CBS: It's Official: Deal Reached On "Fiscal Cliff"

[Purveyor]

Source: CBS

As revelers in Times Square and cities and towns across the country wait for the ball to drop to ring in the new year, politicians in Washington have announced that a ball is not likely to drop on the average taxpayer. Negotiators have come to an agreement on the so-called "fiscal cliff" - and with less than three hours to spare, CBS News has confirmed.

Vice President Joe Biden traveled to Capitol Hill to brief Senate Democrats on the details of the deal; both Senate Majority Leader Harry Reid, D-Nev., and House Minority Leader Nancy Pelosi, D-Calif., have signed off on the agreement, White House and congressional sources told CBS News' Chief White House Correspondent Major Garrett.

Now that lawmakers have settled on a deal, it's unclear when the Senate will vote but it's expected that if it passes, the House will vote tomorrow at the earliest.

What this means is that although the country will technically go over the "cliff" at midnight, the agreement - if passed by both houses of Congress - guarantees any detrimental impact from the "cliff" will be avoided, even if a vote happens after midnight, as language will likely be added to the final legislation that would make the changes retroactive.

Here are the known details of the deal:

Tax rates: current tax rates will be extended for all wage earners making below $400,000 and couples making below $450,000.

This was a key concession for both Republicans and Democrats. Democrats wanted the threshold for tax increases to rest at $250,000 and Republicans didn't want marginal tax rates to increase for anyone.

The automatic spending cuts under the sequester will be delayed for two months. The cost of continuing current federal spending levels will be offset by revenue increases and some spending cuts. The spending cuts will come half from defense and half non-defense accounts.

The two-month window is to allow Congress and the White House to come up with a larger deal on spending cuts, leading to another (though smaller) "fiscal cliff." Democrats see this deal as a victory because Republicans had objected to using any new tax revenue to offset the loss of sequester spending cuts, reports Garrett.

The estate tax: it was set to increase from rom 35 percent to 55 percent in 2013. Instead, the compromise sets the new rate at 40 percent with the first $5 million worth of property exempt from being taxed.

Capital gains tax: Capital gains and dividend tax rates will increase from 15 to 20 percent.
Alternative Minimum Tax: a permanent fix to the tax that would hit middle class families
"Doc Fix": doctors will be shielded from a massive reimbursement gap for treating Medicare patients.

Unemployment benefits: unemployed workers will receive their benefits which expired over the weekend.

Renewable energy tax credit: the tax credit for renewable energy companies will be extended for another year.

While the extension of unemployment benefits and the Medicare "doc fix" cost money, and revenue will be lost due to a fix in the Alternative Minimum Tax, the package will still increase the federal government's receipts. The total package will add $600 billion to federal coffers.

Read more: http://www.cbsnews.com/8301-250_162-57561465/its-official-deal-reached-on-fiscal-cliff/

[Richardo]

1. Could be worse...

...could be raining.

[bjobotts]

20. Where are the jobs.Screw deficit focus-Jobs jobs

[bjobotts]

21. Debt ceiling blackmail next?

"The good faith and credit of the United
States shall not be questioned..."-14th Amendment
Debt ceiling is raised in order to pay for bills already incurred like Bush's 2wars, bush tax credits, and the Medicare prescription drg package all put on the nation's credit card. Here's hoping Obama will no longer allow the WH to be held hostage to raising the debt ceiling again by invoking the 14th amendment since raising it should just be a matter of house keeping like paying your credit card payment. It has nothing to do with increasing spending...only with paying for what has already been spent.

[CaliforniaPeggy]

2. OK...this I can live with.

[Richardo]

3. That's my thought too, Peg

[bowens43]

5. why are so many so willing to give Obama a pass on this? He lost again.

[WallaceRitchie]

9. Payroll tax cut expires as well

People who actually work for a living also just got a tax increase as the Payroll Tax Cut expires.

Obama started at $1.6 trillion in new revenue.
He settled for $600 billion

That's not a compromise. That's a capitulation.

[plethoro]

13. Exactly. Are you sure about the expiration of the payroll tax cut? I can't find

a link to it. I am at least happy about that, athough the rest was pure capitulation. Oh, but there's the postponement of cuts to defense for an indefinite period.... What a joke.

