January 2, 2013

House approval pulls U.S. back from fiscal cliff

The long drama ends as Congress passes higher taxes on the rich and delays automatic spending cuts.

By LORI MONTGOMERY AND ROSALIND S. HELDERMAN The Washington Post

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John Boehner, Eric Cantor
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ASSOCIATED PRESS

Nancy Pelosi, Xavier Becerra, Joe Crowley, Steny Hoyer
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ASSOCIATED PRESS

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If approved by the House, the bill would proceed to the White House for Obama's signature. It calls for the top tax rate to rise immediately from 35 percent to 39.6 percent on income over $450,000 for married couples and $400,000 for single people.

The measure would protect more than 100 million families earning less than $250,000 a year from significant income tax increases set to take effect this month -- although their payroll taxes will rise with the expiration of a temporary tax cut adopted two years ago.

In addition to avoiding much of the fiscal cliff, the measure would extend federal dairy policies through September, averting a threatened doubling of milk prices. The measure also would cancel a scheduled pay raise for members of Congress.

After weeks of partisan bickering over whether taxes should increase for anyone, the compromise bill rolled through the Senate early Tuesday in a highly unusual New Year's Day vote. The vote was 89 to 8, with both parties offering overwhelming support.

The moment served as a rare bipartisan coda to what has been one of the most rancorous, partisan Congresses in recent history. The 11 senators who are retiring received hugs and kisses from their colleagues. The current Congress ends at noon Thursday, when the new Congress will be seated, and lawmakers would have been forced to scrap the fiscal cliff legislation and start over.

Three Democrats voted against the measure: Tom Harkin of Iowa, Thomas Carper of Delaware and Michael Bennet of Colorado.

Bennet complained that the bill would do little to reduce record budget deficits. According to the nonpartisan Congressional Budget Office, the measure would cause the national debt to be $4 trillion higher by 2022 than if all of the cliff's tax increases and spending cuts had been allowed to take effect.

Five Senate Republicans also rejected the measure, including tea party favorites Rand Paul of Kentucky, Mike Lee of Utah and Rubio.

But 40 others voted for it, including such Republican leaders on tax-and-spending policy as Sen. Patrick Toomey of Pennsylvania and Ronald Johnson of Wisconsin, a tea party star who frequently consults with House conservatives.

Neither party was entirely happy with the bill. While conservatives complained about new taxes and a lack of spending reductions, liberals complained about its provisions regarding inherited estates.

Although the tax rate would rise from 35 percent to 40 percent, estates worth as much as $5 million -- $10 million for married couples -- would go untaxed. And an inflation adjustment would guarantee that the size of the exemption would grow to $15 million for couples by the end of the decade.

 

 

Still, House Democrats largely embraced the measure, which was negotiated by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, R-Ky., and endorsed by Obama. After receiving a point-by-point 90-minute briefing from Biden on Tuesday, Democrats rallied around the package.

"It's long overdue for us to have this solution to go forward and remove all doubt as to what comes next for our country," said House Minority Leader Nancy Pelosi, D-Calif.

Hours later, Pelosi indicated via Twitter that a "strong majority" of Democrats supported the legislation and that she was "confident" it would pass if Boehner held a vote.

But it was a different story among House Republicans, who at first appeared to strongly oppose it. In the early afternoon, Republicans gathered for the first of two lengthy closed-door briefings in the basement of the Capitol.

There, Boehner told members that he wanted to hear their views but would not take a position. Cantor, meanwhile, "forcefully" aired concerns that the measure would raise taxes but not cut spending, said Rep. Jeff Flake, R-Ariz. Afterward, Cantor emerged and told reporters: "I do not support the bill."

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Barack Obama
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President Obama speaks following the House vote Tuesday night.

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