Obama Tax Cut Deal: Did He Cave?

I was on the treadmill when the breaking news headline hit: "Obama to extend Bush tax cuts for two years," at which point the guy next to me literally yelled "I can't believe he caved!"

Believe it or not, the man who once claimed that he felt a moral imperative to right the wrongs of the 2001 and 2003 Bush tax cuts for the wealthy, announced a broad "framework" agreement with Republicans that would:

• Extend the Bush-era tax cuts for all tax payers for two more years
• Maintain the dividend and capital gains tax at 15 percent
• Temporarily cut payroll taxes by two percent for one year
• An estate tax of 35 percent above a threshold of $5 million
• An adjustment to the alternative minimum tax, which would prevent 21 million households from being hit by AMT
• A 13-month extension of unemployment benefits

So did he cave? I guess that depends on where you sit. Despite the name calling during the past two years (liberal! socialist!) I've always thought Mr. Obama was at his core a Chicago politician, ready to make a deal when he needed to do so--after the mid-terms, he clearly sees that the time to negotiate/cave is now. As he said this evening, "this compromise is an essential step on the road to recovery." What he didn't say was that recovery was for the economy as well as for his own wounded ego.

Jill Schlesinger

Jill Schlesinger, CFP® is the Emmy-nominated business analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and chief investment officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.

Twitter