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Senate approves fiscal-cliff deal by a wide bipartisan margin

America went over the so-called fiscal cliff with the arrival of Jan. 1, but disastrous consequences likely will be averted when the U.S. House signs off on a BIPARTISAN DEAL reached in the wee hours today in the Senate:

The measure, which would raise tax rates for families making more than $450,000 and delay deep across-the-board spending cuts for two months, cleared the Senate by an overwhelming 89-8shortly after 2 a.m. The Republican-controlled House could take up the pact in a rare New Year’s Day session, though the timing of that chamber’s vote was not clear.

The $620 billion agreement was a major breakthrough in a partisan standoff that has dragged on for months, spooking Wall Street and threatening to hobble the economic recovery. It turned back the GOP’s two-decade-long refusal to raise tax rates, delivering a major win for the president.

The bill also canceled pay raises for members of Congress and averted an expected hike in the price of milk by extending expiring dairy policy.

But as big a deal as it was, it did little to address the nation’s long-term deficit problem — there’s nothing in it to pare back entitlement spending — or to defuse a potential crisis over raising the debt ceiling that could come as early as February.

The legislation now moves to the House, where Speaker John Boehner  has vowed to give any accord passed by the Senate its time on the House floor. GOP aides said a wide bipartisan vote would ease the bill’s passage through the House, but hurdles still remain. It remains to be seen whether House Republicans try to amend the package — a tactic that would surely sink the deal.

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My view is that Boehner wouldn’t dare to preside over a sinking of the deal. He’ll wangle enough Republican votes — 30 or so, if not more — to ratify the Senate bill.

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16 Comments

  1. So what’s Boehner going to do? Call Monty Hall? His bag boys haven’t passed anything.

  2. “But as big a deal as it was, it did little to address the nation’s long-term deficit problem…”

  3. Luke Fredrickson

    The deficit will only be relieved by sustained economic growth and the resulting increase in tax revenue. Contractionary fiscal policy will not get us a growing economy.

    In other words, the real threat is proloinged economic stagnation. Debt and deficits are just a symptom of that underlying disease.

  4. Here’s hoping for a rip roaring economic recovery in 2013.

    Unfortunately, I won’t be capable of helping out as much as I would like.

  5. Big Dave

    More taxes and spending, wow!

    I wonder just how long it will be before this new tax increase cannot help anymore and everyone must have a tax increase? Time will tell but I’m betting on not much time will be needed.

  6. Brian Opsahl

    Wow …so if your making over 400,000 grand i’m supposed to now feel sorry for your added tax amount….Sorry Charle tricks are for kids..!!
    Maybe now there will be millions of poor folks that will be able to buy a few things…thus causing the demand in products to go up….building the economy from the middle out instead of the trickle down crap that only created a bunch of millionares while throwing all are good paying middle class jobs to China. Like your republicans have been doing the last 20 some years.
    Big Dave that deficit or credit card spending as I like to call it took a pretty hard hit from the republicans over the years…did they NOT..!!

  7. Brian,

    You presume that the rich (those making more than 400,000) were going to stuff the extra money in the bank. While that may certainly be true in the case of the ultra millionaires for those in that 400,000- 1,000,000 range that is likely not true.

    I personally will be decreasing my consumption in 3 specific ways. A planned new car purchase will not happen. The current car will continue to serve its purpose for at least 2 more years.

    Also, instead of a summer vacation involving flying to the west we will be driving to the east.

    Finally, a little used health club membership and music lessons for a child who doesn’t really love them will be dropped.

    You may argue that the extra money I am sending to Uncle Sam will be spent in the economy somewhere anyway but I don’t see anybody talking about increasing federal spending. The money more likely will be spent on servicing the debt.

    Remember your taxes went back up as well as the temporary cut in SS tax is gone for everyone.

  8. So what you’re saying doc is that you make over $450,000. That is where the taxes are going up on married persons.

    Well, BOO HOO! You can be sure the rest of us send our sympathy your way. You have saved $135,000 in taxes over the last ten years. Now you face an increase of $13,000 per year. That works out to about 6 days pay. If you make that much, I don’t think it is going to hurt you. Don’t give us that nonsense on your reduced consumption. Most of us don’t make what you do in 10 years. If you can’t afford the things you mentioned on your pay, your not managing your money very well.

    That shows up when you tell us that a driving trip costs less than a jet trip. It doesn’t.

    Isn’t it better to use the extra taxes to service the debt, rather than adding to the debt with less taxes?

    Isn’t it better to let S.S. tax rise to its previous level? Oh, that’s right. You Republicans would rather see S.S. benefits cut.

    So don’t complain about your taxes going up. You are making over $2000 a day. Not bad for someone who spends most of his day blogging and reading the WSJ.

    I made half of that $2000 amount, in a full year, for 4 years, while serving this country in the military, so people like you could make the big bucks in this free country. If you want to live safely in this free country you have to pay for it. Or move to another country that has less taxes, and less freedom.

    And you could charge your patients less, and drop into a lower tax bracket, you know?

  9. Tex,

    Such a rage filled liberal, I could have written your response it is so predictable.

