Bill to avert fiscal cliff heads to House

The U.S. Capitol in Washington

The U.S. Capitol in Washington

WASHINGTON — Squarely in the spotlight, House Republicans planned a closed-door meeting Tuesday to decide their next move after the Senate overwhelmingly approved compromise legislation negating a fiscal cliff of across-the-board tax increases and sweeping spending cuts to the Pentagon and other government agencies.

In a New Year's Day drama that climaxed in the middle of the night, the Senate endorsed the legislation by 89-8 early Tuesday. That vote came hours after Vice President Joe Biden and Senate Republican Leader Mitch McConnell of Kentucky sealed a deal.

It would prevent middle-class taxes from going up but would raise rates on higher incomes. It would also block spending cuts for two months, extend unemployment benefits for the long-term jobless, prevent a 27 percent cut in fees for doctors who treat Medicare patients and prevent a spike in milk prices.

The measure ensures that lawmakers will have to revisit difficult budget questions in just a few weeks, as relief from painful spending cuts expires and the government requires an increase in its borrowing cap.

House Speaker John Boehner pointedly refrained from endorsing the agreement, though he's promised a vote on it or a GOP alternative right away. But he was expected to encounter opposition from House conservatives, and it was unclear when the vote would occur.

Boehner planned to brief his caucus in early afternoon Tuesday and Biden scheduled a separate meeting with House Democrats to reprise his role of Monday night when he promoted compromise to Democrats before that chamber voted.

Boehner and House Majority Leader Eric Cantor, R-Va., arrived at the Capitol in late morning, and both bid "Happy New Year" to greeters but didn't say anything substantive about the Senate-passed bill.

One of the more conservative House Republicans, Rep. Tim Huelskamp, had no such reticence to speak.

"It's three strikes in my book and I'll be voting no on this bill," he told CNN Tuesday morning, saying the legislation would impose a hardship on small businesses around the country and falls short of addressing the need for cuts in spending.

The measure is the first significant bipartisan tax increase since 1990, when former President George H.W. Bush violated his "read my lips" promise on taxes. It would raise an additional $620 billion over the coming decade when compared with revenues after tax cuts passed in 2001 and 2003, during the Bush administration. But because those policies expired at midnight Monday, the measure is officially scored as a whopping $3.9 trillion tax cut over the next decade.

President Barack Obama praised the agreement after the Senate's vote.

"While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay," Obama said in a statement. "This agreement will also grow the economy and shrink our deficits in a balanced way — by investing in our middle class, and by asking the wealthy to pay a little more."

The sweeping Senate vote exceeded expectations — tea party conservatives like Pat Toomey, R-Pa., and Ron Johnson, R-Wis., backed the measure — and would appear to grease enactment of the measure despite lingering questions in the House, where conservative forces sank a recent bid by Boehner to permit tax rates on incomes exceeding $1 million to go back to Clinton-era levels.

In the Senate, three Democrats and five Republicans voted against the legislation.

"Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members — and the American people — have been able to review the legislation," said a statement by Boehner and other top GOP leaders.

Lawmakers hope to resolve any uncertainty over the fiscal cliff before financial markets reopen Wednesday. It could take lots of Democratic votes to pass the measure and overcome opposition from tea party lawmakers.

Under the Senate deal, taxes would remain steady for the middle class but rise at incomes over $400,000 for individuals and $450,000 for couples — levels higher than President Barack Obama had campaigned for in his successful drive for a second term in office. Some liberal Democrats were disappointed that the White House did not stick to a harder line, while other Democrats sided with Republicans to force the White House to partially retreat on increases in taxes on multi-million-dollar estates.

The measure also allocates $24 billion in spending cuts and new revenues to defer, for two months, some $109 billion worth of automatic spending cuts that were set to slap the Pentagon and domestic programs starting this week. That would allow the White House and lawmakers time to regroup before plunging very quickly into a new round of budget brinkmanship, certain to revolve around Republican calls to rein in the cost of Medicare and other government benefit programs.

Officials also decided at the last minute to use the measure to prevent a $900 pay raise for lawmakers due to take effect this spring.

Even by the dysfunctional standards of government-by-gridlock, the activity at both ends of historic Pennsylvania Avenue was remarkable as the administration and lawmakers spent the final hours of 2012 haggling over long-festering differences.

