Fiscal Cliff Deadline Missed, but Senate Approves 'Imperfect' Compromise Package
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The House was dark early Tuesday morning when the Senate approved a scaled-down package aimed at nixing historic tax increases for most Americans and postponing across-the-board spending cuts.
With only one chamber voting for a deal, Congress did indeed miss its fiscal-cliff-aversion deadline.
But the Senate voted 89-8, a convincing margin in favor, for the hastily cobbled together package, leaving building blocks and a foundation in place for the House.
Unconfirmed but according to Washington twitter, Florida Sen. Marco Rubio was one of the eight who voted no. "The real fiscal cliff is the one that awaits us," Rubio is reported as saying, "and there's nothing we can do to avoid it."
The vote followed a late-night deal between White House and Senate Republican negotiators.
For the short-term anyway, it looks as though a tax increase will technically go into effect on Jan. 1. In total -- unless and until the legislation is finalized -- some $600 billion in tax hikes and spending cuts are scheduled to hit in the new year.
The bill now goes to the House, scheduled to reconvene at noon Tuesday. Its chances there are unclear. But the reality is, the longer a stalemate drags on, the greater the risk for taxpayers and the economy.
Senate leaders, though less than gleeful, called the deal “imperfect” but a vital solution to the fiscal crisis.
“The president wanted tax increases, but thanks to this imperfect agreement, 99 percent of my constituents won’t be hit by those hikes,” Senate Republican Leader Mitch McConnell said. McConnell and Vice President Joe Biden were the deal's chief negotiators.
Fox News reported that under the proposal, current tax rates would be extended for everyone except families making above $450,000. That's up from President Obama's earlier threshold of $250,000. "The bill would also extend long-term jobless benefits for a year and address other expiring provisions like the estate tax," Fox claims.
The late-night deal is said to have ironed out the last major sticking point between the two sides -- what to do about the $110 billion in automatic spending cuts set to kick in right away. Those cuts have been postponed by two months, in exchange for a 50-50 mix of revenue increases and spending cuts. Of those cuts, half would come from defense and half from other budgets.
Fox News also reported that the deal contains a repeal of an Obamacare program called the CLASS Act. "The provision, which would set up a government-run long-term care program, was never actually implemented amid concerns that it couldn't generate enough revenue to sustain itself," Fox said.
Economists warn that the tax hikes, combined with the spending cuts, could trigger another recession if they aren't dealt with soon. The fiscal deal, though, still pushes off a permanent decision on the spending cuts until two months down the road, which is part of the reason Rubio balked. In two months lawmakers could find themselves in a similar position – only this time, with the debt ceiling playing a far more prominent role.
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