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Congressional leaders are still engaged in negotiations over the fiscal cliff.
The Senate passed a last-minute plan at 2 a.m. Tuesday with a vote of 89 to 8. The plan came about after a late-night visit from Vice President Joe Biden on New Year's Eve.
Below, a live blog of the latest developments in the negotiations:
Senate Bill Includes Help For Troubled HomeownersThe Senate version of the legislation to avert the so-called fiscal cliff is littered with favors for select corporations. But it also includes a prime provision for troubled homeowners who receive mortgage relief from their banks.
Without the special clause, the limited foreclosure relief efforts that are currently in the works would be extinguished. Banks have been extremely reluctant to grant families debt relief on mortgages facing foreclosure. But tax policy is poised to poison any debt relief that borrowers could receive from banks -- unless Congress acts.
Millions of homes are worth far less today than what buyers paid for them during the housing bubble. Banks can often save money for themselves and investors by writing down the value of a troubled mortgage to the current value of the house -- thus averting costly foreclosure expenses. At midnight on January 1, 2013, the tax policy for this relief changed. Any debt that banks forgave would be counted as ordinary, taxable income for the borrower. If a $300,000 mortgage is written down to a $200,000 current home value, the homeowner is suddenly burdened with a tax bill for $100,000 in income.
As a result, a homeowner struggling to pay the bills would be faced with tens of thousands of dollars in taxes. That would destroy any hope of establishing future mortgage debt relief for troubled homeowners, as any bank leniency would result in heavy tax trauma for borrowers.
But the Senate version of the fiscal cliff bill would delay this tax policy change for a year. If the deal passes the House, the few mortgage modifications that are currently in the works will be able to proceed.
-- Zach Carter
ACU RespondsAmerican Conservative Union Chairman Al Cardenas released the following statement on the latest fiscal cliff proposal:
"The American Conservative Union simply cannot accept or support the Senate Bill as passed this morning, which does nothing to reign in out of control spending. Given the dire financial situation our country faces, ACU would have supported, albeit reluctantly, the Bush era tax cut extensions for those with incomes under $400,000 to $450,000 and supported the Death Tax provisions that maintain the current exemptions and are indexed for inflation. This is vital for our family farms and family-owned businesses. Our nation has a spending problem, not a revenue problem. Rather than do the essential work of cutting spending, the current bill actually adds even more deficit spending. Congress needs to make the hard decisions now for the future of our children and grandchildren. Therefore, ACU recommends that the House take the non-tax provisions out of the Senate Bill and pass it. They should then go back to the drawing board and put together a comprehensive plan to responsibly deal with unemployment insurance, the Farm Bill, special interest tax subsidies and replacing the sequester with targeted spending cuts in a way that would be in line with our conservative values."GOP 'Not Batshit Crazy'
@ OKnox : Dem. Rep. Hastings tells reporters GOP going w. clean up/down vote on Senate deal. "They're crazy but they're not that batshit crazy" Confused House GOP Republicans Shifting Back To Senate Deal After their second conference meeting of the day on the fiscal cliff deal, House Republicans seemed subdued and were beginning to back away from a fresh showdown with the Democratic-led Senate.
Rep. Richard Nugent (R-Fla.) told reporters that House Speaker John Boehner explained to the caucus that Boehner would vote for the Senate bill, if that were the choice.
"I think he showed he's trying to listen to the conference in regards to giving everybody an equal shot at moving something forward," said Nugent. "But you also have to be pragmatic about what's going to pass."
"When you have a bill passed with so many Republicans in the Senate, it probably would get a similar result [in the House]," said Rep. John Fleming (R-La.), comparing the situation to the 2011 end-of-year battle over the payroll tax cuts, which the House balked at then ultimately passed after 89 senators had voted for them -- the same as voted early Tuesday for the fiscal cliff deal.
Republicans seemed to be looking forward to future chances to extract cuts. "We still have more opportunities. We've got the debt ceiling coming, sequestration," Fleming said. "So we're going to get taxes off the table. The president can't say, 'We've go to raise taxes first before we get to spending cuts.' We will have already done that.Now the topic will be spending cuts, from this point out."
