Hallelujah! Democrats and Republicans Agree on Fiscal Cliff Solution

The nation breathed a collective sigh of relief late Tuesday night as Congress passed a resolution to the fiscal cliff in which both sides of the aisle made significant concessions to avert automatic across-the-board tax hikes and spending cuts that would have taken effect January 2.
The measure originated in the Democrat-led Senate where it was approved by an overwhelming majority, 89-8, shortly after clocks chimed the New Year. Less than 24 hours after the Senate approved the legislation, it came to a vote in the House, where it was approved by the Democratic minority with the help of a small faction of Republicans unwilling to risk allowing the fiscal cliff to go into effect. Economists have widely speculated that, should the tax hikes and spending cuts have been allowed to take effect, they would have plunged the U.S. economy into another recession.
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The bill shields millions of middle-class taxpayers from income tax increases, but will let rates rise on individuals earning more than $400,000 a year, and households earning more than $450,000 a year. House Speaker John Boehner (R-Ohio) had earlier in December pushed for a bill that would raise taxes only for those earning $1 million a year or more, but could not garner significant support from his own party, as they stuck to their long-held stance against raising taxes for any Americans. His bill also failed to get Democratic support, and was quickly shot down.
Democrats ultimately won greater concessions with the bill approved on Tuesday, while Republicans were forced to accept the measure in order to avert fiscal catastrophe, ultimately deciding their game of chicken could go on no longer. The bill marks the first time in more than two decades that a broad tax increase has been approved with GOP support. The bill drew 85 votes from House Republicans and 172 from Democrats. The majority of House Republicans — 151 — voted against the measure…
While finally settling a tax debate that held up legislation until the 11th hour, the measure also ensures that benefits will continue for 2 million unemployed workers on the verge of losing their federal checks. And it will delay for two months automatic spending cuts to the Pentagon and other agencies that would have taken effect today.
The legislation calls for the top tax rate to rise immediately from 35 percent to 39.6 percent on income over $400,000 for single people, and $450,000 for married couples. It will protect more than 100 million families earning less than $250,000 a year from those same tax increases, though their payroll taxes will increase as a temporary tax cut adopted two years ago expires.
The legislation not only avoids much of the fiscal cliff, but it also includes a measure that will extend federal dairy policies through September, averting a threatened doubling of milk prices, which the media were calling the ‘dairy cliff.’ The legislation also cancels a scheduled pay raise for members of Congress.
However, while Republicans had the biggest complaints, neither party was entirely happy with the bill. Conservatives, of course, took issue with the tax hike, as well as a lack of spending reductions, while liberals complained about its provisions regarding inherited estates. Now, estates worth as much as $5 million — $10 million for married couples — will go untaxed. And an inflation adjustment guarantees that the size of the exemption will grow to $15 million for couples by the end of the decade.
Still, Democrats largely embraced the fiscal cliff solution, which put to end many months of bitter fighting in the Capitol and averted what could’ve been one of the biggest public relations nightmares for Congress in years.
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