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ECONOMICS REPORT - President Obama Agrees to Extend Tax Cuts for 2 years

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President Obama announcing an agreement to extend tax cuts and unemployment aid
President Obama announcing an agreement to extend tax cuts and unemployment aid

This is the VOA Special English Economics Report.

President Obama announced an agreement with Congressional Republicans Monday. It  would extend for two years the tax cuts put in place by former president George W. Bush.  The tax cuts were to end in January. The compromise extends current income tax rates for all Americans for two years.  That includes rates for the richest Americans.

The agreement also cuts workers' Social Security taxes by two percentage points.  Social Security is retirement insurance paid by almost all American workers and employers.

The so-called payroll tax holiday would save a family earning fifty thousand dollars about one thousand dollars a year.

For the president, the most important part of the compromise was the extension of aid payments to unemployed Americans for thirteen months.  Last month, the jobless rate increased by two-tenths of a percent to nine point eight percent.

Economists say payments to unemployed people directly help the economy because they spend the money immediately.  This has led some experts to call the agreement a stimulus measure meant to improve the economy.

President Obama said he accepted the compromise because he wanted to help unemployed Americans.

BARACK OBAMA: "Because of this agreement, two million Americans who lost their jobs and are looking for work will be able to pay their rent and put food on their table."

But the president faces strong opposition from his own party.  Democrats object to keeping tax cuts for the rich at a time when the government is struggling with deep budget deficits.

The extension of the tax cuts for the wealthiest Americans is expected to cost about eighty billion dollars over two years.  The deal also includes tax cuts aimed at middle income Americans and businesses.

The House of Representatives and Senate will have to approve the proposal.  Senate Minority Leader Mitch McConnell says Republicans support the deal.

MITCH MCCONNELL: "I think the vast majority of the Republican caucus in the Senate feel that this is a step in the right direction, an important step to take for the American people."

Before the agreement, Senate Republicans had threatened to block other measures unless the tax cuts for the richest Americans were extended.

Some Democrats were disappointed that President Obama agreed to the compromise.  In two thousand eight, he campaigned on the promise that he would continue tax cuts for the middle class.  But he proposed to raise income taxes on families reporting two hundred fifty thousand dollars or more in taxable income.

And that's the VOA Special English Economics Report, written by Mario Ritter. Our programs are online with transcripts and MP3 files at www.unsv.com. And you can find us on Twitter, Facebook and YouTube at VOA Learning English.  I'm Steve Ember.

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