It remained undecided whether there would be a vote on the Senate bill or an amended Senate, and whether it would be voted on tonight or Wednesday.
-- Michael McAuliff
House To Vote On Senate Bill
@ DanaBashCNN : About to report w/ @AliVelshi : sentiment emerging among house repubs that the house will just vote up or down on senate bill no amendment Rep. John Fleming: We Have Enough Republican Votes To Pass Fiscal Cliff Deal Without AmendmentsRep. John Fleming (R-La.) said Tuesday there are enough votes among House Republicans to pass the Senate fiscal cliff bill without any amendments -- so long as a majority of Democrats support it.
"There are some Republicans who do support this along with Democrats," Fleming told reporters after the second GOP caucus meeting Tuesday, adding that he thought the number would be sufficient to get the Senate-passed bill through the House.
Fleming said he does not support the bill but thought it would be a "waste of time" to amend it when Senate Democratic leaders have already said they would reject any amendments to the legislation -- and he was confident most Republicans did not want to go down that road.
"I don't think the amendment will have 218 votes, because the sentiment I'm getting from people is this will put us in the same kind of situation we're in with the payroll tax where we sent something back to the Senate and the Senate wouldn't take it up," Fleming said. "So I think they're unlikely to take it up."
Fleming also weighed in on the alleged disagreement between House Speaker John Boehner (R-Ohio) and House Majority Leader Eric Cantor (R-Va.) over the fiscal cliff deal and said that he did not feel the two men were on the same page.
"I think there's a division between the speaker and the leader on this. The only thing I know is the Leader said that he personally did not support the speaker," Fleming said. "I heard the speaker say he is going to vote for the bill -- we're talking without amendments. [But] it's always possible the leader will vote with Speaker Boehner just in unity even though he personally doesn't support it."
Shortly before the meeting, Cantor spokesman Doug Heye pushed back against rumors of a rift between Boehner and the Majority Leader, tweeting, "Majority Leader Cantor stands with @SpeakerBoehner. Speculation otherwise is silly, non-productive and untrue."
Boehner presented his caucus with two options during the meeting: amend the Senate bill with approximately $328 billion in spending cuts, if a majority commit to passing it, or hold a vote on the Senate-passed legislation with no amendments.
--Sabrina Siddiqui
House Staffer: Need to Wait For 113th Congress For DealA senior House Republican staffer from the conference's most conservative wing summed up his latest sense of the state of play.
"My gut is that this 'deal' falls apart, and we have to start over when the 113th Congress reconvenes later this week," the aide told HuffPost by e-mail.
-- Jon Ward
What Is Boehner's Next Move?A House GOP leadership aide mapped out House Speaker John Boehner's plan forward: See if the 218 votes are there to amend the Senate-passed bill to add in spending cuts, and if the answer is no, hold an up-or-down vote on the Senate-passed bill.
From the aide:"The Speaker presented his members two options. The first would be to make an amendment to the Senate bill that would add a package of spending cuts. The Whip will do a whip check on this spending cuts amendment after the meeting. If we can get the commitment of 218 votes on this amendment, we will bring it to the floor and send it to the Senate. The Speaker and the Leader both cautioned members about the risk in such a strategy. They told them there is no guarantee the Senate would act on it. If we cannot get the commitment of 218 votes tonight, we will bring up the Senate-passed measure for an up-or-down vote in the House.
Members said that the amendment would include about $328 billion in cuts, although none spelled out what those cuts would be.
-- Jen Bendery and Michael McAuliff
Senate Wraps Up For EveningThe Senate adjourned until noon on Wednesday, which means if the House does alter the fiscal cliff deal, there is no chance the Senate would follow suit today.
In any case, Democrats there say they wouldn't take it up anyway.
-- Michael McAuliff
GOP Changes To Cliff Deal Could BackfireNot only could Republican changes to the fiscal cliff deal create a measure that the Senate refuses to take up, it could create a bill that's actually tougher on the GOP.
Why?
