Deal Reached on Fiscal Cliff, Although House Unlikely to Vote Before Midnight
Posted on December 31, 2012It appears that a deal has been reached between the Democrats and the Republicans to stop us from going over the fiscal cliff. Technically, we will go over the cliff because the House of Representatives won't hold a vote before midnight, although the Senate said it could do a vote tonight before midnight. The House will most likely vote on January 1st or 2nd, so the damage should be minimal, although technically they missed the deadline.
Senator Mitch McConnell (R-KY) just could not get along with Democrat Harry Reid (Nevada) and called his old buddy Vice President Joe Biden. The two don't agree on much politically, but they are old friends from the Senate and Biden is President of the Senate. Biden is very good at back room politicking and this is the deal that's been cut, according to CNN: income taxes will go up to the Clinton-era rate of 39.6% from the current 35% rate for singles making $400,00 a year ($450,000 for families); the estate tax cap will stay at $5 million with estates over that amount taxed at 40% from the current 35%, unemployment benefits will be extended for another year; the sequester will be delayed for two months; cuts to Medicare doctors will be delayed for one year.
In addition, individuals making more than $250,000 and families that make more than $300,000 will see caps on itemized deductions and personal exemptions. A number of tax credits will be retained for the next five years, such as the earned income credit and the tuition credit. The deal is said to have a permanent fix to the Alternative Minimum Tax so it doesn't hit middle class families, but there aren't any specifics yet. None of this has been passed by the full Congress yet, but the deal has been approved by Nancy Pelosi and other House leaders.
President Obama addressed the nation earlier today, in which he says that the deal is very close. He also talks about the items he wanted that he got. He also took a small pot shot at Congress for taking too long to do a deal, which infuriated some Republicans. Others just shrugged it off, saying it's just politics as usual.