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.

Comments

Contango

@ tk:

Not too good on sports and entertainment. I've got a BA in Political Science and History, plus I'm an investor and self-educated in personal finance and economics (Austrian).

Centauri

Contango, I have found that the most informed people are not sports fanatics. Sports are alright for entertainment at times but too many people are too engrossed in sports. There is a reason why a multi-page newspaper section is all about sports. Many Americans are well versed and informed about sports but know nothing about their government.

thinkagain

Don’t forget his BS in Pretentiously Annoying…

Contango

@ thinkagain:

Annoying only to those who dislike documented facts.

goofus

We are all screwed!!!!!

The Big Dog's back

Just you goof.

goofus

Not me, with my assets being hidden in the Cayman Islands and no dependents, I plan on having a good time and the last check Written to the undertaker will bounce if I played my cards right

Louie

I dont understand why republicans should have any say on anything they want spending cuts to medicare and medicaid but dont want taxes on the rich to go up in other words make the poor and middle class pay once again isnt nothing new.If people would stop and think its the republicans that put the economy in this shape to begin with thats why I say they shouldnt have a say on any of it they just make things worse on everyone but the rich and then they wonder why they dont reelected DAH!I dont know about any one else but I know people are tired of their help the rich B.S and nothing will ever get any better as long as they are here to drag down people who try but arent rich so they dont care.

Dr. Information

Dems at their best. Want to raise taxes 600 billion but only cut 15 billion in spending. A nice ratio of 41/1 raising/cutting. We are all screwed. Don't pass this bill house, it's a bad deal for everyone.

Dr. Information

No new taxes. Remember Obie said that. Liar, and a cheat.

KURTje

tk good luck to you. As one who had grandparents leave pre-Nazi Germany, I feel that gave me an education. Things like : try to plan for the future, don't spend more than you make, pay as you go, produce as much of your food as possible etc. Many here never knew trying times growing up. America's economy was vibrant after WW2. Now it is a &*^%#@8. The future is going to be a challenge.

tk

@kURTje, I had quite an education growing up also. Believe me there were plenty of trying times. As a teenager I wasn't out partying. When I got married I had callouses across both hands from the work I did. Raising a family there were times we had to charge things but we always made sure we did not go into debt more then we could afford to pay back. We grew a garden then and although my husband will soon be 81 years old and has had open heart surgery, we still plant one and I can and freeze vegetables. We don't have to do that now but it is just who we are. Some things are just beyond our control. Our home has been paid off for years but the property taxes are now more per year than our house payments were. Propane prices skyrocketed although we keep our thermostat set in the 60's. You would be hardpressed to find someone more more frugal then we have been without being miserly. My husband and I just celebrated our 57th wedding anniversary and looking back we feel we have had a good life. Sometimes hard no doubt, but when we look at our children and grandchildren we know it was a success.

The Big Dog's back

Bravo TK!

arnmcrmn

@tk, while I think most older people can say their kids and grandkids have lived a better life than them, you also have to remember that it was a reflection of the booming economy along the way minus the out of control federal debt. Was the Bush administration to blame, sure. Yet, what has Obama done? Are we now a society that will just blame the guy behind him and not fix the problem? I think so. Its all added up to a run away train. To fix the issue, we can't just close our eyes and hope for the best. Drastic measures will need to take place to wrangle in our debt. I don't care if it takes 20 years to cut the debt down to a trillion or so dollars, just show us more improvement and less blaming everyone else. If Obama or any other future president claims they can fix the problem, but then doesn't, why do we re-elect them? We really need to demand more.

Unfortunately, our children and grandchildren are going to carry the burden of crushing debt, super high taxes and an economy that will just limp along.

Every day we are regulating more and more that is costing this nation jobs. We cannot compete with China or other countries anymore in several areas because of our regulations. Companies simply cannot make a product cheaper here. Jobs will continue to be outsourced, thats a fact.

What it all adds up to is a run away train. Everyone wants a fix, but nobody wants a fix. Don't touch my Medicare, don't touch my SSI, don't make Defense cuts, but dear Lord, fix the problem. We can't fix the problem without making some serious cuts and thats the bottom line. This is a national problem.

Contango

@ tk:

Good for you. Most today have little-to-no understanding of frugality but have a "you owe me" and "I want it NOW" attitude.

I'm sure that you and your spouse are an inspiration to many.

A wonderful and healthy New Yr. to you and yours!

BTW: I worked in factories (Amer. Crayon for one) and grocery stores in order to help put myself through college.

arnmcrmn

HSA cap (thanks to Obamacare) will really pinch the middle class even more.

Also, read below....reeks of hypocrisy , lies and more government BS by this administration. Wait....just wait.....here it comes......Bush's fault right?

http://online.wsj.com/article/SB...

A tax increase for everyone but the favored wealthy few

In praising Congress's huge new tax increase, President Obama said Tuesday that "millionaires and billionaires" will finally "pay their fair share." That is, unless you are a Nascar track owner, a wind-energy company or the owners of StarKist Tuna, among many others who managed to get their taxes reduced in Congress's New Year celebration.

There's plenty to lament about the capital and income tax hikes, but the bill's seedier underside is the $40 billion or so in tax payoffs to every crony capitalist and special pleader with a lobbyist worth his million-dollar salary. Congress and the White House want everyone to ignore this corporate-welfare blowout, so allow us to shine a light on the merriment.

KURTje

Meanwhile the Republican has more strife among themselves. The old GOP doesn't get along with the Log Cabin GOP. Then the Tea Party doesn't like the old GOP. What's an GOP person supposed to do? (okay won't lie here - kinda like watchin M go at each other..such small minds)

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