[chimpymustgo]

32. Payroll tax was never even discussed. We are such chumps.

[plethoro]

39. Well, if it had been extended again,

it would mean that that extension was permanent. Then the employers would be claim unfair treatment and demand a matching cut on their side of the ledger. If both of these cuts were filled-in by the general fund, then the enemy republicans would be right about Social Security contribution to the deficit. So, imo, the reduction had to go.

[chimpymustgo]

40. Lift the damn CAP - and lower everyone's contribution. So many ways to make this less regressive.

NO more excuses!

[plethoro]

41. We have all said that so many times and so fervently, I wonder

why Obama, the Democrats, the Republicans, the Independants, etc have not explained why they won't do this. It is becoming very strange that no explanation is being given.

[Yo_Mama]

33. An extension of the payroll tax cut is not in the bill passed in the Senate

Text here:
http://i2.cdn.turner.com/cnn/2013/images/01/01/american.taxpayer.relief.act.pdf?hpt=hp_t1

Sequestration goes into effect March 27th. AMT fix is made permanent. Extension of 2001, 2003 & 2009 tax relief provisions, with amendments for higher income earners. Extension of a whole lot of business deductions (primarily faster depreciation/amortization). Extension of a bunch of energy tax credits. Extension of unemployment benefits.

Tuition tax credits extended until 2018. Higher EITC extended until 2018. Higher child tax credit extended until 2018.

The tax break for forgiveness on residential mortgage principal is extended through 2013.

[plethoro]

38. Thank you so much for your post, Yo-Mama........nft

ffffffff

[Politicub]

11. Me, too. While I don't like everything about it

It is a clear improvement over the status quo.

[jillan]

17. Agreed.

[Cosmocat]

37. It is comiserate to the hand he was holding

he had A LOT of leverage with the "cliff" and tax cuts expiring, and I was very critical of what he was willing to accept to make a deal earlier.

But, this is a solid deal.

It wasn't a horrible 600,000 with a split on the rates where he was with Boehner, he nudged up to 400,000/450,000 with Clinton rates. He got the ATM fixed, which negates some of the revenue gains people are upset with, and a nudge up on capital gains and estate tax. Overall, SMALL, but needed increases where they should have been and dealt with the ATM, FINALLY.

What he gave - 150,000/200,000 on levels and the payroll tax.

Also, got a full year extension of UC, something the Rs have been holding over his head from day one. AND, did not jack with SS.

Just gotta hope Boehner has the balls to put it up to a straight up and down vote, and that you get the 30 or so Rs needed to help the Ds get it passed.

[WallaceRitchie]

4. This isn't a deal

This is lipstick on a donkey.

This is a kicking of the fiscal cliff can down the road until March.
The sequester AND the debt ceiling remain to be tackled.

The President started out seeking $1.6 trillion in new revenue.
He got $600 billion. That is a pathetic use of "political capital".

And it hasn't even passed the Senate yet... let alone the rabid House.

This just sets up a GRAND FISCAL CANYON in March.

[plethoro]

15. That will be filled with promises of cuts to entitlements. This was worse

than lipstick on a donkey, imo. This was best defined by another poster here.

http://www.democraticunderground.com/?com=view_post&forum=1002&pid=2107539

[iamthebandfanman]

6. no changes to estate tax

i guess?

[caraher]

12. The changes are above

The estate tax: it was set to increase from from 35 percent to 55 percent in 2013. Instead, the compromise sets the new rate at 40 percent with the first $5 million worth of property exempt from being taxed.

[iamthebandfanman]

22. well

while not as much as id wanted, of course..
better than nothing on that front i suppose.

still think 45 sounds better

[ErikJ]

7. Wimped out agai. The cap gains tax up only 5% to 20%, still less than the average American worker!

[Scuba]

31. +1

[Yo_Mama]

34. And it only applies to high-income taxpayers n/t

[Ed Suspicious]

8. I think there is an important semantic miscommunication when they talk about this...

Tax rates: current tax rates will be extended for all wage earners making below $400,000 and couples making below $450,000.

