Republicans trade spending hike for entitlement reform? | Washington Examiner

The Washington Examiner reports that Republicans and Democrats in the House of Representatives have arrived at a budget deal.  Basically, Republicans agreed to lift spending caps, keep the government funded, and increase spending in return for some entitlement reforms and some tweaks of Obamacare.

Read the story after the jump.  A good deal?  Bad deal?  At least the House is no longer paralyzed? [Read more...]

$1.2 trillion in automatic cuts might kick in

Remember the “sequester,” the automatic budget cuts that were supposed to go into effect on January 2 but were kicked down the road to March 1?  The result of last year’s agreement on the national debt and the recent “fiscal cliff” deliberations?  Since the cuts would hit Republican causes (the Pentagon) and Democratic causes (social programs) alike, it was assumed that Congress would get rid of them.  Well, it looks like they may go into effect after all. [Read more...]

The federal program that wouldn’t die

There is a line item in the budget that costs nearly a half million dollars.  Republicans oppose it.  Democrats oppose it.  President Obama wants to kill it.  The House Republican leadership wants to kill it.  And yet, this program has gone on for twenty years and NO ONE CAN END IT. [Read more...]

Republicans go along with raising debt limit

House Republicans decided to adopt a “no drama” policy in regards to raising the debt ceiling:

A measure to suspend the nation’s legal limit on borrowing for nearly four months cleared a key vote in the House Wednesday, as Republicans broadly endorsed a new tactic that would temporarily remove the threat of a potentially calamitous government default from their ongoing fight with Democrats over government spending.

The measure, which would set aside the legal debt ceiling and allow the government to borrow as needed to meet spending obligations through May 18, was adopted on a 285 to 144 vote. [Read more...]

What all is in the Fiscal Cliff bill

The Fiscal Cliff bill did more than extend the Bush tax cuts for everyone except those who make $450,000.  Here is a useful summary of what’s in the new law:

— Tax rates will permanently rise to Clinton-era levels for families with income above $450,000 and individuals above $400,000. All income below the threshold will permanently be taxed at Bush-era rates.

— The tax on capital gains and dividends will be permanently set at 20 percent for those with income above the $450,000/$400,000 threshold. It will remain at 15 percent for everyone else. (Clinton-era rates were 20 percent for capital gains and taxed dividends as ordinary income, with a top rate of 39.6 percent.)

— The estate tax will be set at 40 percent for those at the $450,000/$400,000 threshold, with a $5 million exemption. That threshold will be indexed to inflation, as a concession to Republicans and some Democrats in rural areas like Sen. Max Baucus (D-Mt.).

— The sequester will be delayed for two months. Half of the delay will be offset by discretionary cuts, split between defense and non-defense. The other half will be offset by revenue raised by the voluntary transfer of traditional IRAs to Roth IRAs, which would tax retirement savings when they’re moved over.

— The pay freeze on members of Congress, which Obama had lifted this week, will be re-imposed.

— The 2009 expansion of tax breaks for low-income Americans: the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit will be extended for five years.

— The Alternative Minimum Tax will be permanently patched to avoid raising taxes on the middle-class.

— The deal will not address the debt-ceiling, and the payroll tax holiday will be allowed to expire.

— Two limits on tax exemptions and deductions for higher-income Americans will be reimposed: Personal Exemption Phaseout (PEP) will be set at $250,000 and the itemized deduction limitation (Pease) kicks in at $300,000.

—The full package of temporary business tax breaks — benefiting everything from R&D and wind energy to race-car track owners — will be extended for another year.

— Scheduled cuts to doctors under Medicare would be avoided for a year through spending cuts that haven’t been specified.

— Federal unemployment insurance will be extended for another year, benefiting those unemployed for longer than 26 weeks. This $30 billion provision won’t be offset.

— A nine-month farm bill fix will be attached to the deal, Sen. Debbie Stabenow told reporters, averting the newly dubbed milk cliff.

via Wonkbook: Everything you need to know about the fiscal cliff deal.

Congress scrambles back up the cliff

Congress stayed up late last night and at 10:35 p.m. voted 257 to 167 to approve the Fiscal Cliff compromise.  And the good thing is that since taxes automatically went up for everyone when the day began, with the expiration of the Bush tax cuts, Congressmen could keep their no-tax-hike pledges because their action was now a tax cut; that is, for everyone except those who make over $450,000. Also, people making over $250,000 may no longer claim the personal exemptions on their tax forms, so their taxes will go up slightly, allowing President Obama to keep his campaign promise.

The bill that had already been approved by the Senate also extended the Farm Bill, backing us away from the Dairy Cliff that would have doubled milk milk prices.  The automatic spending cuts that were scheduled to go into effect when the Bush tax rates expired were postponed for two months.  Nor does it raise the debt ceiling.  Nor does it do much for the deficit.  So the battles and brinkmanship will continue.

via Congress approves ‘fiscal cliff’ measure – The Washington Post.


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