Senate approves fiscal cliff legislation 89-8

WASHINGTON (AP) — Hours past a self-imposed deadline for action, the Senate passed legislation early New Year's Day to neutralize a fiscal cliff combination of across-the-board tax increases and spending cuts that kicked in at midnight. The pre-dawn vote was a lopsided 89-8.
Associated Press
Jan 1, 2013

Senate passage set the stage for a final showdown in the House, where a vote was expected later Tuesday or perhaps Wednesday on the measure, which also raises tax rates on wealthy Americans.

Even by the recent 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.

"It shouldn't have taken this long to come to an agreement, and this shouldn't be the model for how we do things around here," said Senate Republican leader Mitch McConnell, who negotiated the agreement with Vice President Joe Biden.

Shortly after the Senate vote, President Barack Obama said, "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."

Under the deal, taxes would remain steady for the middle class and rise at incomes over $400,000 for individuals and $450,000 for couples — levels higher than Obama had campaigned for in his successful drive for a second term in office.

Spending cuts totaling $24 billion over two months aimed at the Pentagon and domestic programs would be deferred. 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.

"One thing we can count on with respect to this Congress is that if there's even one second left before you have to do what you're supposed to do, they will use that last second," the president said in a mid-afternoon status update on the talks. Yet when the roll was called nearly 12 hours later, only six Republicans and two Democrats opposed the measure.

As darkness fell on the last day of the year, Obama, Biden and their aides were at work in the White House, and lights burned in the House and Senate. Democrats complained that Obama had given away too much in agreeing to limit tax increases to incomes over $450,000, far above the $250,000 level he campaigned on. Yet some Republicans recoiled at the prospect of raising taxes at all.

Democratic senators said they expected a post-midnight vote on the measure. They spoke after a closed-door session with Vice President Joseph Biden, who brokered the deal with Senate Republican leader Mitch McConnell.

"The argument is that this is the best that can be done on a bipartisan basis," said Sen. Dianne Feinstein, D-Calif., when asked about the case the vice president had delivered behind closed doors.

Passage would send the measure to the House, where Speaker John Boehner, R-Ohio, refrained from endorsing a package as yet unseen by his famously rebellious rank-and-file. He said the House would not vote on any Senate-passed measure "until House members — and the American people — have been able to review" it.

Numerous GOP officials said McConnell and his aides had kept the speaker's office informed about the progress of the talks.

The House Democratic leader, Rep. Nancy Pelosi of California, issued a statement saying that when legislation clears the Senate, "I will present it to the House Democratic caucus."

Without legislation, economists in and out of government warned of a possible recession if the economy were allowed to fall over a fiscal cliff of tax increases and spending cuts.

And while the nominal deadline for action passed at midnight, Obama's signature on legislation by the time a new Congress takes office at noon on Jan. 3, 2013 — the likely timetable — would eliminate or minimize any inconvenience for taxpayers.

A late dispute over the estate tax produced allegations of bad faith from all sides.

After hours of haggling, Biden headed for the Capitol to brief the Democratic rank and file.

Earlier, McConnell had agreed with Obama that an overall deal was near. In remarks on the Senate floor, he suggested Congress move quickly to pass tax legislation and "continue to work on finding smarter ways to cut spending" next year.

The White House and Democrats initially declined the offer, preferring to prevent the cuts from kicking in at the Pentagon and domestic agencies alike. A two-month compromise resulted.

Officials in both parties said the agreement would prevent tax increases at incomes below $400,000 for individuals and $450,000 for couples.

At higher levels, the rate would rise to a maximum of 39.6 percent from the current 35 percent. Capital gains and dividends in excess of those amounts would be taxed at 20 percent, up from 15 percent.

The deal also would also raise taxes on the portion of estates exceeding $5 million to 40 percent. At the insistence of Republicans, the $5 million threshold would rise each year with inflation.

Much or all of the revenue to be raised through higher taxes on the wealthy would help hold down the amount paid to the Internal Revenue Service by the middle class.