I suspect they mean that the current tax rates will be extended for all wages (or possibly income) below $400,000/$450,000. The difference being that rich folks will also enjoy lower rates on their first 400k the same as those earning below that level. Everybody, including the rich win in that scenario. It's only when income becomes, imo, obscene that income is taxed at a higher rate.

[BeyondGeography]

10. That's really nothing to get upset about

Rates were never going up on the first $250K anyway. You wanted to torpedo the whole deal for four percentage points between $250-400K? That amounts to $9 billion in revenue. Nothing worth losing your mind over.

[Ed Suspicious]

16. No, I'm fine with it. I just thought the language made it a very "us vs. them" type of thing.

Really it is an everybody wins till $450,000. It's not till after that that you need to worry, and really at that point, 4 points really isn't anything to worry about. I pay more as a percentage in sales tax on all my transactions.

[triplepoint]

18. Wowzer! I Thought For Sure We Were Going Over...

.
.
.



Oh well...maybe come March, we'll get to light this candle, and then do our best imitation of the ending to "Thelma and Louise!"

[sendero]

19. Sounds like a typical Obama deal..

... better than nothing but nothing to get excited about, just an incremental improvement. It seems like that is all Obama can do. Ever, no matter what.

[Why Syzygy]

23. ... ...

Yes, it does. Never able to perform as advertised.

[Kelvin Mace]

24. Once agan, Obama caves from position of strength

And rich get a massive payday.

[budkin]

26. He might as well make all tax cuts permanent now

Because you know that's what's coming in 2 months in exchange for raising the debt ceiling.

[RBInMaine]

27. You are talking purist nonsense. Not happy? Then step up and do some actual governing YOURSELF.

[Kelvin Mace]

43. Purist nonsense?

Last edited Thu Jan 3, 2013, 04:19 PM - Edit history (1)

Obama started by asking for $1.2 trillion in new taxes. Boehner countered with $800 billion. They settled on $600 billion.

Huh?

That's not purism, that's math.

(I would love to play poker with Obama, I would clean him out and I suck at poker).

As to "governing" myself, will you provide me the millions it takes to win even a house seat, never mind the senate or the White House?

But, you want the economic problems solved?

OK, here you go:

1) Remove caps on FICA at $104,000, allowing ALL wage income to be subject to SS withholding. Boom! That fixes SS shortfall well into the next century at least.

2) Disallow corporate deductions for salaries and benefits for any executive pay that exceeds 50 times the lowest paid employee in the company. Currently all executive compensation is tax deductible by the company as a business expense, which means that the poorest in the nation are subsidizing the outrageous paychecks and benefits of the people contributing least to society.

If you run a pizza chain and pay minimum wage, your lowest paid employee makes $15K a year. So, ANY executive compensation greater than $754K would not be deductible by the company as a business expense. Want to pay your CEO $40 million? Go ahead, but $39.25 million is no longer deducted from taxable income.

3) Cut ALL elected/appointed official pay to 1.25 of the national median income. Provide free public housing in DC (convert some government buildings to apartments) for elected/appointed representatives (1 BR for single reps, 2 BR for married reps, and 3 BR for reps with children). Provide vouchers good for free ground-based mass transit anywhere in the U.S.

4) Elected/appointed officials healthcare benefits are the same as those available to the poorest citizens in the U.S.

5) Set 18% as the minimum corporate tax rate, regardless of deductions.

6) Declare global climate change and energy policy, national security emergencies. Divert 15% of the Pentagon's budget to a "Manhattan Project" to solve both problems.

7) Establish a carbon tax with ALL revenue being used for emissions mitigation or carbon neutral energy research.

8) Establish building codes that require all commercial and domestic structures to obtain 5% of their energy needs from renewable sources starting in 2014. Raise the requirement 1% every two years.

9) Reform copyright law by setting copyrights to expire 25 years after the creation of the work. Copyrights may be renewed in five year increments, but each time they are renewed, a 10% tax on all revenues generated by the work is assessed. Copyrights may be renewed a maximum of five times (50 years total, with the final five year's revenues subject to a 50% tax. Any existing copyright older than 50 years gets an automatic five year extension at the 50% rate, and then it expires, permanently.

