Obama signs tax package, clearing way for tax breaks, bigger paychecks -- and more federal debt

WASHINGTON -- President Barack Obama on Friday signed the sweeping tax package passed by Congress, the final step in clearing the way for continued tax breaks, extended unemployment benefits and other incentives aimed at letting you keep and spend more of your money.

"We are here with some good news for the American people this holiday season," Obama said at a White House ceremony before signing the legislation into law, two weeks before tax rates were set to rise. It's a package, he said, that will "protect the middle class, that will grow our economy and will create jobs for the American people."

Every Georgian will feel the effects.

The centerpiece, of course, is the extension of current tax brackets. For the next two years, that will keep the range of income tax rates at 10 percent for individuals making up to $8,500 per year to 35 percent for those making more than $379,150.

But other parts of the package also will filter down in coming months. According to White House estimates:

• About 4.6 million Georgians will see a little more money in their paychecks because of a 2 percentage point Social Security payroll tax cut included in the plan.

• Nearly 302,000 Georgians who have been out of work for an extended period of time will continue to receive unemployment insurance benefits through 2011.

• About 289,000 college students in Georgia and their families are expected to receive tax credits for education.

• Georgia businesses will be able to apply for tax credits for capital improvements to buildings, research and development and other capital investments.

"There will be a sigh of relief from average taxpayers in Georgia that their taxes won't go up on Jan. 1," said Virginia Galloway, Georgia state director for the conservative group Americans for Prosperity.

Galloway said her group's 40,000 members would have liked cuts in spending on unemployment insurance and other areas as part of the package.

"But we can call this better than nothing," she said. "It's definitely an improvement over what could've happened."

The House passed the tax cut package late Thursday amid deep discord over its $858 billion impact on the federal budget, as well as the estate tax rates for wealthiest Americans and the unemployment benefits for some of the poorest.

Obama on Friday acknowledged what just about every member of Congress already acknowledged -- that there were parts of the bill that they didn't like. But the president portrayed the end result as an example of what can happen with compromise and bipartisanship.

"That's the nature of compromise -- yielding on something each of us cares about to move forward on what all of us care about," Obama said.

In Congress, the disagreement cut across party lines, resulting in some unusual dynamics.

U.S. Rep. John Lewis of Atlanta, for instance, voted against the package despite its approval by every other Democrat from Georgia. He said he couldn't support it because of the cost to future generations and because it gives tax breaks to the richest Americans that he said the country cannot afford and the richest Americans don't need. He called it one of the toughest votes he's taken in his nearly 25 years in Congress.

"This was a bad deal, rotten to the core," Lewis said in a statement. "This bill does nothing to create jobs while at the same time providing tax cuts for the wealthiest 2 percent of Americans. Additionally, it further burdens an already strained Social Security Trust Fund.

"This bill is tampering with the soul of our nation," Lewis added. "Some place along the way, we must say enough is enough."

The vote by Lewis, one of the most liberal members of Congress, put him in the unusual position of voting with most of Georgia's Republicans in the House. All but two of Georgia's seven House Republicans voted against the package. Reps. Tom Price of Roswell and Lynn Westmoreland of Coweta County, despite reservations about its costs, were the only two Georgia Republicans to vote for it.

Republican Rep. Tom Graves of Ranger said he, too, supported the tax cuts but couldn't vote for the package. He said he wanted the tax cuts made permanent and the costs offset with spending cuts.

Like other conservative Republicans, Graves objected particularly to the estimated $57 billion cost for extending unemployment benefits for the long-term unemployed through the rest of next year.

"I don't disagree with the fact that we need to extend the tax code; I disagree that we need to add spending while we do it," he said prior to the vote. "I didn't get elected to kick the can down the road, which is exactly what this package does."

In the end, the House approved the package 277-148, with most members who voted for it saying they had problems with it, but nonetheless thought it was necessary to keep the economic recovery going.

"This is giving certainty to the business community ... and pumping money directly into the hands of people who need it the most and who are most likely to spend it," Democratic Rep. David Scott of Atlanta said before voting for it.

Scott said it's now up to big businesses to start spending some of the cash they've been stockpiling during the recession, to start hiring again and doing their part to improve the economy.

"There will be no excuses now," Scott added. "The economy should zoom."