It was after midnight, but not by much. In a town and for a Senate that has become synonymous with gridlock, the two parties came together for an imperfect solution to a big problem.
After several days of hurried last-ditch negotiations between Vice President Joe Biden and Senate Minority Leader Mitch McConnell, it took only a few hours of hand-wringing and legislative arm twisting for the Senate to has passed a bill that would to avert the tax hikes and spending cuts known as the “fiscal cliff.”
But the legislation faced an uncertain future in the House, where Republicans have been more committed to opposing any and all tax hikes and wanted more spending cuts. But those concerns have given way to a vote later tonight.
Obama Headed to Hawaii Signaling Deal is Done – Sort Of
With a deal to avert the fiscal cliff wrapped up, President Obama is headed back to Hawaii on Marine One tonight.
Obama cut his Christmas vacation there short in order to come back to D.C. Wednesday to move along negotiations on a deal to stop automatic spending cuts and expiring tax breaks.
The deal does little to address the nation’s long-term debt woes, however, and does not entirely solve the problem of the “fiscal cliff.”
Indeed, the last-minute compromise — far short from a so-called grand bargain on deficit reduction — sets up a new showdown on the same spending cuts in two months, amplified by a brewing fight on how to raise the debt ceiling beyond $16.4 trillion. That new fiscal battle has the potential to eclipse the “fiscal cliff” in short order.
“Now the focus turns to spending,” said House Speaker John Boehner in a statement after the vote. “The American people re-elected a Republican majority in the House, and we will use it in 2013 to hold the president accountable for the ‘balanced’ approach he promised, meaning significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt.”
President Obama was also looking forward to that next debate.
“This is one step in the broader effort to strengthen our economy for everybody,” said Obama, who was joined by his top negotiator Vice President Joe Biden for late-night televised remarks after the House vote.
“This law is just one step in the broader effort to strengthen our economy and broaden opportunity for everybody.” —President Obama
— Barack Obama (@BarackObama) January 2, 2013
He lamented earlier attempts at a much larger fiscal deal that would have cut spending and dealt with entitlement reforms. He said he hopes future debates will be done with “a little less drama, a little less brinksmanship, and not scare folks quite as much.”
But Obama drew his own line in the sand when he said he “will not have a debate” with Congress about the debt ceiling, which is set to be reached by March.
Republicans hope that by allowing the fiscal cliff compromise, which raised taxes without an equal amount of spending cuts, will settle the issue of tax rates for those coming debates. But it wasn’t easy.
With more than 218 votes, the fiscal cliff bill will pass. But it took Democrats and a minority of Republicans to do it. House Speaker John Boehner voted yes. And so did Paul Ryan, the GOP Vice Presidential candidate last year. But other GOP leaders, chiefly their number two in the House, Rep. Eric Cantor, voted no.
Already 133 Republican no votes — a majority of Republicans voting no
— Jonathan Karl (@jonkarl) January 2, 2013
Fiscal Cliff Winner – George W. Bush - As the bill edges toward passage, it should be noted that these tax cuts being made permanent are the legacy of George W. Bush even though he has been largely absent from the debate. Democrats don’t want to point out they’re making his cuts permanent. Republicans aren’t yet ready to bring him back in the discourse.
Closing Arguments in the House - All of the Democratic leaders in the House urged passage of the bill. Those included Nancy Pelosi, Whip Steny Hoyer and James Clyburn. No Republican leaders – not Speaker Boehner, Majority Leader Cantor (who opposes the bill) or Majority Whip Kevin McCarthy spoke.
The closing moments of debate turned into a debate over entitlements and the next stage of the fiscal debate. Rep. Sander Levin has argued that Democrats will seek more revenue in future talks. Rep. Dave Camp said this bill should represent a permanent level of funding for the government. He’d like to see a more comprehensive tax reform. Camp supports this fiscal cliff bill.
