We have jumped off the cliff

The good news is that the Republican and Democratic leadership seems to have come to an agreement about renewing the Bush tax cuts.  The bad news is that it was impossible logistically to pass a bill before midnight on New Year’s Eve when the cuts expire and automatic spending cuts kicked in.  So we have jumped off the fiscal cliff, though there is hope that Congress will clamber back up it with a retroactive action.  From CNBC:

With no vote likely on Monday night, the U.S. will technically be going over the “fiscal cliff” at midnight, sources told CNBC.

The emerging deal with the Senate would raise tax rates on family income over $450,000 a year, increase the estate tax rate and extend unemployment benefits for one year.

The parties were at an impasse over whether to put off the automatic, across-the-board spending cuts set to begin taking effect at midnight, and if so, how to pay for that. One official said talks were focused on a two-month delay in the across-the-board cuts but negotiators had yet to agree on about $24 billion in savings from elsewhere in the budget.

“Today it appears that an agreement to prevent this middle class tax hike is in sight,” Obama said in an early afternoon appearance from the White House, where he stood in front of cheering supporters.

“Over the next 12 hours, let’s see if we can get this done,” Obama said.

Obama expressed regret that the work of the administration and lawmakers won’t produce a “grand bargain” on tax-and-spend issues, but said that “with this Congress, it couldn’t happen at that time.”

Before he spoke, details of the emerging deal emerged. It would raise $600 billion in revenue over the next 10 years by increasing tax rates for individuals making more than $400,000 and households making above $450,000 annually, officials familiar with the talks said.

The deal would also delay a series of spending cuts known as the “sequester,” though a sticking point remains on how long that delay would last. McConnell said action on the sequester could continue in coming months. “Let’s pass the tax relief portion now, let’s take what’s been agreed to and get moving,” McConnell said.

Other details included increasing the estate tax rate, extending unemployment benefits for one year, officials familiar with the negotiations said. The officials, speaking on condition of anonymity, said an agreement would shield Medicare doctors from a 27 percent cut in fees and extend tax credits for research and development, as well as renewable energy.

The deal also would extend for five years a series of tax credits meant to lessen the financial burden on poorer and middle-class families, including one credit that helps people pay for college.

via Going Over the ‘Cliff,’ but Tax Agreement ‘in Sight’.

We are also going off the Dairy Cliff.   The Farm Bill has also expired when the crystal ball touched down in Times Square.  As a result, a price support mechanism devised in 1949 kicked in, whereby the U.S. government has to buy milk for $7-$8 per gallon in today’s money.  This would more than double the price of milk in the supermarket.  Reportedly, an agreement has been struck that would renew the Farm Bill, though, again, it remains for Congress to act.

The wild card in all of this is whether the party leaders can deliver the votes from their members.  Some Congressional Republicans are said to be upset that spending cuts are not being included, with some Congressional Democrats incensed at the cutoff for higher taxes being raised to $450,000 rather than the $250,000 that President Obama campaigned on.

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • Tom Hering

    It’s at the top of the 2013 list:

    http://www.lssu.edu/banished/current.php

  • Tom Hering

    It’s at the top of the 2013 list:

    http://www.lssu.edu/banished/current.php

  • http://facebook.com/mesamike Mike Westfall

    Nice! Not only do we kick the budget down the road year after year, but now we are going to start kicking our self-imposed consequence for not passing a budget down the road too!

    And, um.. the Farm Bill. Maybe when congress does pass something, they should make sure that the “price support mechanism devised in 1949″ goes away. The Farm Bill should consist of nothing more than doing away with all the government supports and subsidies extended to agriculture, for good. Farm subsidies in the modern age are ridiculous.

  • http://facebook.com/mesamike Mike Westfall

    Nice! Not only do we kick the budget down the road year after year, but now we are going to start kicking our self-imposed consequence for not passing a budget down the road too!

    And, um.. the Farm Bill. Maybe when congress does pass something, they should make sure that the “price support mechanism devised in 1949″ goes away. The Farm Bill should consist of nothing more than doing away with all the government supports and subsidies extended to agriculture, for good. Farm subsidies in the modern age are ridiculous.

  • rlewer

    Since neither side is really serious about getting rid of the deficit, the so-called “fiscal cliff” seems to be the only way to do the job. It includes both tax increases that spread the pain and real spending cuts.

    Congress does not have the courage to do either.

