After missing the midnight deadline, Congress and the President have technically sent the nation over the fiscal cliff, meaning higher tax rates are already in effect for all income tax brackets. But the Senate’s deal, brokered by Senate Republican Leader Mitch McConnell (KY) and Vice President Joe Biden, would target the tax increases on those making more than $250,000.
The Senate voted 89-8 to limit deductions for taxpayers making more than $250,000, which would raise their taxes, and to hike tax rates for those making more than $400,000....
Meanwhile, the United States also ran up against the debt ceiling yesterday. Treasury Secretary Tim Geithner said the Treasury would do some short-term creative accounting to make sure the country doesn’t default on its loans, which will buy two months before lawmakers have to fight it out again over increasing the debt limit.
The deal does nothing to address the reasons that the U.S. budget is out of control. Its focus on tax hikes rather than spending cuts is completely the opposite of what the country needs....
Hiking taxes simply isn’t a solution. Until Congress and the President pursue serious spending cuts, the country and the budget will keep chugging in the same direction. And that’s certainly no cause for celebration.
◼ Here's The Deal On The Fiscal Cliff Deal - Rick Ungar/Forbes
Early this morning, the U.S. Senate, by a vote of 89 to 9, passed a bill designed to back the nation away from the fiscal cliff—potentially averting a critical challenge to the nation’s economic recovery and forestalling a feared negative reaction from the stock markets upon opening Wednesday morning.
While the last minute and intensive negotiations led to success in the upper chamber of Congress, the battle is far from over as it remains to be seen whether the House of Representatives will approve the bi-partisan agreement or, for that matter, whether the bill will be permitted to even come to the House floor for a vote....
But it isn’t all just about taxes as the Senate bill addresses a number of additional and parallel issues that fed into the fiscal cliff fiasco—including passage of a nine month extension of the farm bill, temporarily removing the threat of a radical rise in the price of milk.
Here’s a roundup—
◼ Unemployment benefits are extended for an additional year benefiting approximately 2 million out of work Americans.Not included in the agreement is an extension of the payroll cut meaning that payroll taxes will rise by for 2 percent for all American wage earners.
◼ 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.
Also not included is a rise in the debt ceiling. The nation actually reached its debt ceiling yesterday and, while the Treasury Department says that it can continue to pay outstanding debt obligations and other bills for another two months, there will need to be an all new debt ceiling battle in Congress beginning in February to allow the nation to continuing making payments on its debt obligations.
Which brings us to the sequester...
Today, the bill will face the vagaries of the United States House of Representatives where, as we have learned, anything can happen.
To get an early sense of where this is all going, you will want to watch for a fundamental call to be made by Speaker John Boehner based on the result of a GOP caucus vote on the Senate originated agreement.
◼ Senate passes massive tax cut which raised taxes over $600 billion in middle of night without reading the bill - Le-gal In-sur-rec-tion
There are too many metaphors here applicable to the Senate’s 89-8 passage of a “fiscal cliff” bill in the middle of the night (around 2 a.m. this morning).
The bill raised taxes by over $600 billion, in addition to Obamacare taxes already coming on line, yet the Senators can claim it was a massive tax cut because the vote took place after midnight, so technically the Bush tax cuts already had expired.
The basic details are in ◼ last night’s post. The index to the bill ◼ is here, and the ◼ full bill here.
