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May 19, 2013

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It’s over: House passes ‘fiscal cliff’ deal

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J. Scott Applewhite / AP file

FILE - In this Nov. 13, 2012 file photo, a man walks in front of the Capitol in Washington. The debate in Washington over taxes and spending is likely to continue damaging the fragile economy well into 2013. The political standoff has already taken an economic toll, creating uncertainty about the future and discouraging consumers from spending and businesses from hiring and investing.

By (contact) Karoun Demirjian

Washington — 

Fiscal Cliff

House Majority Leader Eric Cantor of Va., right, leaves a Republican caucus meeting on Capitol Hill in Washington, Tuesday, Jan. 1, 2013. Cantor, the No. 2 Republican in the House leadership says he opposes a Senate-passed measure to avert the so-called fiscal cliff. Launch slideshow »

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The House of Representatives voted to back the Senate-White House deal on the "fiscal cliff" Tuesday night, ensuring that more than 99 percent of wage earners won’t see their taxes go up in 2013.

The vote of 257-167 came on the heels of the Senate’s voting 89-8 in the wee hours of the morning to accept the same deal. The House vote came only 37 hours before the 112th congressional session was constitutionally mandated to disband.

All members of the Nevada delegation, save for Rep. Mark Amodei, voted in favor of it.

But it wasn’t an easy road.

Congressional leaders went back and forth with the White House for months over how to avoid the onset of tax hikes and across-the-board “sequestration” cuts set to take effect on Jan. 1.

Discussions that started between President Barack Obama and House Speaker John Boehner eventually gave way to post-Christmas negotiations between Senate Leaders Harry Reid and Mitch McConnell. In the last 48 hours of 2012, it was McConnell and Vice President Joe Biden who struck a deal to permanently extend cut tax rates from the Bush administration on incomes up to $400,000 -- $450,000 for couples filing jointly -- allowing rates for income above that to rise from 35 percent to 39.6 percent in 2013.

The deal also extends unemployment benefits, sales tax deductions, mortgage debt relief deductions and energy tax deductions for a year, and makes permanent a correction to the alternative minimum tax and the $5 million exemption on estate taxes, which is now pegged to inflation.

Senators conferred through the night Monday, as Democrats expressed concerns with the tax threshold; they had wanted to see tax cuts extended only up to $250,000. Ultimately, 49 of the 53 Senate Democrats and Democrat-leaning Independents voted for the deal, along with 40 of 47 Republicans.

When the House of Representatives returned to the Capitol at noon, however, it was clear that the lawmakers in the House weren’t ready to follow in lockstep.

Biden returned to the Capitol on New Year’s Day to give Democrats what many described as an especially hard sell on the deal. Meanwhile, Republicans met in the Capitol basement twice, and for several hours Tuesday afternoon were threatening to amend the Senate’s fiscal cliff deal with an amendment to include more than $300 billion of spending cuts along with it.

By Tuesday evening, it was clear Republicans were going to drop that threat, and allow the Senate-passed fiscal cliff bill to come to the House floor for a clean, up-or-down vote. But Republicans did not carry that vote: In fact, over the 257 lawmakers that voted yes, only 85 were Republicans.

Boehner had been under pressure from Democrats for the last few weeks to allow a fiscal cliff vote, even if he could not secure a majority of Republicans to back the deal. He resisted, but by Tuesday, chose to promote the bipartisan deal over the unity of his Republican conference.

Boehner and Rep. Paul Ryan voted for the fiscal cliff deal, while Majority Leader Eric Cantor and Whip Kevin McCarthy voted against it.

Several Republicans, including Amodei, complained that the lack of spending cuts in the deal -- and the lack of resolution on “sequestration” cuts -- made it impossible for them to support the deal.

“I respectfully decline to support a measure that raises $41 in revenue for every dollar of spending cuts,” Amodei said in a statement released after the vote. “This is not a balanced approach. The status quo on the federal budget deficit and federal debt is not acceptable... I will not tell the Nevadans I represent that this bill is anything resembling a solution to the fiscal and economic sickness that threatens all of us.”

But other Republicans –- albeit a smaller number -– decided the benefits of the deal outweighed its faults.

“While I would have preferred to see more spending cuts in this final package, I did vote for this compromise because ultimately it was more important to protect Nevada families and business from these unprecedented tax increases,” Rep. Joe Heck (R-NV) said in a statement released after the vote.

The deal does not address or try to undo sequestration cuts, but postpones the onset of those sequestration cuts, which amount to about $500 billion over 10 years, for two months.

The deal also does not address the growing national debt, which exceeded the country’s borrowing authority over New Year’s Eve. Treasury Secretary Tim Geithner has said he could prevent the country from defaulting on its obligations for about the next two months, setting up a new showdown at the end of February.

In fact, the deal is expected to add about $3.6 trillion to the debt over the next decade, according to an initial estimate by the Congressional Budget Office.

