Obama’s tax deal could boost US economy

first_img A TAX deal struck between the Obama administration and Republican lawmakers could lift 2011 growth by as much as a full percentage point by leaving more money in consumers’ pockets.Economists say the plan should help breath new life into the sluggish recovery, though it will only add to the already bloated budget deficit.The plan could boost GDP anywhere from a half to a whole percentage point, helping reduce unemployment and lessen the need for the Federal Reserve to increase its monetary stimulus, analysts said.“In all likelihood, the recovery would have made it through next year without backtracking into recession, but this deal improves those odds significantly,” said Mark Zandi, chief economist at Moody’s Analytics.The compromise plan, which still needs to clear Congress, would extend all Bush-era tax cuts for two years, give a 13-month extension of unemployment benefits and cut employee payroll taxes by two percentage points.Initial reaction to the deal was positive, as uncertainty over US tax policy was cited as a factor discouraging companies from hiring, keeping the unemployment rate at an elevated 9.8 per cent.Zandi estimated every dollar of government spending on unemployment benefits would give a $1.60 lift to the economy while every dollar spent on a payroll tax holiday would provide a $1.24 boost.But economists estimate the package, which will also extend breaks on dividends and capital gains, could cost up to $1trn and boost the budget deficit to record proportions. It comes at a time when Obama is under pressure to reduce the country’s bloated $1.3trn budget deficit.Ratings firm Moody’s Investors Service said it was worried the extension of the tax cuts could become permanent, hurting U.S. finances and its credit ratings in the long run. Share whatsapp Obama’s tax deal could boost US economy whatsapp Read This NextFresh Fruit Sushi: Recipes Worth CookingFamily ProofCreamy Pumpkin Soup: Delicious Recipes Worth CookingFamily ProofYoga for Beginners: 3 Different Types of Yoga You Should TryFamily ProofHiking Gadgets: Amazon Deals Perfect For Your Next AdventureFamily ProofChicken Bao: Delicious Recipes Worth CookingFamily ProofWhat to Know About ‘Loki’ Ahead of Disney+ Premier on June 9Family ProofBack on the Rails for Summer New York to New Orleans, Savannah and MiamiFamily Proof’A Quiet Place Part II’ Sets Pandemic Record in Debut WeekendFamily ProofA Once in 17 Years Cicada Event in Princeton, New JerseyFamily Proofcenter_img Tuesday 7 December 2010 5:06 pm Tags: NULL Show Comments ▼ by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeMisterStoryWoman Files For Divorce After Seeing This Photo – Can You See Why?MisterStoryTotal PastThe Ingenious Reason There Are No Mosquitoes At Disney WorldTotal PastMoneyPailShe Was The Dream Girl In The 90s, This Is Her NowMoneyPailSerendipity TimesInside Coco Chanel’s Eerily Abandoned Mansion Frozen In TimeSerendipity TimesBetterBe20 Stunning Female AthletesBetterBeMagellan TimesThis Is Why The Roy Rogers Museum Has Been Closed For GoodMagellan TimesElite HeraldExperts Discover Girl Born From Two Different SpeciesElite HeraldHealthyGem”My 600-lb Life” Star Dropped 420 Pounds, See Her NowHealthyGemZen HeraldThe Truth About Why ’40s Actor John Wayne Didn’t Serve In WWII Has Come To LightZen Herald alison.lock last_img

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