In addition to preventing higher rates for most, the agreement would retain existing breaks for families with children, for low-earning taxpayers and for those with a child in college. Also, the two sides agreed to prevent the alternative minimum tax from expanding to affect an estimated 28 million households for the first time in 2013, with an average increase of more than $3,000. The law originally was designed to make sure millionaires did not escape taxes, but inflation has gradually exposed more and more households with lower earnings to its impact.

The legislation leaves untouched a scheduled 2 percentage point increase in the payroll tax, ending a temporary reduction enacted two years ago to help revive the economy.

Officials said the White House had succeeded in gaining a one-year extension of long-term unemployment benefits about to expire on an estimated two million jobless.

The legislation would delay for one year a 27 percent cut in fees for doctors who treat Medicare patients.

Also included is a provision to prevent a threatened spike in milk prices after the first of the year.

Even as time was running out, partisan agendas were evident.

Obama used his appearance not only to chastise Congress, but also to lay down a marker for the next round of negotiations early in 2013, when Republicans intend to seek spending cuts in exchange for letting the Treasury to borrow above the current debt limit of $16.4 trillion.

"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.

"And I'm going to be president for the next four years, I think," he added.

Obama's remarks irritated some Republicans.

Sen. John McCain of Arizona they would "clearly antagonize members of the House."

Associated Press writers Julie Pace, Andrew Taylor, Alan Fram and Ben Feller contributed to this report.



Bang, bang, bang.

What's that?

It's the can being kicked down the road by our government leaders.


Interesting that the Republicans insist on raising the amount exempted from estate tax every year depending on inflation, but these same Republicans resist cost of living increases for seniors on Social Security who are living month to month and have to sometimes chose between food or medicine.


@ tk:

Deficit reduction using "chained CPI" for Soc. Security was Pres. Obama's idea.


@TK....Amen to that. And that is exactly what it is, a choice between the two.


Bread and Circuses, Congress with the Hail Mary Pass, and Biden doing the final push, so when it all leads to a new recession/depression, Obama can say he really didn't do it.



You must not have kids or grandkids. You have no problem with leaving those generations a debt they didn't make and can't be paid. Pretty selfish of you.


I have grandchildren. My children and grandchildren are doing better then we are because they have had more opportunities and have taken advantage of them. Many of the benefits they enjoy come from the things we older people fought for.


@Tk....right again. My children have far better lives than we ever had at much younger ages just because of the fights we fought for them. Right on, TK. Truer words were never spoken. And their salaries were higher because of those fights as well. They made far more money more quickly than we ever did at younger ages as well.

I am in my sixties, my son in his forties and my grandchildren in their teens. Who knows WHAT may happen by the time my grandchildren are my age? No one has a crystal ball that can predict that far ahead. It is guess work at best. Who knows. With the smarts these kids have now days, they may be able to beat the deficit within a short time without being so stubborn and by working together. Not like the rest of us who have to have it all our own ways. No one knows for sure.



So with your logic no one should pay their debt because we don't know what the future will bring? Lets keep racking up debt for your teenage grandchildren. They can figure it out.

You are a prime example of no personal responsibility and do what ever you want attitude.

I on the other hand feel our generation made this problem it's our responsibility to fix it.


Poor Republican Party. You're in complete disarray, having been hijacked by your own extreme right- wing faction. Infighting has led to things we never thought we would see: Mitch McConnell filibustering his OWN legislation, and Boehner unable to even get his own reps to agree on a fiscal cliff plan to present to Democrats for consideration. The current Republican-led House, without a doubt, is the most dysfunctional political entity since the Nixon White House. I liken the Tea Party folks to a single defective bulb in a string of Christmas tree lights: they singlehandedly keep the entire system from working as it should.


@ wiredmama222:

"Beat the deficit"? Not hardly.

Historically, countries tend to cheapen their currency and monetize the debt which leaves the citizens working harder for less due to inflation.

For decades, the politicians have been writing checks for benefits that can never be paid in order to get elected and stay in office. Someday, the checks will be returned NSF.

