UPDATE: 11:54 P.M. EST 1-2-2013
The deal is done.
In a 257-167 vote, that included 151 Republican and 16 Democratic “nays,” the Republicans blinked first and Congress passed the first tax increase in 20 years, saving the nation from the dreaded ‘Fiscal Cliff.’
Included in the Democratic win column was an extension of unemployment benefits and tax cuts that were in President Barack Obama’s stimulus plan. Republican victories included “a permanent fix to the alternative minimum tax and estate tax,”.
Boehner (R-Ohio), could not rally enough support from conservatives who refused to agree to the tax increase. But House Democrats pushed the deal through.
Boehner cast a rare Speaker vote in favor of the bill, while Majority Leader Eric Cantor (R-VA) voted no, exposing a widening rift within the Republican Party.
What’s In The ‘Fiscal Cliff’ Plan?
•Permanently extends the middle-class tax cuts and also extends credits for working families, with additional measures to protect families and promote economic growth.
• Permanent extension of the middle class tax cuts: This will provide certainty for 114 million households including lower tax rates, an expanded Child Tax Credit, and marriage penalty relief—steps that together will prevent the typical family of four from seeing a $2,200 tax increase next year. In addition, it includes a permanent Alternative Minimum Tax (AMT) fix.
• Most progressive income tax code in decades: By raising income tax rates on the wealthiest and keeping taxes low for the middle class, the agreement will ensure we have the most progressive income tax code in decades.
• Extension of Emergency Unemployment Insurance benefits for 2 million people: The agreement will prevent 2 million people from losing UI benefits in January by extending emergency unemployment insurance benefits for one year.
• Extension of tax cuts for 25 million working families and students: The deal extends President Obama’s expansions of the Child Tax Credit, Earned Income Tax Credit, and the President’s new American Opportunity Tax Credit, which helps families pay for college. The President fought hard to extend these credits, overcoming Republican insistence that income taxes go up by an average of $1,000 for 25 million working families and students. The agreement would extend them for five years.
• Extension of renewable energy incentives, the R&E tax credit and other business incentives: The agreement extends tax relief for businesses through the end of next year. This means extending the Production Tax Credit, a key incentive for renewable energy that many Republicans had been trying to end, as well as the Research & Experimentation tax credit. In addition, the agreement extends 50 percent bonus depreciation, a cost-effective temporary measure to support investment and growth. All of these would be extended through the end of 2013.
• Fixes the SGR (“doc fix”) with no cuts to the Affordable Care Act or to beneficiaries: The agreement avoids a 27 percent cut to reimbursements for doctors seeing Medicare patients for 2013 by fixing the sustainable growth rate formula through the end of next year (the “doc fix”). The President stood firm against Republican proposals to pay for this fix with cuts to the Affordable Care Act or the beneficiaries.
• Postpones the sequester for two months, paid for with $1 of revenue for every $1 of spending, with the spending balanced between defense and domestic: The agreement saves $24 billion, half in revenue and half from spending cuts which are divided equally between defense and nondefense, in order to delay the sequester for two months. This will give Congress time to work on a balanced plan to end the sequester permanently through a combination of additional revenue and spending cuts in a balanced manner.