Senate Passes Fiscal Cliff Bill But House Offers No Guarantee Before Vote

  • Rate this Story
  • 0
  • 0

January 2, 2013 2:36 AM EST

The U.S. Senate passed a bill to avert the "fiscal cliff" bill early Tuesday morning that will increase income taxes – for the first time in 20 years – but the House Republican leadership then issued a statement giving no guarantees it will do the same later in the day.

“The House will honor its commitment to consider the Senate agreement if it is passed,” read a joint statement from Speaker John Boehner of Ohio, Majority Leader Eric Cantor of Virginia, Majority Whip Kevin McCarthy of California and Republican Conference Chair Cathy McMorris Rodgers of Washington.

“Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members – and the American people – have been able to review the legislation," the statement continued.

The House will reconvene at noon Tuesday.

In addition raising taxes on the richest – a victory for President Barack Obama – the Senate extended unemployment benefits for millions of Americans and voted to delay automatic "sequestration" budget cuts for two months.

The fiscal cliff deal passed the Senate 89 to 8. The hope is that such bipartisanship will be shown in the lower chamber as well. The dissenters were Sens. Rand Paul, R-Ky.; Marco Rubio, R-Fla.; Mike Lee, R-Utah; Chuck Grassley, R-Iowa; Richard Shelby, R-Ala.; Tom Harkin, D-Iowa; Michael Bennet, D-Colo., and Tom Carper, D-Del.

“How can @barackobama call his proposal a #deficit reduction package if it uses #taxincrease to fund more spending & it increases the #debt,” Rubio tweeted on Monday.

If the Senate bill becomes law, the Bush-era income tax cuts would be preserved for individuals earning less than $400,000 or couples making less than $450,000. The current 35 percent tax rate they now enjoy will revert to the 39.6 percent of the Clinton era.

Additionally, taxes on estate tax will increase from 35 percent to 40 percent on those over $5 million; the alternative minimum tax would be permanently adjusted for inflation to keep millions in the upper middle class from falling under it, and unemployment insurance will be extended for two years; there also are tax credits for tuition, child care, and research and development, and continued reimbursements for doctors who take Medicare patients but not from Obamacare.

Moreover, itemized deductions would be capped for individuals making over $250,000 and for joint filers earning $300,000, as stated in the 150-plus-page bill.

The president and Congress will be dealing with the sequester, or the automatic cuts to domestic and military spending, on March 1. If these cuts take effect, many federal programs face budget cuts of 8 to 9 percent.

But note, the sequester will be dealt with around the same time lawmakers must tackle the debt ceiling, as the Treasury Department will soon hit the borrowing limit again. So Congress would need to wrestle with another issue that otherwise would have been dealt with nowy.

If the House doesn't approve a plan to avert the approximately $600 billion in tax increase and spending cuts, then, as the Congressional Budget Office warned, America may suffer a new recession and the current 7.7 percent unemployment rate could rise above 9 percent.

To contact the editor, e-mail:

  • Rate this Story
  • 0
  • 0
This article is copyrighted by International Business Times, the business news leader

Join the Conversation

IBTimes TV
E-Newsletters

We value your privacy. Your email address will not be shared.