    Where did I ever say I wanted sympathy or was even upset about paying the increased tax rate? I simply told you what the impact of the tax changes are going to be on my spending in 2013. I didn’t say I was mad about the changes I am making or even felt they were a sacrifice.

    I’ll give you a break though, budgetary math isn’t the strong suit of enraged liberals.

    As far as SS, I pointed out a fact about SS taxes and you raged.

    Your math is wrong by the way.

    And the driving trip to DC will cost me less than flying to San Francisco would have.

  10. Luke Fredrickson

    Wow! Well said, tex.

    doc, the “math” of raising taxes on earners like yourself was exhaustingly debated over the last year. Your pitch man lost. Decisively.

    Moreover, GWB spent most of a decade showing us that tax breaks for high earners do NOT signicantly build demand and grow wealth for the rest of the country.

    So, dry your eyes. You should know that, to most of us, your spiteful plans to limit luxury spending come across as so much spoiled whining.

    Most others in your bracket won’t be so petulent.

  11. Brian Opsahl

    Doc: you clearly implied that, by saying you would NOT be buying that new car this year. Do you have any idea how many folks suffered during the Bush give away years. All those good paying manufacturing jobs that got shipped to anywhere but America…mostly to China by all those Bain/Romney type companys…those blood sucking millionares that should be tried for treason for selling us out like that..!! destroyed so many familys just so they could then hide there proffits overseas from paying any taxes ….really doc..?

    And Tex, Thank You Sir for standing up for my freedom and serving our great Nation…!!

  12. Tex,

    I too fully honor your defense of my freedom just like I did that of my grandfathers, father and uncle as well of all of our current Wounded Warriors.

    Luke,

    I am not talking about federal budgetary math I am talking about Expdoc family budgetary math.

    It is a simple fact that I will have sigificantly less money in my household budget next year. Not just due to an increase in tax rate but also due to decreasing physician reimbursement.

    I know this is shocking to a liberal, but that means I have to adjust my budget and also spend less.

    And I will say it again, I am not sad, mad, disappointed or upset by this prospect. This is something I have experienced for 4 years running and is an eventuality which I fully expected to happen and fully expect will get much worse in the near future. The attempt to “increase revenue” by increasing taxes will not stop and in fact will be required of all of us if we are going to fix our federal budget problem. Even with that, significant spending cuts and entitlement reform must also happen and that too will likely impact the “dirty rich”.

    I merely posted this so that the die hard liberals here can try to understand (although I know you won’t) what the economic impact might be.

    More worrisome is the impact that might happen for small business owners in the sweet spot of a struggling economy and increasing tax burden. That will cost the country jobs.

  13. You live a tortured life doc. You don’t seam to understand. Which do you want? Increased taxes or decreased spending? You can’t decrease spending or we will go back into recession. That was tried in 1932. Tell us where you would cut spending which would not impact the economy.

    Taxes cannot be increased on the middle class until this economy recovers. At that time, of course taxes must go up to decrease the deficit.

    The rich have been doing very well for the last 10 years, and can afford to have their taxes raised. All of the tax increases must be done in very careful steps.

    And I don’t want to hear anymore about entitlement reform, from the Republicans. We are good for several years into the future. When the economy recovers I want to see politicians, especially Republicans talk about cutting spending in other areas, before entitlements. It seems they can only look at the area they hate. If they can give $4 billion in tax breaks to the oil companies this year, then hands off S.S. and Medicare.

  14. doc: Round-trip air Milwaukee to San Fran. Priceline quotes $242. So for 4 of you that is $968.

    Milwaukee to D.C. is 800 miles. At 20 M.P.G. that is $280 both ways. 2 nites in a motel equals $300. Food for your family for 4 days travel at $150 per day is $600. That means the trip to D.C. costs about $1180. Plus tolls, and wear on your car.

    Oh, I forgot. You probably have to fly in First Class.

  15. Brian Opsahl

    Well said Tex …Austerity doe’s NOT work….just ask the Greeks,Spanish…it didn’t work for them and it surly wont work for us.
    Doc, If your Romney had won the election, you would be buying a new car and several other things while the rest of us would be doing the same things we did under GWBush selling our possesions down sizeing everything…but we voted for a differant way this time.

  16. Tex,
    I have 3 kids not 2 and I can stay for free 2 of the nights with Marriott rewards points gained on a credit card. Your math is wrong, trust me.

    Taxes were just increased on the middle class.

    I love the snide comment about first class, very clever. The only time I have ever flown first class was on a 10th anniversary trip with my wife 10 years ago. It is somewhat overrated except that I am 6’4″ and the extra leg room was nice.

    I understand both of your arguments about austerity but the entitlement reforms that have been proposed don’t even take effect for 10 years. If the economy hasn’t recovered by then we are well and truly screwed.

    If we don’t choose budget reform now then it will be chosen for us in the future. If the Greeks had their way they would have kept up their wonton spending except that the other Euro nations refused to lend them more money unless they got their fiscal house in order.

    Brian,

    What exactly about what just happened in D.C. is going to change the fact that the middle class is hurting? Do you think my deferring a car purchase helps? Do you think the fact that your SS tax break went away helps?

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