As the measure stands now, House Minority Leader Nancy Pelosi would push Democrats to hold their noses and back the bill, which is not enthusiastically supported. There could be around 150 Democratic votes in favor, meaning fewer than 70 Republicans would have to sign on.
But if Republicans amend the deal with anything Dems like less, all bets are off, said one Democratic source.
House Speaker John Boehner would then have to compel more of his caucus to back the deal, and he was unable to get that sort of support when he tried his Plan B proposal to set the tax-cut cut-off at $1 million -- more than double what passed the Senate early this morning.
"It would just kill this thing," a Democrat said. "It wouldn't pass."
House Rules Committee Chairman David Dreier (R-Calif.) was asked if amending the bill is the equivalent of killing it. "To me, that's the case," he said, according to Fox News' Chad Pergram.
-- Michael McAuliff
Time For Some SandwichesCantor, Boehner Coming Together“It's meatball with provolone”-VP, ordering sandwiches for his staff @potbelly today in DC. (WH Photo-D. Lienemann) twitter.com/VP/status/2862…
— Office of VP Biden (@VP) January 1, 2013
Rep. Eric Cantor (R-Va.) spokesman Doug Heye tweeted out a peace offering to House Speaker John Boehner, a sign that leadership is coming together and moving closer to a path to passage of the Senate bill.
"Majority Leader Cantor stands with @SpeakerBoehner. Speculation otherwise is silly, non-productive and untrue," Heye tweeted.
-- Ryan Grim
All Major Conservative Groups Oppose White House-Senate DealThree influential conservative groups that helped to defeat Speaker John Boehner's "Plan B" before Christmas called for a "no" vote on the fiscal cliff deal struck by the White House and the Senate. The calls of opposition from these groups appear to have been heard by House Republicans, who are refusing to support the deal passed by the Senate.
The ultra-conservative Club for Growth stated, "This bill raises taxes immediately with the promise of cutting spending later. Tax rates will go up on marginal income, capital gains, dividends, and even certain estates when a person passes away. But it also delays the sequester for at least two months, breaking the promise made by Congress in 2011 to cut government spending. And, among other things, it includes an unpaid for extension of unemployment benefits."
Heritage Action, the political arm of the Heritage Foundation, echoed these concerns, "To be clear, this is a tax increase. ... Heritage Action opposes the kick-the-can tax increase and will include it as a key vote on our legislative scorecard."
FreedomWorks President and CEO Matt Kibbe opposed Senate passage of the deal and wrote to his group's members to call their senator to express their opposition. "I urge you to call your state’s two U.S. Senators and ask them to vote NO on the McConnell-Obama bill to raise taxes and postpone the promised sequester savings. We will count any vote on this proposal as a KEY VOTE when calculating the FreedomWorks Economic Freedom Scorecard for 2012."
A fourth group, the Koch brothers-controlled Americans for Prosperity, stopped short of calling for supporters to oppose the deal, but did blast both the deal's contents and the way it was being passed.
"The package is being rushed through at the last minute, possibly voiding the Speaker’s promise that the country would be able to review legislation for three days before the House voted on it. Much like the President’s health care law, it looks like we’ll have to pass the tax bill to find out what’s in it," Americans for Prosperity policy director James Valvo wrote on AFP's blog.
Both the Club for Growth and FreedomWorks are known for getting involved in Republican primary elections to oppose lawmakers that they deem insufficiently conservative. In the past three elections, the Club for Growth defeated four incumbent lawmakers in primaries including Sens. Richard Lugar (R-Ind.) and Bob Bennett (R-Utah) and Rep. Wayne Gilchrest (R-Md.). The group's primary opposition to the late Arlen Specter led him to switch parties in 2009 to run for reelection as a Democrat.
-- Paul Blumenthal
Dems: What Will We Do When Deal Collapses?Some Democrats were already thinking out loud about what will follow the collapse of the Senate deal, which they now expect.
If Republicans attempt to offer amendments -- as is expected -- Democrats will oppose a rule to allow that to happen procedurally.
If the GOP then tries to pass an amended bill, "they will have to do it with their own votes," said Rep. James Clyburn, (D- S.C.), a member of the leadership. Either scenario would kill the deal.