Even with the permanent extension of tax cuts for most wage-earners, the deal doesn’t set the matter of tax reform to rest, either.

But the president and supporters praised it as an important first step.

“Today’s agreement enshrined a principle in law that I think will last as long as I am president... we're going to have to continue to move forward in deficit reduction, but we're going to have to do it in a balanced way,” Obama said, minutes after the House passed the fiscal cliff deal. “The sum total of all the budget agreements we have reached so far proves that there is a path forward.”

But, he added, he hoped it would get easier in the future.

“The one thing that I think hopefully the new year will focus on is to see if we can put a package like this together with a little less drama... that will not scare the heck out of folks quite so much,” Obama said.

Congress’ votes actually came one day too late to keep the country from going over the fiscal cliff. That happened at the turn of the New Year. But no real effects of the fiscal cliff had been realized because sequestration cuts were already being mitigated by an ongoing federal budget, risen income tax rates hadn’t yet been reflected in paychecks and the markets were closed on New Year’s Day.

“With markets reopening around the world and all eyes focusing on whether this institution can govern, this legislation allows us to get done what we need to get done,” said Rep. Sander Levin, the ranking Democrat on the House Ways and Means committee.

Discussion: 13 comments so far…

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  1. By mschaffer (Mark Schaffer)
    Jan. 1, 2013
    9:57 p.m.
    Flag

    Frankly I was surprised Joe Heck voted for this although much of his reasoning on his website is specious. I assume that Mark's constituents in the North will be happy with his regressive vote.

  2. By Test_Guy (Dan Connell)
    Jan. 1, 2013
    10:48 p.m.
    Flag

    New year, same old stuff. Nothing was really accomplished with this so-called legislation. The deficit continues to grow, spending goes unchecked, taxes continue to rise for all. Is anyone really surprised?

  3. By lovinglife (Bob Coburn)
    Jan. 2, 2013
    3:41 a.m.
    Flag

    Thanks to Obamacare our taxes went up ONE TRILLION DOLLARS on New Years.

    But remember, Obama just raising taxes on those evil rich people. Fraud.

    Happy New Years, everybody!

  4. By FernleyDem (Jess Garner)
    Jan. 2, 2013
    4:03 a.m.
    Flag

    @lovinglife...
    Care to explain ?

  5. By BoliBlingBling (Jeff Garner)
    Jan. 2, 2013
    5:57 a.m.
    Flag

    No problem. My taxes go up I'll just spend less as a consumer.

  6. By mschaffer (Mark Schaffer)
    Jan. 2, 2013
    6:41 a.m.
    Flag

    Jeff Garner shoots himself in the foot. Bob will not explain because his comment makes no sense and is not based on reality. Dan Connell makes over the top hyperbolic assertions that taxes continue to rise for all which is obviously untrue. Just another day in comment land.

  7. By ColinFromLasVegas
    Jan. 2, 2013
    7:01 a.m.
    Flag

    I am simply amazed the House of Representatives actually brought this up for a vote. But I'm not surprised it took a bi-partisan swing to get it done. And it was a reluctant bi-partisan effort. Especially on the side of the Tea/Republican majority; who all act like a herd of cats all milling around aimlessly.

    Today, they come up with a defense (why they defend not doing anything is beyond me) and they all act like they were forced to do it. And, of course, it's always the other side of the aisle to blame. Yeah. Sure. Senator Reid twisted your arms behind your backs and forced you. Gimme a break.

    At the same time, I'm disgusted with the leadership in the House. It took monumental efforts to even get them to lift a finger to do anything. Continual hammering. Rhetoric flying all over the place. Even by some of their own members ganging up on themselves. The Tea/Republicans over there are not leaders who are interested in governing. Rather they are a gaggle of thugs. It basically took constant beating on the head with a political two by four to get the vote even brought forth. And even then it was a day late and a dollar short. Past the date it was due. And they knew they had to do something.

    Also, it was reported that Speaker Boehner told Senator Reid last Friday, "Go *@$% yourself." I guess this is the new tool for the Tea/Republicans to demonstrate leadership and governing. Just cuss out the opposition. Way to go, Tea/Republicans. That's surely gonna get somethin' done....

    But this is what you get from Tea/Republicans who let right wing hate radio and Fox News dictate their policy all the time.

    It ain't over with though. Get ready for more debacle and mismanagement from the House for this next 113th Congress. And that don't matter who's in charge of it. Could be Boehner. Could be Cantor. Could be Boris Batonov from Rockey And Bullwinkle. They all operate in everything is a crisis mode. And protest, whine, complain and point fingers. Even if it isn't a crisis, they MAKE it into one at the drop of a dime. Everything they touch turns into an ultra-conservative soup sandwich.

    The voters are gonna remember this idiocy come election time. I predict another few elections and we'll wipe this nonsense away like turning Romney etch-a-sketch upside down and vigorously shaking it. POOF. Gone. Out of sight, out of mind. At least for a few generations.