Ya got the "takers" and the "makers" and the "takers" are winning, but only temporarily. Because in the end, Mr. Market won't be fooled and always wins.

The Soviet Union didn't collapse because the Russians were stupid. The U.S. is following in its footsteps.



(C) Just say it, "communism", all are equal until those that do all the work decide it is not worth it anymore.


Who is John Galt?


The fiscal cliff took years in the making going back to LBJ. Poverty in America was falling at a steep rate until LBJ started his war on poverty. What sense did that make if poverty was falling at a steep rate?
"What’s really striking, if we look at the chart, is that the poverty rate in America was steadily declining. But then, once President Lyndon Johnson started a “War on Poverty,” that progress came to a halt."


"Total federal and state welfare spending has increased more than 16-fold since 1964. Even since the 1996 welfare reform replaced Aid to Families with Dependent Children (AFDC) with the Temporary Assistance for Needy Families (TANF) program, spending has increased by 76 percent and by more than 20 percent since 2008."

There are many reasons for the increase in poverty rates. Loss of jobs in America is one of them. Many former middle income families now live in poverty due to loss of living wage jobs.

The Big Dog's back

centauri, your own chart showed poverty going down until the Reagan era. Hmmmmm.


centardi? Name calling, Big Dog? It goes to show you how the biased SR moderators allow trolls to name call but remove comments by other members that did not in any way violate the discussion guidelines.

1. Personal attacks (including: name calling, presumption of guilt or guilt by association, insensitivity or picking fights)

Carry on Big Dog, you get a free pass from the SR moderators to call people names. If you can't add something worthwhile to a discussion, then bring on the name calling.

The Big Dog's back

Answer the post.


@ Big Dog, I see that you edited your comment @ 7:16 for name calling. You didn't have to do that. You already got a free pass from the SR moderators. Carry on troll Big Dog.

BTW Big Dog, get some eye glasses and look at the charts again. Are you drunk or smoking that street weed to make you high?


No it did not pass the Republicans will not approve it. It was just on TV where they said no.


To all of you name callers, we that are receiving Social Security benefits are not takers. We are receiving the benefits because we worked and paid into the system.


Thank you for not saying you're getting back what you put into the system, because you're not. A majority of Social Security recipients get back quite a bit more than they put in! That's okay as long as there are lots of younger workers to support the program. The problem? There aren't, and Social Security in its present form is completely unsustainable.

You would have been much better off financially if the money from your paycheck, and your employer's matching percentages, had been stuck into an interest-bearing account, by the way...But that's all water under the bridge.

I don't begrudge those currently receiving such "earned entitlements," nor can we just cut them off for those who are too near retirement age to compensate. But we're going to have the phase the program out. It truly is a simple pyramid scheme, and it truly is well on the way to utter collapse. And how would THAT help any of the working poor or the elderly, hmmm?


You are living in a different age then some of us elderly. There were no 401s or employer matching funds.


Perhaps. On the other hand, many employers don't offer such benefits. Mine, for example, doesn't. I'm effectively limited to the same things YOU were limited to, perhaps less since I'm also not eligible for any kind of a pension.


@ tk:

There are "earned" entitlements and "unearned" entitlements.

SS is a pay-go Ponzi scheme. The money comes in, the money goes out. The youth are paying for your benefits and you paid for the seniors before you.

The SS trust fund is an accounting gimmick - there is no "trust fund."

SS began paying out more than it took in two yrs. ago - it can't last that way forever.


The trust fund would have a considerable amount more in it if they would quit using it for other things then what it is intended for.


@ tk:

Coulda, woulda, shoulda.

That "ship" sailed under LBJ's 1969 unified Federal budget plan.

Pres. Obama's 2% payroll tax deduction means there is less money currently going into the "fund."

As is said: A government with the policy to rob Peter to pay Paul can be assured of the support of Paul.

The Big Dog's back

Take the cap off. Problem solved.


I'm glad you are on here. You're an expert on everything no matter the subject.