If the GOP doesn't offer an up or down vote on the Senate deal, well, that would kill the deal, too.
And then what? "Well, I say that then we wait for the new Congress to come in on Thursday. We'll have better numbers, more members on our side," said Clyburn. "Then we offer a new bill that they will like even less. They didn't like the 450 (thousand dollar in household income) floor on the tax increase? Let's see how much they like it when we push it back down to 250 (thousand)!"
-- Howard Fineman
House Democratic Leadership Calls On Boehner To Bring Fiscal Cliff Deal Up For A VoteFollowing a three-hour meeting with their caucus that included a discussion with Vice President Joe Biden, House Democratic leadership called on House Speaker John Boehner to bring the Senate-passed fiscal cliff deal to the floor for an up-or-down vote.
"The United States Senate voted in an uncharacteristically, very strong bipartisan way -- 89 votes in favor of the compromise legislation -- that's historic," House Minority Leader Nancy Pelosi (D-Calif.) told reporters Tuesday on Capitol Hill. "Up until now, the speaker has said when the Senate acts, we will have a vote in the House. That is what he said, that is what we expect, that is what the American people deserve."
She added that she thought there had been "gigantic progress," but stopped short of saying whether she anticipated having enough votes from members of her caucus to see the bill through the lower chamber.
"Right now, our members after very thoughtful deliberations and review are continuing to review the legislation, weighing the pros and cons and weighing the equities of not going over the cliff," Pelosi said. "But we're all very eager to see the form that the Republican leadership will put onto the floor today … our members are making their decisions now."
But even though the deal negotiated between Biden and Senate Minority Leader Mitch McConnell (R-Ky.) is unpopular across both parties, a House leadership aide was confident the majority of House Democrats would get behind the bill.
"There's concern among members, but no one [is] really saying they'll vote no," the aide said in an email.
-- Sabrina Siddiqui
GOP Deeply Displeased With Spending In Fiscal Cliff DealRepublicans emerging from their first of two meetings on the fiscal cliff deal Tuesday were unanimously displeased with the spending measures in the bill the Senate passed in the very early hours of New Year's Day.
“The speaker and leader laid out options to the members and listened to feedback," said Brendan Buck, a spokesman for House Speaker John Boehner (R-Ohio). "The lack of spending cuts in the Senate bill was a universal concern amongst members in today’s meeting. Conversations with members will continue throughout the afternoon on the path forward.”
Members stated their objections just as plainly.
The majority of us, and I'm one of those, is not satisfied with what the Senate sent over," said Rep. Walter Jones (R-N.C.). "The membership is very concerned about the increase spending in the bill."
Many seemed interested in changing the bill, but also worried that it could get killed, creating a deeply uncertain atmosphere on Capitol Hill and in the financial markets.
"I would say that that's a strong possibility -- that there will be some changes on the floor that will get back to the Senate," Jones said.
"It may go back with, as someone said, not a poison pill, just enough to give 'em a little heartburn and get it done," said Rep. Bob Turner (R-N.Y.).
-- Michael McAuliff
Federal Workers Fear Agency Cuts, Furloughs In Cliff DealA union for federal employees has criticized a tentative "fiscal cliff" deal that would lead to funding cuts for federal agencies, saying lawmakers should curb federal contractor pay rather than ask federal employees for sacrifices.
The American Federation of Government Employees (AFGE), which represents 670,000 workers, said it was "concerned" about the Senate proposal to pay for the delay of the sequester with unspecified agency cuts.
"How agencies will achieve these amounts is not clear in the language of the bill," J. David Cox Sr., the union’s president, said in a statement. "Before they look any further at unpaid furloughs or other cuts to critical agency programs, [the White House’s Office of Management and Budget] should sharply reduce the amount taxpayers provide to federal contractors for excessive salaries for their top executives."
The unions representing federal employees have been worried for months that a fiscal cliff deal hammered out by lawmakers would lead to further pay freezes or furloughs at federal agencies. Federal workers haven't had a raise in two years due to an extended pay freeze, and new federal workers will be facing significantly higher pension costs.
