postpones the sequester for two months, which will give
Congress time to work on a balanced plan to prevent the automatic
spending cuts that would threaten our national security and slash
investments that build our economy. The postponement is paid for with $1
of revenue for every $1 of spending, with the spending balanced between
defense and domestic: The agreement saves $24 billion, half in revenue
and half from spending cuts which are divided equally between defense
There’s more work to do to reduce the deficit, and President Obama is
prepared to work with Congress to do it. But this agreement builds on
the $1 trillion in spending cuts the President has already signed into