President Obama: Fiscal cliff deal ‘one step in a broader effort to strengthen our economy’
BY LYNN SWEET Sun-Times Washington Bureau Chief January 1, 2013 11:21AM
The dome of the Capitol is reflected in a skylight of the Capitol Visitor's Center in Washington, Tuesday, Jan. 1, 2013. Squarely in the spotlight, House Republicans planned a closed-door meeting Tuesday to decide their next move after the Senate overwhelmingly approved compromise legislation negating a fiscal cliff of across-the-board tax increases and sweeping spending cuts to the Pentagon and other government agencies. (AP Photo/Jacquelyn Martin)
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Updated: January 1, 2013 10:52PM
WASHINGTON — The drawn-out fiscal cliff drama ended Tuesday night with the House sending President Barack Obama a bill to sign averting tax hikes that would have socked every earner in the nation.
The bill passed the House on a 257-167 bi-partisan vote, coming with only hours to spare since the new Congress is being sworn-in at noon Thursday.
Obama late Tuesday thanked Congress for “preventing a middle-class tax hike that could have sent the economy back into recession. . . . This law is just one step in a broader effort to strengthen our economy.”
Highlights of the deal call for income tax rates to rise for individuals with incomes above $400,000 and married couples who earn above $450,000 — a level that represents a Democratic concession, since Obama had campaigned on boosting taxes on households making more than $250,000. Capital gains taxes would also rise for these higher income earners.
The tax on estates above $5 million will be taxed more-from 35 percent to 40 percent, despite efforts by the GOP for no increase. Unemployment benefits set to expire would be extended for one more year.
If Congress took no action federal tax hikes and a series of deep cuts in Pentagon and domestic spending spread would also have started to be implented starting today. Under the deal, those cuts will be postponed for two months while Congress takes another stab at the budget, debt and deficit.
And while Obama prevailed in his quest to have the wealthy pay more, the price he paid is another exhausting battle in a few weeks over spending cuts, this time linked to raising the nation’s debt ceiling.
The vote came after a chaotic and historic 24 hours on Capitol Hill, starting at about 2 a.m. ET Tuesday when the Senate approved — on a 89-8 bipartisan roll call — a fiscal cliff deal negotiated between Vice President Joe Biden and House Minority Leader Mitch McConnell (R-Ky.)
Less than 12 hours later, the deal almost unraveled when conservative GOP House members — some with roots in the Tea Party movement--led by House Majority Leader Eric Cantor (R-Va.) said at a closed door meeting they would not support the Senate bill because it did not cut spending enough.
The internal GOP wrangling magnified festering divisions between Cantor and House Speaker John Boehner (R-Ohio.). If the House GOP derailed the bi-partisan Senate deal, House Republicans were exposed to the very real political possibility that they would be blamed for saddling everyone with tax hikes in order to preserve tax breaks for top earners.
At a second closed door meeting of GOP House members on Tuesday afternoon, moderate members who spoke out, including Rep. Judy Biggert (R-Ill.), urged colleagues to take a reality check and not throw out the tax package.
The breakthrough came when Boehner made two key decisions. In order to address the concerns of the conservatives, he whipped, or polled GOP members asking them if they would support an amendment with deeper spending cuts. It failed to win support.
Next — and most crucial — Boehner allowed an up-or-down vote, putting aside Tuesday night governing through the “Hastert Rule,” named for former House Speaker J. Dennis Hastert (R-Ill.) whereby no legislation gets to the floor not supported by the party in power.
Obama and House Minority Leader Nancy Pelosi (D-Calif.) had been urging the up-or-down vote knowing that there would be enough Democratic votes to get to the 217 needed for passage. While there was some angst among Democratic progressives, there was no serious threat of Democratic defections.
The House vote ended a showdown that was entirely self-inflicted because of the Congressionally imposed Dec. 31 fiscal cliff deadline installed in order to force members to act on the growing debt and deficit. Those harder questions, for now, will be left for another day.
In interviews, Demcrats and GOP lawmakers from Illinois said each side gained in the compromise.
Rep. Bob Dold (R-Ill.) called the measure a “good deal,” noting that “we are keeping rates low” for most U.S. workers.
“I do hope that there are going to be other opportunities to talk about reigning in spending because we have to do that,” Dold said.
Rep. Adam Kinzinger (R-Ill.) said while Obama got his higher taxes on the wealthy, “in the long run, we do have to have a spending fight in this country.”
Rep. Jan Schakowsky (D-Ill.) said, “we stopped taxes going up for 98 percent of Americans. We asked the rich to pay more. For the first time in 20 years, Republicans are being force to vote for higher taxes. This is a good deal.”
Said Kinzinger of the next round of fiscal fights, within a few months, “this is all going to be down-to-the-wire stuff again.”