Arguing for shared sacrifice, AFGE has tried to pressure Congress to lower the cap for the taxpayer-subsidized salaries of federal contractors, from its current level of roughly $760,000 down to the vice president's salary of $230,000.
-- Dave Jamieson
Biden To The Rescue?
Vice President Joe Biden arrives for a House Democratic Caucus meeting to discuss the legislation that will blunt the effects of the fiscal cliff before a rare New Year's Day session on Tuesday. Biden and Senate Minority Leader Mitch McConnell (R-Ky.) negotiated the deal that produced The American Taxpayer Relief Act of 2012, which passed the Senate after midnight on New Year's Day. (Photo by Chip Somodevilla/Getty Images)
Dems, GOP Fights For Votes ContinueDemocrat and GOP leaders are currently on the phone with each other trying to see who has which votes, reports Howard Fineman, editorial director of the Huffington Post Media Group.
Democrats think they can get 140-150 Democratic votes but are not sure -- and neither are the GOPers -- that the GOP side can get enough votes to pass the Senate deal, he said.
Fineman reports that Democrats don't want to be blamed for going over the cliff, but GOP Tea Partiers may see it as a perverse act of courage to do so.-- Howard Fineman
GOP: Fiscal Cliff Deal May Be In TroubleThe few Republicans who have filed out of the House GOP meeting have sounded cautionary notes about the fiscal cliff deal, suggesting it faces serious trouble.
"I'd be shocked if this bill did not go back," said Rep. Spencer Bachus (R-Ala.), the chairman of the House Financial Services Committee.
The biggest complaint is the lack of spending cuts.
"We've got to provide responsible spending balance long-term," said Rep. Nan Hayworth (R-N.Y.) "This bill does not do that."
The few Republicans who have filed out of the House GOP meeting have sounded cautionary notes about the fiscal cliff deal, suggesting it faces serious trouble.
"I'd be shocked if this bill did not go back," said Rep. Spencer Bachus (R-Ala.), the chairman of the House Financial Services Committee.
The biggest complaint is the lack of spending cuts.
"We've got to provide responsible spending balance long-term," said Rep. Nan Hayworth (R-N.Y.) "This bill does not do that."
-- Mike McAuliff
Biden Leaves Dems MeetingAt 2:06 p.m. Tuesday, Biden swept out of back door of a Democratic caucus meeting about the fiscal cliff deal without giving any concrete indication of what had gone on in an hour and a half of talking and answering questions.
I asked him if he had the votes and he said, "you're an old hand and you know that I never predict the vote." I asked him what the most effective argument was that he had made and he said, "you'll have to ask the members that."
He smiled the usual Biden sincerely frozen grimace and added, "I'm a 'foreign policy expert!' Why am I here doing this?"
Then he disappeared up the escalator surrounded by a cloud of aides and security officers.
-- Howard Fineman
Richard Trumka On Fiscal Cliff DealAFL-CIO President Richard Trumka put out several tweets Monday night urging lawmakers to put the brakes on the fiscal cliff deal being negotiated in the Senate. The deal ended up passing that chamber. And as it made its way to the House Tuesday morning, Trumka was sounding a bit more favorably disposed to the legislation, albeit with some criticisms peppered in.
His full statement is below:
The agreement passed by the Senate last night is a breakthrough in beginning to restore tax fairness and achieves some key goals of working families. It does not cut Social Security, Medicare or Medicaid benefits. It raises over $700 billion over 10 years, including interest savings, by ending the Bush income tax cuts for families making over $450,000 a year. And in recognition of the continuing jobs crisis, it extends unemployment benefits for a year. A strong message from voters and a relentless echo from grassroots activists over the last six weeks helped get us this far.But lawmakers should have listened even better. The deal extends the Bush tax cuts for families earning between $250,000 and $450,000 a year and makes permanent Bush estate tax cuts exempting estates valued up to $5 million from any tax. These concessions amount to over $200 billion in additional tax cuts for the 2%.
And because of Republican hostage taking, the deal simply postpones the $1.2 trillion sequester for only two months and does not address the debt ceiling, setting the stage for more fiscal blackmail at the expense of the middle class.