  • rlewer

    Since neither side is really serious about getting rid of the deficit, the so-called “fiscal cliff” seems to be the only way to do the job. It includes both tax increases that spread the pain and real spending cuts.

    Congress does not have the courage to do either.

  • Random Lutheran

    This manufactured “crisis” explains why idiot scrawlings like this have been published of late. Combine Rahm Emanuel’s “Never waste a crisis” with the quote attributed to Lenin, “Because we can, we must!” (which is operative phrase for many on both sides of the aisle), and things become clearer. This is a recipe for all sorts of fun in the years to come.

  • Random Lutheran

    This manufactured “crisis” explains why idiot scrawlings like this have been published of late. Combine Rahm Emanuel’s “Never waste a crisis” with the quote attributed to Lenin, “Because we can, we must!” (which is operative phrase for many on both sides of the aisle), and things become clearer. This is a recipe for all sorts of fun in the years to come.

  • Joe
  • Joe
  • http://www.grailquestbooks.com Josh Radke

    Well there is this from the WT: “‘Fiscal cliff’ deal repeals part of ‘Obamacare’”

    Not sure if I would rank it in the “win” department though because it was already an unfunded mandate that even POTUS Obama admitted had serious flaws.

  • http://www.grailquestbooks.com Josh Radke

    Well there is this from the WT: “‘Fiscal cliff’ deal repeals part of ‘Obamacare’”

    Not sure if I would rank it in the “win” department though because it was already an unfunded mandate that even POTUS Obama admitted had serious flaws.

  • Tom Hering

    Re: @ 4. I like that “idiot scrawling.” I know you’re surprised. ;-)

  • Tom Hering

    Re: @ 4. I like that “idiot scrawling.” I know you’re surprised. ;-)

  • Random Lutheran

    #7: Fine. But government needs constraints on its actions that do not come from simple traditions and agreements. Law must trump power, or it is government by whim, and nothing but tyranny.

  • Random Lutheran

    #7: Fine. But government needs constraints on its actions that do not come from simple traditions and agreements. Law must trump power, or it is government by whim, and nothing but tyranny.

  • http://facebook.com/mesamike Mike Westfall

    I just heard in the radio that the House isn’t exactly going along with the deal. So we don’t even have half a deal yet it seems.

    Also, I wonder why the Senate had an agreement at all if the House hadn’t sent something to them to agree to. Tax and revenue issues are supposed to originate in the House, I thought.

  • http://facebook.com/mesamike Mike Westfall

    I just heard in the radio that the House isn’t exactly going along with the deal. So we don’t even have half a deal yet it seems.

    Also, I wonder why the Senate had an agreement at all if the House hadn’t sent something to them to agree to. Tax and revenue issues are supposed to originate in the House, I thought.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Tax and revenue issues are supposed to originate in the House

    power trumps law

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Tax and revenue issues are supposed to originate in the House

    power trumps law

  • Other Gary

    The post title says we “Jumped off the cliff.” Hmmm. No, I think we got pushed off the cliff by short-sighted cowards.

    sg @ 10: “power trumps law”
    I understand your concern. But in this case it seems more like part of congress is not as paralyzed as the other part, so that what we have is a congressional stroke victim trying to write with the “wrong” hand, because there is no other way any deal can get brokered. The 112th has been a colossal embarrassment, and yes, as a result of this truth, an end-around has been run around the proper rules. Is it good? No. Should we want it repeated. Never. Is it necessary ? Maybe. In the same sense that sometimes an emergency calls for martial law. Bad, bad, bad.

  • Other Gary

    The post title says we “Jumped off the cliff.” Hmmm. No, I think we got pushed off the cliff by short-sighted cowards.

    sg @ 10: “power trumps law”
    I understand your concern. But in this case it seems more like part of congress is not as paralyzed as the other part, so that what we have is a congressional stroke victim trying to write with the “wrong” hand, because there is no other way any deal can get brokered. The 112th has been a colossal embarrassment, and yes, as a result of this truth, an end-around has been run around the proper rules. Is it good? No. Should we want it repeated. Never. Is it necessary ? Maybe. In the same sense that sometimes an emergency calls for martial law. Bad, bad, bad.

  • rlewer

    I believe that technically the Senate used the House bill and gutted and amended it and sent it back to the House.

  • rlewer

    I believe that technically the Senate used the House bill and gutted and amended it and sent it back to the House.

  • Random Lutheran

    Ah, just like the health care act. Lovely.

  • Random Lutheran

    Ah, just like the health care act. Lovely.