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Crisis Averted (sort of)
Author: BobR    Date: 01/02/2013 13:39:25

It appears the crisis has been averted. Well - half the crisis anyway... the other half has been delayed for two months, so we'll get another two months of dickering and posturing before yet another 11th hour deal. At 2:00 AM on New Years Day, the Senate passed a bill to avert the fiscal cliff. It passed with only 8 votes opposing. House Speaker John Boehner (R-OH) had previously punted on his responsibility to get anything done when he couldn't even get a watered down "Plan B" passed by his own party. He left town saying it was up to the Senate Dems and the president to come up with a deal, and if they did, he'd bring it up for a vote.

From a political perspective, those words came back to bite him. The president and the Senate DID come up with a plan, one that was far more progressive than his "Plan B". It contained a lot of good stuff:

  • Unemployment benefits are extended for an additional year benefiting approximately 2 million out of work Americans.
  • Tax credits for college tuition, created by the 2009 stimulus package, are extended for five year, benefiting some 25 million low income families.
  • The “doctor fix” is included meaning that Medicare providers will not face a serious cut in pay.
  • The Alternative Minimum Tax problem is permanently fixed removing a potential tax danger for middle class families.
  • A number of existing business tax benefits will remain in place for another year, including renewable energy tax credit which is extended for an additional year.
  • The $900 per year salary raise recently signed into existence by President Obama for members of Congress is revoked.

From a revenue perspective, the only real compromises on the president's part were increasing the cut-off income level from $250k/yr to $400k/yr ($450k for families), and letting the temporary Social Security tax holiday expire. That last one means everyone will see their taxes go up 2% in the coming year. For someone making $50k/yr, that amounts to $1000, or $83/month. That will hurt a little, but won't be as devastating as doing nothing would have been.

It also kicks the can containing spending cuts two months down the road.

Republicans in the House were divided, and spent most of the day debating whether to amend the bill. Ultimately - like the "Plan B" idea - they could not muster enough votes amongst themselves to move forward on amendments. At about 11:00, they put the original unamended bill up for a vote, and it passed with most Democrats and 87 Republicans voting for it (here's the roll call). Sadly, my own very liberal House Rep voted against, because (as he tweeted last night) "I voted no on #fiscalcliff bill. Leaves US with 3 more 'fiscal cliffs' - all would put nearly 40% of Northern Va economy on chopping block". Doing nothing would do the same thing, which is the inverse of something Republicans failed to grasp, which is that voting no on tax increases means taxes go up anyway. I am a bit disappointed in him.

As expected, heads in freeperland are exploding. Also expected are the whiners on the left who still consider this "caving". The Dems in the House who voted against the bill mostly did so because they felt it was missing too many vital components. Republicans voted against it because they're against anything the president is in favor of. House majority leader Eric Cantor (R-VA) voted against the bill; Boehner voted for it, as did failed veep candidate Paul Ryan (R-WI). That should make for an interesting dynamic come Jan 03 when the new House reconvenes and has their biennial election for House Speaker. Meanwhile, President Obama - who had to cut short his Christmas vacation to come back to DC to babysit this process, is reuniting with his family in Hawaii.

Some Republicans are trying to convince themselves that since this occurred after midnight on Dec 31, these aren't tax increases at all. They argue that the country did go over the fiscal cliff, and thus - these are actually tax cuts. Grover "Tax Pledge" Norquist himself is trying to make that point. To this, I say - I agree.

Good-bye Bush Tax Cuts.

Hello Obama Tax Cuts.

And finally, a big thank-you to Republicans who painted themselves into a corner and let the clock run out. Not only did the president get nearly all of what he wanted, he also gets the credit, and you get the blame.


117 comments (Latest Comment: 01/03/2013 01:50:35 by TriSec)
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