Instead of moving to address our nation’s real jobs and public investment crisis, our leaders will be debating a prolonged artificial fiscal crisis. In the weeks to come, as the confrontation over the economic direction of our country continues, the working men and women of the AFL-CIO will continue to fight to keep poor and middle class families from giving more so rich people can continue paying less. That means a fairer, more progressive tax system, an end to Bush tax rates for the 2% and protection of Social Security, Medicare and Medicaid from benefit cuts.
-- Sam Stein
Boehner: GOP Meeting To Explain Fiscal Cliff DealA spokesman for House Speaker John Boehner said the point of the Republican meeting going on this afternoon on Capitol Hill was purely to explain the fiscal cliff deal. Boehner was not making any recommendations on how members should vote, contrary to some reporting.
Such a recommendation would more likely come in a second meeting later Tuesday, after Republicans digest what they learn.
-- Michael McAuliff
Fiscal Cliff Deal And The DeficitThe fiscal cliff deal adds $3.9 trillion to the deficit, over the next 10 years, at least technically.
That's because while most people assumed most of the Bush-era tax cuts would be extended, the Congressional Budget Office must look only at what the law says. The law called for letting all the cuts expire, which would have brought in more than $4 trillion. The fiscal cliff deal lets most of that revenue go, letting rates increase only for single filers above $400,000 and $450,000 for couples.
Senate Fiscal Cliff Deal Offers Help After ForeclosureThe Senate deal to avert the cliff includes a one-year extension of a tax provision that prevents foreclosure victims from getting hit with a huge tax bill after they lose their homes, according to the legislation as written.
-- Ryan Grim
Scores For Senate's Fiscal Cliff DealThe Congressional Budget Office has scored the Senate-passed deal. View the CBO document.
Cleaver: Biden A 'Persuasive Guy'Democratic Rep. Emanuel Cleaver of Missouri estimated that, before the meeting, the sentiment was running about 7-2 among Democrats in favor of the deal, based on the floor statements he had heard.
Emerging from the meeting, he said that Biden's had changed at least one vote to a "yes" and would probably change more. "He's a persuasive guy," he said.
He better be: A 7-2 ratio would mean a lot of "no" votes among the 191 Dems -- and would imperil the deal big time.
-- Howard Fineman
Republicans Delay Fiscal Cliff Deal VoteIn a sign that the fiscal cliff deal could face an uncertain future in the House, Republican leaders delayed their planned vote on the measure and were expected to meet twice before going to the floor of the House in the late afternoon or evening.
If the House amends the bill passed by the Senate early this morning, or worse, offers a whole new bill, it could throw the seeming certainty achieved by the Senate out the window. Many observers had seen the strong bipartisan vote in the Senate -- including such conservatives as former Club For Growth head Sen. Pat Toomey (R-Pa.) -- as an encouraging sign that Tea Party House members could also hold their noses and go along.
-- Mike McAuliff
Lee: Biden Emphasizes History To DemsDucking out of the closed-door meeting of Democrats to attend another event, Rep. Sheila Jackson Lee of Texas said that Vice President Joe Biden had made a pitch based on "historical perspective."
He explained that he had taken a central role in the final deal because, as president of the Senate and a former long-time member there, he was in the best position to deal with GOP Sen. Mitch McConnell -- and President Barack Obama had realized that and asked the Veep to take the lead.
Biden went through the long history of GOP refusals to vote for income-tax rate hikes -- a history that goes back to 1993, long before the Tea Party was a gleam in Grover Norquist's eye. Lee agreed that it was a victory of sorts for the president to get the Republicans to move on that issue, however modestly.
Biden, according to Lee, also stressed that the debt "crisis" was largely of the GOP's making because of profligate spending in the Bush II Years. If the Democrats now have to agree to spending cuts, it will be up to the GOP to offer up its pet categories of spending -- defense in particular -- for new limits.
