Late last night Vice President Biden and Senate Leaders worked out a deal to temporarily avoid the so-called Fiscal Cliff. The plan was brokered after midnight even after the US House said there would be no vote on the Fiscal Cliff, and had basically given up on the idea of compromise.
The deal is good in many ways. It permanently secures the tax cuts for the middle class to avoid a huge jump in taxes for all Americans. The biggest news is that the deal, which moves to the House today, includes a significant revenue increase. For those who make more than $400,000 ($450,000 for couples) will see a 4% increase.
The bill also increases the rates on capitol gains taxes from 15% to 20%. While this is not the rates and numbers that President Obama campaigned on however in a negotiation you have to give a little as well.
“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.”
–President Barack Obama 1-1-13
The proposed bill includes a “cap on personal exemptions and itemized deductions for income above $250,000, or $300,000 per household.”
Another fabulous part of this bill is that it extends the Child Tax Credit, the Earned Income Tax Credit, and the Tuition Tax Credit for the next five years. These are tax credits that are specifically designed to help the middle and lower class families.
For labor this bill is a huge win. VP Biden included a one year extension of the unemployment insurance for more than two million Americans. The UI helps those who are still struggling to find meaningful work, survive, while the economy is still recovering.
The big draw back to this agreement is that it does not solve the Debt Ceiling issue. As we all remember the House GOP held American’s hostage by refusing to raise the debt ceiling and nearly shut the government down. This also resulted in a downgrade of our national credit rating. Early proposals of the Fiscal Cliff negotiations allowed the President to raise the Debt Ceiling without Congressional approval.
President Obama released this statement last night.
“There’s more work to do to reduce our deficits, and I’m willing to do it. But tonight’s agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans. And as we address our ongoing fiscal challenges, I will continue to fight every day on behalf of the middle class and all those fighting to get into the middle class to forge an economy that grows from the middle out, not from the top down. “
This may not be all we wanted or what we have been fighting for, however we made some great advances. We removed any Social Security cuts, and made positive changes to the Medicare program.
Now we all wait and see what the House does with the proposal.
Late in the night the US House passed the bill 257-167. Only a handfull of Democrats opposed the bill however the Republicans opposed it. Republicans voted 85 for to 151 against the bill, showing that only some were truly willing to do their jobs as elected leaders. I applaud these 85 Republicans who help get this legislation through, including Lame Duck Congressman Charlie Bass. Congressman Frank Guinta voted against it, showing that he is true to his “NO TAX” pledge and Tea Party politics.