  8. By wharfrat (pat hayes)
    Jan. 2, 2013
    7:23 a.m.
    Flag

    Speaker Boehner has apparently forgotten that he is Speaker of the House, not Speaker of the Republican Party. His insistence [and that of Cantor, McCarthy, etc.] that all bills muster a majority Republican vote before he will allow them on the floor seems at odds with representative democracy. Oh, wait....they're Republicans living in their own delusional bubble where Mitt Romney is President and Paul Ryan channels Ayn Rand.

    Heck's vote is consistent with his desire for re-election. It's hard to maintain Republican principles [to the extent that they have any] when a large number of your constituents are unemployed, in foreclosure or both. Amodei is an insignificant back-bencher with the IQ of, well, a rural high school dropout. How he votes on farm supports is more instructive.

    But let us rejoice. The can has been kicked down the road. In several months we can recycle all our comments plus add a few relating to the debt ceiling and continue doing that until the mid-terms give is the opportunity to prepare for 2016. Personally I'm hoping for Hillary v. Condi. Two women with balls, one black. That's gonna shrink a few in both parties. Hope I make it that long.

  9. By lvfacts101 (Jerry Fink)
    Jan. 2, 2013
    9:13 a.m.
    Flag

    What do we need the Republicrats for? What a bunch of spineless, wimpy, limp-wristed A-holes they have become under Boehner. They have morphed into "Dumbocrats" lite. UGH! We no longer have a 2-party system - it is now a 1 1/2 party system. The parasites are winning. Taxes go up. Spending stays at a record pace. The country continues on its downward spiral and the "progressives" get to cheat coming generations in order to fulfill their greedy and grubby agenda. How nice. Dumbocrats continue to hurtle the country towards another fiscal disaster greater than the one created by Chris Dodd & Barney Frank and stupid American's bask in the glory of having made themselves more dependent on lying, cheating and worthless politicians who are busily lining their own pockets while enriching their friends, cronies and families. Happy New Year, chumps!

  10. By PaulRupp (Paul Rupp)
    Jan. 2, 2013
    10:11 a.m.
    Flag

    I could ask my congressional Rep. Mark Amodei in writing to explain his vote however, his office excels with correspondences that never address core issues raised.

    Rep. Mark Amodei will not represent some of us much longer.

    Surprisingly, our new soon to be Rep. Steven Horsford has already taken an interest in constituent concerns and issues...

  11. By floozy (Willaim Flusek)
    Jan. 2, 2013
    11:24 a.m.
    Flag

    It is somewhat surprising that there is a lot of comments about the tactics of the House Republicans but little comment about much of the same set of tactics by Reid and the Senate Democrats. No comment about Reid saying that if the House passed a fiscal cliff bill without a tax increase for those over $250,000, he would not even allow it to come up for a vote. Or the fact that they did not even vote on the bill passed months ago by the house. Both sides a pretty dysfunctional in their behavior most of the time and this sort of brinksmanship only appears to be getting worse. Luckily we have at least a couple more months of it as we approach the debt ceiling and dealing with the postponed sequester cuts.

    As for the lovinglife's comment about the trillion dollar tax hike from Obamacare, I assume that he refers to:

    3.8% surtax on investment income for high income earners.

    0.9% increase in the Medicare tax on income over $200,000 ($250,000 for couples)

    2.3% Excise tax on medical device makers

    Cap on deductions for flexible spending accounts which results in higher taxes.

    Elimination of employer deductions for prescription drug coverage for retirees in coordination with Medicare Part D.

    At least those are the big things from Obamacare that go into effect 1/1/2013. But the CBO only scored the total impact of all of this as roughly $500B over 10 years, so this years take is probably $30B-$40B additional.

  12. By JeffFromVegas
    Jan. 2, 2013
    12:11 p.m.
    Flag

    I keep asking folks I talk to in my physical life this question:

    "Is this what a true compromise looks like?"

    I think that the republicans played the chess board smarter than the Obama people. And that the democrats got brushed aside.

    Still don't think it was a good plan for America, considering the debt ceiling blackmail game is just 8 weeks or so down the road...

  13. By DrJCA1 (Joel)
    Jan. 6, 2013
    7:13 p.m.
    Flag

    All of this means nothing. We are doomed because the American voter is probably the stupidest thing to walk the Earth. Every election you go to the polls and vote your party line without ever actually researching the issues or the implications of what the slime in Washington do. Liberals ignore the fact that we are close to actual bankruptcy and believe more spending is the answer. Conservatives run around waving the holier-than-thou flag and bring to the forefront the absurd issues of gay rights, abortion, and birth control, which of course has so much to do with the sensible running of this country.

    We have now argued the issues of taxes, spending, entitlements, lobbying, and various foreign policies for over a half century with things just getting worse. Obviously, the elected morons cannot fix anything and the voters who send them to Washinton, despite their comments on sites like this, couldn't care less. Looks great for our kids.

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