Washington – Senate Approves Fiscal Cliff Legislation 89-8; Now Heads To House


U.S. Senate Minority Leader Mitch McConnell (C) departs the senate floor with an aide after a senate vote in the early morning hours at the U.S. Capitol in Washington January 1, 2013. REUTERS/Jonathan ErnstWashington – Legislation to negate a fiscal cliff of across-the-board tax increases and sweeping spending cuts to the Pentagon and other government agencies is headed to the GOP-dominated House after bipartisan, middle-of-the-night approval in the Senate capped a New Year’s Eve drama unlike any other in the annals of Congress.

The measure cleared the Senate on an 89-8 vote early Tuesday, hours after Vice President Joe Biden and Senate Republican Leader Mitch McConnell of Kentucky sealed a deal.

It would prevent middle-class taxes from going up but would raise rates on higher incomes. It would also block spending cuts for two months, extend unemployment benefits for the long-term jobless, prevent a 27 percent cut in fees for doctors who treat Medicare patients and prevent a spike in milk prices.

The measure ensures that lawmakers will have to revisit difficult budget questions in just a few weeks, as relief from painful spending cuts expires and the government requires an increase in its borrowing cap.

House Speaker John Boehner pointedly refrained from endorsing the agreement, though he’s promised a vote on it or a GOP alternative right away. But he was expected to encounter opposition from House conservatives.

“It’s three strikes in my book and I’ll be voting no on this bill,” Rep. Tim Huelskamp told CNN Tuesday morning. Huelskamp says the legislation would impose a hardship on small businesses around the country and falls short of addressing the need for cuts in spending.

The measure is the first significant bipartisan tax increase since 1990, when former President George H.W. Bush violated his “read my lips” promise on taxes. It would raise an additional $620 billion over the coming decade when compared with revenues after tax cuts passed in 2001 and 2003, during the Bush administration. But because those policies expired at midnight Monday, the measure is officially scored as a whopping $3.9 trillion tax cut over the next decade.

President Barack Obama praised the agreement after the Senate’s vote.

“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,” Obama said in a statement. “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.”

The sweeping Senate vote exceeded expectations — tea party conservatives like Pat Toomey, R-Pa., and Ron Johnson, R-Wis., backed the measure — and would appear to grease enactment of the measure despite lingering questions in the House, where conservative forces sank a recent bid by Boehner to permit tax rates on incomes exceeding $1 million to go back to Clinton-era levels.

“Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members — and the American people — have been able to review the legislation,” said a statement by Boehner and other top GOP leaders.

Lawmakers hope to resolve any uncertainty over the fiscal cliff before financial markets reopen Wednesday. It could take lots of Democratic votes to pass the measure and overcome opposition from tea party lawmakers.

Under the Senate deal, taxes would remain steady for the middle class but rise at incomes over $400,000 for individuals and $450,000 for couples — levels higher than President Barack Obama had campaigned for in his successful drive for a second term in office. Some liberal Democrats were disappointed that the White House did not stick to a harder line, while other Democrats sided with Republicans to force the White House to partially retreat on increases in taxes on multi-million-dollar estates.

The measure also allocates $24 billion in spending cuts and new revenues to defer, for two months, some $109 billion worth of automatic spending cuts that were set to slap the Pentagon and domestic programs starting this week. 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.

Even by the 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.

Republicans said McConnell and Biden had struck an agreement Sunday night but that Democrats pulled back Monday morning. Democrats like Tom Harkin of Iowa said the agreement was too generous to upper-bracket earners. Obama’s longstanding position was to push the top tax rate on family income exceeding $250,000 from 35 percent to 39 percent.

“No deal is better than a bad deal. And this look like a very bad deal,” said Harkin.

The measure would raise the top tax rate on large estates to 40 percent, with a $5 million exemption on estates inherited from individuals and a $10 million exemption on family estates. At the insistence of Republicans and some Democrats, the exemption levels would be indexed for inflation.

Taxes on capital gains and dividends over $400,000 for individuals and $450,000 for couples would be taxed at 20 percent, up from 15 percent.

The bill would also extend jobless benefits for the long-term unemployed for an additional year at a cost of $30 billion, and would spend $31 billion to prevent a 27 percent cut in Medicare payments to doctors.

Another $64 billion would go to renew tax breaks for businesses and for renewable energy purposes, like tax credits for energy-efficient appliances.