Republicans said McConnell and Biden had struck an agreement Sunday night but that Democrats pulled back Monday morning. Democrats like Tom Harkin of Iowa said the agreement was too generous to upper-bracket earners. Obama's longstanding position was to push the top tax rate on family income exceeding $250,000 from 35 percent to 39 percent.

"No deal is better than a bad deal. And this look like a very bad deal," said Harkin.

The measure would raise the top tax rate on large estates to 40 percent, with a $5 million exemption on estates inherited from individuals and a $10 million exemption on family estates. At the insistence of Republicans and some Democrats, the exemption levels would be indexed for inflation.

Taxes on capital gains and dividends over $400,000 for individuals and $450,000 for couples would be taxed at 20 percent, up from 15 percent.

The bill would also extend jobless benefits for the long-term unemployed for an additional year at a cost of $30 billion, and would spend $31 billion to prevent a 27 percent cut in Medicare payments to doctors.

Another $64 billion would go to renew tax breaks for businesses and for renewable energy purposes, like tax credits for energy-efficient appliances.

Despite bitter battling over taxes in the campaign, even die-hard conservatives endorsed the measure, arguing that the alternative was to raise taxes on virtually every earner.

"I reluctantly supported it because it sets in stone lower tax rates for roughly 99 percent of American taxpayers," said Sen. Orrin Hatch, R-Utah. "With millions of Americans watching Washington with anger, frustration and anxiety that their taxes will skyrocket, this is the best course of action we can take to protect as many people as possible from massive tax hikes."


notblind 2 years, 9 months ago

Obama said "Now, if Republicans think that I will finish the job of deficit reduction through spending cuts alone — and you hear that sometimes coming from them ... then they've got another think coming. ... That's not how it's going to work at least as long as I'm president," he said.

I want you 51% to really listen to what your man is saying. He is saying "Taxes are going up". He is also saying "Spending is not going to drop".

If taxes are going to rise anyway and Uncle BO isn't going to cut spending [ just the opposite actually ] then the Republicans in the Senate have done a disservice to the country. They should have let the automatic tax increases and dramatic spending cuts take effect.

One day we are going to have to rethink our fiscal policies but it's obvious by his own words that it won't come under Uncle BO's time in office.


BuzzG 2 years, 9 months ago

We are addicted to spending. The Republicans would like to stop the crazy stuff, but don't have the backbone to tackle Obama. We are now $16.5 trillion in debt and it is rising fast. The increased taxes will do little to slow the deficit down. Government cannot continue spending more than they take in any more than individuals can. At some point the world will quit lending us money, and at that point the Federal Reserve will have to create money to finance the debt. We will then see double or triple digit inflation.

Obama and the Democrats need to have their butts kicked, but they won the election and we missed our chance. Sucks to be us.


NewsReader 2 years, 9 months ago

Elections have consequences. You people keep shooting yourself in the foot and then say "ouch, that hurts" and then wonder why it hurts as you reload and fire again. LOL, you voted for him. Go ask him what's for dinner!


dentaldawg83 2 years, 9 months ago

Pubs..grow a pair, tell the WH and Harry Reid to screw themselves and go over the cliff, refuse to raise debt ceiling and shut this dysfuntional gubment down...let the POTUS go around speech making and watch him squirm when his peeps whose votes he bought with his spending programs turn on him as well. the message should be "America, you put these guys back in office, here's what you get".


kevin 2 years, 9 months ago

Do not forget that this bill also gave larger tax credits to those that do not put into the system other than the votes they give to Obama, their savior on earth.They are getting larger increases than the Social Security recipients. Those elder folks are the ones getting screwed. They got a 1.6% increase while the unearned tax credits rise much more than 1.6%. At least the SS tax withholding went back to normal instead of short-changing the system more. Unemployment compensation continues to keep workers from looking for work. The longer they keep getting benefits from the socialists, the longer the unemployment rate stays high and those folks lose their dignity at the same time; a dream come true for socialist government (dependency & votes).


TOWG 2 years, 9 months ago

Let's see here...$1 in spending cuts and $41 in tax increases. Great job congress. Let it burn.