Lee, a staunch liberal, said that she was undecided about how to vote -- out of concern that the deal would lead to a "hostage taking" two months from now when spending cuts are negotiated in the midst of another manufactured "crisis" -- the one over raising the debt ceiling. She said that she was concerned that a latter deal would include restrictive changes in how cost-of-living adjustments are calculated for Social Security; and that it would cut programs such as funding for housing and homeless shelters.
"I haven't decided -- but I am listening," she said.
Lee is apparently worried that Biden might have made promises to McConnell on those items.-- Howard Fineman
Liberals Opposing Fiscal Cliff DealLiberals really do not like the fiscal cliff deal.
Robert Borosage, of the Campaign for America's Future, hammered the deal in a blog post..
Borosage noted some positive points in the deal, such as raising taxes on some of the wealthy and extending breaks for the middle class, but he also detailed what he saw as major problems. “No one should be fooled," he wrote. "This is an ugly deal, with foul implications for the coming months."
1. Setting Up the Next ExtortionAlso on HuffPost: Get Alerts Subscribe to the HuffPost Hill newsletter!“The most ominous part of the deal is what was left out. The deal makes no provision for lifting the debt ceiling. It postpones the sequester (automatic cuts in domestic and military spending) for only two months. It is a smaller deficit reduction package than that originally sought by the president. It therefore sets up the right-wing House zealots to hold the economy hostage once more, while demanding deep cuts in public services (known as cuts in domestic spending), backed by a media frenzy about deficits. And while Social Security, Medicare and Medicaid escaped unscathed in this deal, they will be the prime targets in the coming debate.
2. Hiking Taxes for Working Americans; A Million Jobs Lost
“By allowing the payroll tax cut to expire, every working American gets a tax hike of 2 percent of their income (up to about $113,000 in income). A worker making $50,000 a year will pay an extra $1,000 in taxes. Payroll checks will be cut. Belts will have to be tightened even more. That will lower demand, producing job loss totaling up to an estimated million jobs. (Taxes on the wealthy go up also, but those have only marginal effects on jobs).
3. Compromising the Compromising President
“President Obama sensibly told Republicans that he would not sign any bill or agree to any deal that extended the Bush tax cuts on those making over $250,000. He had stumped on that across the country on this pledge and received a mandate from the voters. Polls showed the majority of Americans were with him. With all the Bush tax breaks due to expire, Republicans were faced with letting taxes go up on everyone just to defend tax breaks for the richest Americans. The President began the negotiations saying this was not negotiable. He could not have been in a stronger position.
“But he chose to compromise. The Bush tax cuts will be allowed to expire on couples making over $450,000. This costs about $150-200 billion in revenue over 10 years. The president argues he got the important extension of unemployment insurance and the working poor tax credits in return. But these could have been folded into a package after going over the cliff. And the cost to the president is significant. Once more Republicans have learned that obstruction works, that the president will always blink.
“The next extortion – the debt ceiling, automatic sequester – in the next eight weeks makes this a big deal. The President says sensibly that he will not negotiate over lifting the debt ceiling. Period. And now there is even less reason for the Republicans to believe him than before. This encourages extreme demands rather than discouraging them. This was the time to draw the line.
4. Feeding the deficit distraction
“The deal is already being denounced in the mainstream media as `too timid,’ offering too little in deficit reduction. It guarantees the next eight weeks will be fixated on the debate about what to cut and how much to cut headed into the debt ceiling.
“But this entire debate is wrong-headed. You can’t fix the debt without fixing the economy. And deficit reduction won’t fix the economy. The recovery is too slow and too skewed to put people back to work. Deficit reduction can only slow it further.
“We need a big and bold debate about fundamental reforms needed to make this economy work for working people. That includes making big investments vital to our future at a time when we can borrow for virtually nothing – rebuilding and modernizing our decrepit infrastructure, funding R&D, doing at least the basics in education. We need to balance our trade, and revive manufacturing, beginning with capturing a leading role in the global move to clean energy.
“We need to address inequality frontally. That requires much more than small marginal increases in taxes for millionaires. It includes raising the minimum wage, empowering workers to organize and bargain for a fair share of the profits they help to generate, limiting perverse CEO compensation schemes. It includes a financial transaction tax that might curb Wall Street gambling.
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