White House: Double-dip recession possible if tax cut/unemployment benefit extension deal falls through
The White House spent much of the day yesterday drumming up support for a deal to extend tax cuts and federal unemployment benefits within its own party.President Obama's administration continues to try to drum up support for the framework agreement it announced earlier this week that includes an extension of federal unemployment benefits and an across-the-board extension of Bush-era tax cuts for two years.
The agreement has met with opposition, mainly from Democrats who think the deal goes too far in granting Republican demands that mainly help the wealthy.
The White House spent much of the day yesterday drumming up support for a deal to extend tax cuts and federal unemployment benefits within its own party.The White House insists that the deal is necessary to protect the middle class and the fragile economic recovery.
The White House issued a warning to House Democrats yesterday that failure to pass the framework agreement could result in a double dip recession.
Larry Summers, Obama's chief economic adviser, told reporters that if the measure isn't passed soon, it will "materially increase the risk the economy would stall out and we would have a double-dip" recession. That put the White House in the unusual position of warning its own party's lawmakers they could be to blame for calamitous consequences if they go against the president.
Also, the administration circulated a memo to reporters claiming that if the Bush tax cuts are allowed to expire, taxes for the average family would rise by $3,000 and economic growth would shrink by 1.7 percent. It's passage, the White House says, could help add 1.5 million to 2 million jobs to the economy.
The White House also issued dozens of statements from Democrats endorsing the deal, includingMichigan Gov. Jennifer Granholm and Detroit Mayor Dave Bing.
"The President has taken a pragmatic approach that will provide Michigan’s working families the relief they need during these difficult economic times,” Granholm said in the statement. “Without an extension of unemployment benefits, more than 181,000 Michigan residents would exhaust their benefits by the end of April.”
Bing said the deal is good news for Detroit.
"We cannot afford to turn our backs on the unemployed and the middle class in the kind of difficult times we’re facing. This agreement also sets the stage to help businesses in our city and across the country make the necessary investments to jumpstart our economy. It is an example of the kind of difficult but necessary choice we have to make to move forward."
The deal is getting more support from Democrats in the Senate than in the House. Majority Leader Harry Reid indicated that a vote on the deal could be "scheduled within days" — a signal that he's close to having the 60 votes needed to advance the bill.
Senate Republican Leader Mitch McConnell (Ky.) has said he expects the vast majority of Republicans to support the deal, which means Reid needs to secure only 25 Democratic votes.
In the House, the deal has enough Republican support that it could pass even with two-thirds of Democrats voting against it, the New York Times reports.
Larry Summers, Obama's chief economic adviser, told reporters that if the measure isn't passed soon, it will "materially increase the risk the economy would stall out and we would have a double-dip" recession. That put the White House in the unusual position of warning its own party's lawmakers they could be to blame for calamitous consequences if they go against the president.
"The President has taken a pragmatic approach that will provide Michigan’s working families the relief they need during these difficult economic times,” Granholm said in the statement. “Without an extension of unemployment benefits, more than 181,000 Michigan residents would exhaust their benefits by the end of April.”
"We cannot afford to turn our backs on the unemployed and the middle class in the kind of difficult times we’re facing. This agreement also sets the stage to help businesses in our city and across the country make the necessary investments to jumpstart our economy. It is an example of the kind of difficult but necessary choice we have to make to move forward."
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