Fiscal Cliff

By Editorial Board, Tuesday, January 1, 4:49 PM

THE COMPROMISE BILL passed by the Senate to avert the worst effects of the “fiscal cliff” is a small, imperfect package that will do too little to address the nation’s long-term debt problem. As this page went to press, it was still unclear whether the House would accept the measure. But for all its weaknesses, the bill’s enactment would be far better than a failure by this Congress to act before it adjourns Thursday.

Most important, the deal would delay the ill-targeted and unwise spending cuts known as sequestration and cancel sharp tax increases for most Americans. In the process, it would also make some worthwhile reforms.

On Tuesday, the White House trumpeted estimates that the plan would raise $620 billion in new tax revenue over 10 years and create “the most progressive income tax code in decades.” According to a preliminary analysis from the nonpartisan Tax Policy Center, the top 1 percent of income earners would pay an average of nearly $51,000 more in taxes compared with current policy. The country needs additional tax revenue, and in an era of growing inequality, the tax code should become more progressive. The Senate bill would also permanently patch the alternative minimum tax, which has become a perennial headache for Congress.

Yet despite these desirable structural changes, the deal would not reduce future deficits much, even though Congress engineered the fiscal cliff to force ambitious budget reform. Relative to current policy, only 0.7 percent of American households would pay more in income and capital gains taxes, producing too little revenue. For context, the deal’s $620 billion in new revenue over 10 years is smaller than any single year’s projected deficitin the coming decade. If Republicans’ opposition to raising tax revenue weren’t so blinkered, they could have extracted more from Democrats in return for higher tax rates for more wealthy Americans. If Democrats hadn’t fought a money-saving reform to Social Security, they would have been in a better position to demand those higher rates on incomes or big estates. Instead, lawmakers seem to have gotten as close as they could to doing the bare minimum.

The United States will have to wait longer yet for its inevitable budget reckoning. Lawmakers are girding for battle over raising the debt limit, and sequestration’s spending cuts will continue to threaten vital government operations, including at the Pentagon. That means more brinkmanship in the next couple months. Then Congress and President Obama will have to tackle future annual budgets.

We hope the nation’s leaders will be able to accomplish in stages what they have been unable to do in a series of self-imposed crises: raise more revenue and significantly reduce future entitlement spending. But the fiscal cliff episode — including the GOP House’s last-second balking — offers little encouragement.

In a perverse way....most of them.

The final tally, 257 to 167, included most of the chamber’s Democrats and fewer than half of the Republican majority.

The bill passes 257-167 with 85 Rs and 172 Rs

In a brief address Tuesday night, President Obama saluted the passage of a fiscal cliff deal that the White House had negotiated with the Senate. Then he fired a warning shot at Congressional Republicans, saying he won't tolerate another down-to-the-wire battle over the debt ceiling this spring.

"i will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up," he said. "If Congress refuses to give the U.S. government the ability to repay these bills on time, the consdequences for the global economy would be catastrophic—far worse than a fiscall cliff.

JPB wrote:

The bill passes 257-167 with 85 Rs and 172 Rs

I guess that's 172 Ds.

"i will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up," [Obama] said. "If Congress refuses to give the U.S. government the ability to repay these bills on time, the consequences for the global economy would be catastrophic—far worse than a fiscal cliff.

I'm beginning to suspect there are lots of people in Washington who would love nothing more than to see this bill fail in the House.

And as many of them are Democrats...as are Republicans.

In fact, it wouldn't surprise me if, in their heart of hearts, more Democrats are hoping the Republicans are fools enough to push us over the cliff...then there are fools in the Republican ranks who want to do so.

Specifically which Democrats do you suspect would love nothing more than to see the Senate bill fail in the House?

If so, the vote breakdown in The House vote does not reflect that, according to the LA Times.

Which means that the No votes are 19 of the 191 Democrats and 156 of the 241 Republicans. Sorry for spamming the thread, but Frank Apisa irked me with his comment that as many Democrats as Republicans want to see the deal fail. There is a time and a place for equal-opportunity cynicism, but the America of 2013 isn't it. The obstructionists in Congress overwhelmingly sit in one party, and it's not the Democrats.

I wish! Unfortunately, this is Obama. When he said he will absolutely positively not negotiate about X, you know the next thing he'll do is negotiate about X. (Consider that my contribution to equal-opportunity cynicism.)

The latest internal party struggle on Capitol Hill surprised even Senate Republicans, who had voted overwhelmingly for a deal largely hashed out by their leader, Mitch McConnell of Kentucky. The bill passed the Senate, 89 to 8, at 2 a.m. on Tuesday, with only 5 of the chamber’s 47 Republicans voting no.

Twenty-one hours later, the same measure was opposed by 151 of the 236 Republicans voting in the House. It was further proof that House Republicans are a new breed, less enamored of tax cuts per se than they are driven to shrink government through steep spending cuts. Protecting nearly 99 percent of the nation’s households from an income tax increase was not enough if taxes rose on some and government spending was untouched.

A party that once disputed that there was any real “cost” of tax cuts encountered sticker shock when the nonpartisan Congressional Budget Office estimated that enacting them in place of the “fiscal cliff” provisions would cost $4 trillion over 10 years.
http://www.nytimes.com/2013/01/02/us/politics/a-new-breed-of-republicans-resists-the-fiscal-deal.html?hp

Quote:

In a brief address Tuesday night, President Obama saluted the passage of a fiscal cliff deal that the White House had negotiated with the Senate. Then he fired a warning shot at Congressional Republicans, saying he won't tolerate another down-to-the-wire battle over the debt ceiling this spring.

"i will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up," he said. "If Congress refuses to give the U.S. government the ability to repay these bills on time, the consdequences for the global economy would be catastrophic—far worse than a fiscall cliff.

http://www.slate.com/blogs/the_slatest/2013/01/02/fiscal_cliff_obama_warns_congress_he_will_not_have_debt_ceiling_debate.html

the man seems to think that he is the king!