Tuesday, January 01, 2013

Senate passes fiscal cliff bill; House yet to act

At 1:39am New Year's morning, the U.S. Senate passed a "compromise" deal on the fiscal cliff -- with nearly all of the compromise coming on the part of the Republicans.

The Congressional Budget Office estimates the deal to raise tax revenue by $620 billion, while cutting only $15 billion in spending (which is off-set by increased spending elsewhere). That's $41 in higher taxes to every $1 cut. Additionally, only two billion dollars in cuts will take place during 2013 -- which means that when it's all said and done, not a penny will be cut. We've been down this road many times already.

Here are some details from RedState:
The bill raises income tax rates for those taxpayers with incomes more than $400,000 for individuals and $450,000 for couples from 35 percent to 39.6 percent. These higher income taxpayers will also pay higher rates on investment income, with rates on dividends and capital gains rising from 15 percent to 20 percent. Add the 3.8 percent ObamaCare surcharge on investment income — another tax that takes effect in January, and the top rate on investment income would rise to 23.8 percent for those high-income households.
The bill also raises taxes on couples earning more than $250,000 a year and single people earning more than $200,000 by limiting personal exemptions and itemized deductions.
Estates taxes will also be increased, with the top rate raised to 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates.
The bill also delays the automatic $1.2 trillion draconian sequester spending cuts for sixty days. The sequester cuts, evenly split between defense and certain domestic discretionary spending, were scheduled to go into effect on Jan. 1, 2013. The $24 billion cost of the sequester delay is allegedly made up with a mix of spending cuts and new revenues from rules changes on converting traditional individual retirement accounts into Roth IRAs.
Worse, the bill actually increases the deficit by including:
  • A permanent fix for the alternative minimum tax.
  • A five-year extension of tax credits for college tuition and the working poor, which were enacted as part of Obama’s failed 2009 stimulus.
  • A one-year extension for unemployment benefits, affecting two million people.
  • The long-term unemployed could count on receiving emergency benefits for another year, at a cost of about $30 billion.

The bill passed 89-8. Three Democrats voted no: Sens. Bennett (CO), Carper (DE), and Harkin (IA). Only five Republicans voted no: Sens. Grassley (IA), Lee (UT), Paul (KY), Rubio (FL), and Shelby (AL). 40 Republican senators voted for the measure, including Oklahoma's Jim Inhofe and Tom Coburn.

As of this moment, the House has yet to act on the bill.

One thing is for certain - Republicans in both houses of Congress need new leadership. Far too often have GOP leaders in D.C. betrayed the trust that grassroots conservatives have placed in them.


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