At 12:01 AM on January 1, 2013, we went over the fiscal cliff. After the Senate passed a bill 89-8 in favor of averting tax increases for all Americans, House Republicans balked at the plan and called for additional cuts, sure to kill any previous agreement. After high-wire drama and aging Senators complaining about sleep deprivation after late night votes, the unamended Senate bill was voted on in the House and passed 257-167 with 85 Republicans voting across the aisle.
So where do we go from here and what does it mean for ordinary Americans?
Let’s be clear: the country was pulled over the cliff after chaos among House Republicans. With such a mess, unfolding just as Americans celebrated the holidays and the New Year, let’s break down the winners, losers, and what the fiscal cliff deal will do.
The Winners: President Obama and congressional Democrats. The White House and Democrats knew they had the leverage after winning the election in 2012, based on their campaign promise to raise taxes on the rich. While the final deal only raises taxes from 35% to 39.6% on couples making over $400,000 and individuals making over $450,000, instead of $250,000, the deal fulfills a campaign promise to ensure that high income earners are paying their fair share. The result is $620 billion in increased revenue, an extension of unemployment benefits for two million Americans, a renewal of tax credits for child care services and tax credits for college tuition. The president also pushed for and got a two month delay in the automatic sequestration cuts that would have resulted in major cutbacks for important government programs.
The losers: House Republicans. Despite some analysis speculating that Congressional Republicans may have leverage for the upcoming fight over the debt ceiling in a a few months, by forcing the country off of the cliff all in the name of protecting tax cuts for millionaires, Republicans may shoulder all of the blame for the fiscal cliff fiasco. The chaos in the early days of 2013 may stick in the minds of Americans who want elected officials in Washington to work together to get things done in order to make our lives better. Their intransigence in the name of tax cuts for the rich makes them look completely out of touch.
The Bottom Line: Ordinary Americans will benefit from this deal. While the payroll tax holiday, came to an end, no longer will the middle class be shouldering more than their fair share and if that sounds like what President Obama repeated over and over again during the campaign, it is. The next fight will be part deux of last year’s debt ceiling brinkmanship, which resulted in a lowering of the nation’s credit rating. Hopefully, House Republicans realize their mistake (but that’s not likely) and agree to raise the debt ceiling without much all of the drama. What’s clear is that the president got the best of Republicans this time around and the American people got much of what they voted for.