10) Set the top tax bracket at 50% for all income over $10 million. Index it to inflation using the same index applied to Social Security.

11) Since the NRA loves talking about how Israel has lots of assault rifles, yet little gun violence as compared to the U.S., adopt the same gun laws that Israel has on the books. Universal registration of firearms, background checks, minimum age requirements, frequent "re-qualification" checks, and limits on ammunition kept.

12) Repeal the NDAA and the "Patriot" Act. Re-establish the draft for military or public service with a 2 year term. In times of war, raise the minimum recruitment age to 35 (and the maximum age to 65) and disallow exemptions for appointed/elected officials.

13) Begin massive infrastructure repair, with a goal of repairing 2% of all roads, bridges, schools, and public facilities per year, ongoing. New road systems must be pedestrian/bike/mass transit friendly.

14) Change the capital gains tax brackets to:

90% - Investments held less than 30 days
75% - Investments held less than 1 year
60% - Investments held less than 5 years
50% - Investments held less than 10 years
25% - Investments held less than 15 years
15% - Investments held less than 20 years
10 % - Investments held less than 30 years
5% - Investments held for more than 30 years

15) Since the finance industry love credit reports and credit scores, turnabout is only fair. The CFPB will begin issuing a "Financial Institute Solvency and Service Score" which will rate banks/S&Ls/investment funds, etc, based on how they treat their customers, employees and stockholders, the fees they charge, and how risky their investments are. The score will have to be posted on the front door of every branch like health department scores for restaurants.

The score methodology will be secret and without recourse until such time that the financial industry reveals its scoring methodology and allows for meaningful correction of errors.

There, that's my STARTING platform. That's what a REAL progressive/liberal policy looks like.

[malthaussen]

25. Figure we're looking at the set pattern until 2014

Drama, delay, and last-second "deals" to push the day of reckoning farther and farther down the road. Great fodder for the media and discussion boards, who will continue to panic every time Mr Obama twitches an eyebrow, and if he doesn't twitch one, will accuse him of twitching in private. Meanwhile, essential services are prolonged and everyday income taxes remain the same, until the next moment of "crisis."

Unless and until the Democrats can achieve control of Congress, this is presumably how things are going to continue to go. I really don't see how Mr Obama can be accused of "caving." It is not as though he has a cooperative Congress with whom he can cut any deal he pleases. He is the executive of this nation: it is his first and most important job to ensure that it continues to function, however poorly, and this proposal does that. I wonder if it will pass the House, eh?

So he "wanted" 1.6 trillion and "got" only 600 billion. Setting aside the simple fact that negotiators never start out with what they really want, and given the fact that regardless of what the people want, the GOP is going to go their own way, I am at a loss to understand what ammunition Mr Obama is supposed to possess to coerce the House to do his bidding. His "landslide" and "mandate" will look really good on his resume -- or his tombstone -- but they mean zip in the real world. We have seen time and time again that the rich people who actually make our laws, whether red or blue or purple, ignore the wishes of the people they supposedly represent at pleasure. Regardless of where Mr Obama may personally stand on this issue or that, what, exactly, is he supposed to do about that?

-- Mal

[lunatica]

30. You're right. A mandate doesn't mean shit when the other party controls the House

and the other party is determined to obstruct every move he makes.

Everyone would be cheering if it was the other way around, because then it would be obvious.

I think there are a lot of people who want a king or a dictator whose word is law and who can do anything he wants just because he says so.

[grahamhgreen]

28. There are 2 main reasons for the deficit. Tax cuts and Big War. Have to see what the CBO says.

[Shilo]

29. I find this deal acceptable. What is so hard to understand about we have a divided

government and concessions must be made for anything to get done--- nobody ever gets everything they want. Why is this some sign of weakness in the president? Some of of you talk like its supposed to be a dictatorship because our guy won. Thats simply not how our system of government was designed to work or ever will work.

[WhoWoodaKnew]

35. It's about what I expected. You can never get everything you want unless

you have a super majority.

[4dsc]

36. I told you, Weak leadership gets you nothing

I'm growing tired of these spineless asshats.

[Ter]

42. Everytime I get my hopes up that we are going off the cliff, they always come to a last-minute deal

Crap.