Jan 2 years, 9 months ago

Hate to repeat myself, but for those that missed it: Here are the facts:

Average inflation is about 3%, This means that we should expect a 3% average annualized growth in spending.

Since 1982, their have been five presidential terms that exceeded 4% growth in government spending. Reagan, both terms, Bush I and Bush II, both terms. Clinton's terms were held at 3.2% and 2.9% government spending increase and Obama has the lowest increase of only 1.4%, well below average inflation rate.

Average annual spending increase under Republicans of 6.88%, more than twice average annual spending increase while under the Democrats the average is only 2.83% annual increase in spending.

When the annual increase kept below inflation, it is an effective spending decrease. The debt increase is an expected result of the Bush tax cuts and the poor economy inherited from Bush. These together resulted in much less revenue.

Republican's are not interested in cutting the big cost items, such as military, tax credits to big corporations and special tax breaks designed to help the wealthy. They want to cut the benefits of Social Security and Medicare, the items which recipients have been paying and deserve. The deal that is now in the hands of the House cuts every working American taxpayer's taxes.


jack 2 years, 9 months ago

And I, as well, hate repeating myself, but you seem to keep missing it (even though you responded to other parts of this post 11 days ago on another thread):

From the Washington Post fact checkers about spending under President Obama: "One common way to measure federal spending is to compare it to the size of the overall U.S. economy. That at least puts the level into context, helping account for population growth, inflation and other factors that affect spending. Here’s what the White House’s own budget documents show about spending as a percentage of the U.S. economy (gross domestic product):

2008: 20.8 percent

2009: 25.2 percent

2010: 24.1 percent

2011: 24.1 percent

2012: 24.3 percent

2013: 23.3 percent

In the post-war era, federal spending as a percentage of the U.S. economy has hovered around 20 percent, give or take a couple of percentage points. Under Obama, it has hit highs not seen since the end of World War II — completely the opposite of the point asserted by Carney. Part of this, of course, is a consequence of the recession, but it is also the result of a sustained higher level of spending."


Jan 2 years, 9 months ago

While your comparison might be "common", it is not reasonable without consideration of other factors. I will condense this economic lesson. For more information, I suggest some research. First, during economic recessions, GDP goes down. Second, during economic recessions, government spending goes up. This spending is in many categories - some retiring sooner than planned increases SS costs, unemployment, food stamps, Medicaid, and welfare all will increase. Add to that stimulus spending and one would expect a significant increase in spending. Third, inherited wars and unusually high disaster relief added to the expenditures. To better understand how you have used statistics to warp the concept of truth, I suggest you read the book "How to Lie with Statistics" By Darrell Huff.


jack 2 years, 9 months ago

Jan- Not my comparison; this was quoted from the Washington Post. If you read again carefully, it does mention recession and other factors.

As far as using statistics to warp the truth, your claim of President Obama having the lowest percentage increase in spending is entirely misleading. If I increase my spending from $1 to $2, I've increased 100%. If you increase your spending from $4 to $6, that's only 50%. Yet you increased spending $2, whereas I increased only $1.

Perhaps you should reread the book.


Jan 2 years, 9 months ago

You criticize me for using percentages while you use percentages. Seems a little hypocritical to me! If inflation and population growth are level, calculations on the spending versus GDP has some meaning but you apparently don't understand my explanation of the fallacy in using these figures as meaningful in a deep recession that GW Bush left us in. Maybe you can understand it better in terms of disaster relief. When a hurricane wipes out an area like what recently happened in NJ, the people are left homeless and loss of income. The government works like an insurance company and increases spending to help those unfortunate enough to have located in the path of a hurricane while simultaneously reducing revenue since most of these are without immediate income, hence not paying taxes. The recession is like a disaster that hit 10% very hard and another 10% needing to drastically cut back spending. These 20% will significantly reduce their spending, thus increasing the percentage of GDP involved in government spending. Regardless of the source, I have tried to help you understand the problems with using that comparison.


jack 2 years, 9 months ago

Jan- I'm not criticizing you for using percentages, but how you use percentages. Does your 1.4% figure for Obama's spending increases take into account the "fallacies" you find in the Washington Post's numbers?

Those numbers quoted came from the White House.
It would seem your argument should be directed to them.


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