Despite bitter battling over taxes in the campaign, even die-hard conservatives endorsed the measure, arguing that the alternative was to raise taxes on virtually every earner.

“I reluctantly supported it because it sets in stone lower tax rates for roughly 99 percent of American taxpayers,” said Sen. Orrin Hatch, R-Utah. “With millions of Americans watching Washington with anger, frustration and anxiety that their taxes will skyrocket, this is the best course of action we can take to protect as many people as possible from massive tax hikes.”

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  1. Meanwhile my monthly family health coverage went up almost 300 dollars more. The way to get around all this is for those wealthy individuals is to divide your assets to your kids and this way everyone is in a lower tax bracket. The non frum wealthy are stuck because many have only one or two kids. So if they have million dollar incomes they are stuck. Life is too good IF you are an orthodox Jew.

    • Its income that decides if youre ‘wealthy’, not assets. So divvying it up to your kids will make zero difference. And appropriating income to them won’t help either because then THEY’LL have to pay. Either way you’re effed.

    • Sorry, but you can’t divide your income among your children. You can disburse a portion of your assets while you are alive in order to lower the value of your estate.

    • You are right a little bit. There is a great Democratic Enhanced Kitty Tax. Thanks to my friends. Now I can spend this year on unemployment it pays well after factoring the other benifits. Wages aren’t partnof Kitty Tax.

  2. I am sick of these clowns playing chicken with my life. Obama won. Get used to it, I don’t like it any more than you do but the guy made this offer last month, why do you have to bring it to the wire? Last time it cost the USA our credit rating. They’re all a bunch of children.

    • so based on your logic, since the yishmaelim yemach sh’mom nebach kill yiddin we should just kill ourselves first. Afterall they are “winning.”

      We are supposed to have checks & balances in this country. There are three branches of govt for a good reason. While the socialists are in power, the Conservative Republicans
      MUST keep Obama honest. When they fail to do what they are supposed to do, they look like fools & WE WILL vote them out of power.

      Try learning and UNDERSTANDING “American Civics & Government” instead of how much more you could line your pocket with more section 8 & government programs. We WILL run out of money because ALL the money of everyone could be confiscated as “taxes” and there still wouldn’t be enough for OblamO to hand out.

      • You exageration and hyperbole exceeds you nastiness. You need a lesson in civic or consult a certifioed public accountant regarding the tax rate before anyone believes your malarkey. President Clinton did not cvonfiscate anyone’s money except it increased the wealth of America

      • “We will run out of money…” US treasurys are 1% The lowest in 50 years. We have too much money. Treasurys auctioned off. Its called free market. “While the socialist are in power, the Conservative Republicans Must keep Obama honest” That is the reason why 36 Republican Senators voted with Obama.Ha ha. The other eight who voted against, Rubio,Ryan,etc knew verry well that this is the best for the country but they are looking ahead for the 2016 Republican Primeries where 3-4% of americans will elect the next Republican Presidential nomine. I hope they will continue their good work. It will ensure Biden (or another Democrat)will be the next USA President.

      • “Money could be confiscated as taxes” Get some history lessons or simple Google it. President Reagan (Republican) raised the Capital Gain Taxes to 28% Obama to 20% So i am not sure who are your “Conservative Republicans” Can you name them? Under President Reagan Romney and friends would have paid double in taxes since most of their income is Capital Gain.

      • “While the Socialists are in power the Conservative Republicans Must keep Obama honest. When they fail WE WILL vote them out of power. IJ”H i hope you are right on this one and will vote them out of power. We will have a Democratic President,Senate,Congress and Supreme Court in 2016. 4 years is a long time . Can you and Rush do somethyng sooner? Maybe recall them? We in Miami recalled the Mayor because he didnt do what he was voted for.

  3. Actually you can pay your kids a salary if you have a business, you can also trade stock in their names. Trouble is, if you pay more than the threshold you need to pay social security and payroll taxes, and file separate tax returns for each one.

  4. Look how clever they were. The Senate voted before midnight so they can say they raised taxes only on the wealthy ; the House will vote after and they will say they LOWERED taxes on the wealthy; because technically, the draconian rules went into effect at midnight!

  5. How come no one is complaining about the marriage penalty?
    If married rates rise at $450,000; if single it’s $400,000. So if married, get divorced and your hit doesn’t start until $800,000.


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