But you can already sense among Republicans, a shift in tone. Camp pointed out the bill will make permanent Bush-era tax rates for nearly all Americans. Bush, he points out, was a Republican president. Those are Republican tax rates being made permanent. He also referred to the bill, which by stopping a tax hike can be considered a tax cut, “the largest tax cut in American history.”
“We’re going to look back on this night and regret it.” – Frustrated Rep. James Moran, a Virginia Democrat, voicing the ongoing liberal frustration with the higher threshold for tax hikes.
Rule Passes; Vote Around 11 p.m. – An overwhelming majority of 408 – 10 voted to proceed with the vote later tonight.
Not Only Does Grover Norquist Expect Passage, He’s Happy About It - He and his “Taxpayer Protection Pledge” were two of the bugaboos of the fiscal cliff debate, but Grover Norquist has a surprising point of view, according to Chris Good:
“I’m told they think the Senate bill will pass sometime tonight,” Grover Norquist, the Americans for Tax Reform founder and keeper of the Tax Pledge, told ABC News in a phone interview.
“Both parts” of the House GOP conference have told him so, Norquist said. He would not confirm that he meant wings represented by Speaker John Boehner and Majority Leader Eric Cantor, but he said he’s heard “two different perspectives on it.”
Norquist said he wants the House to pass the Senate deal. He previously lent his approval to Boehner’s “Plan B” proposal, which would have raised taxes on $1M+ earners. Despite the lower $400k/$450k threshold (and thus larger tax hike) in the Senate deal, Norquist urged the House Republicans to pass it without adding spending cuts, as they suggested doing earlier today.
“The House should move on this because mixing up tax issues and spending issues is a fool’s errand. It is putting piranha in the goldfish tank, because the taxes will eat up all the spending cuts,” Norquist said, suggesting Democrats would demand more taxes in exchange for House GOP demands on spending. “The bigger the deal you’re talking about, the bigger the tax increase you’re looking at.”
Cantor split w/ Boehner by opposing the cliff deal, but the more surprising split: McCarthy parting ways w Cantor, supporting Boehner
— Jonathan Karl (@jonkarl) January 2, 2013
9:05 p.m. Cliff Bill Violates Boehner 72 Hour Pledge – House Speaker John Boehner famously railed against the Democrats’ health reform bill, asking them if they could say it was developed out in the open. “Hell no, you can’t!” he yelled on the House floor. So he pledged that if Republicans gained the majority they would post all bills online for 72 hours before voting. There is some question as to whether the “Fiscal Cliff” deal violates the taxpayer protection pledge that most Republicans have signed. There is no doubt that it violates the 72 hour pledge. The bill was not posted online 24 hours ago. But perhaps he can be forgiven since the U.S. technically went over the “Fiscal Cliff” in those 24 hours. Here’s what Boehner said in 2010:
BOEHNER: “[I]f we’re lucky enough to be in the Majority, and I’m lucky enough to be the Speaker, I will not bring a bill to the floor that hasn’t been posted online for at least 72 hours. … With all the technology that is available today, they have all of this online. So let’s bring more transparency and accountability to how Congress works and let’s get rid of these 2,000 page bills that nobody can read and understand.”
Back to top 9:02 p.m. Along with Middle Class, Help for Hollywood, Railroads, Rum Producers – From Devin Dwyer and Steven Portnoy – The “fiscal cliff”compromise has been heralded as a saving grace for middle class taxpayers, their families and the unemployed. But buried in the fine print of the 150-page deal are also some lesser-known New Year’s gifts to some of Washington’s favorite industries. Under the plan, the federal government would eat nearly $100 billion in forgone tax revenue over the next two years by extending special tax credits for select businesses that had been set to expire. While the provisions themselves are not new, and are often extended as part of major bills, their inclusion amidst a tumultuous year-end debate over deficits and debt did raise a few eyebrows. The nonpartisan Committee for a Responsible Federal Budget listed the so-called “tax extenders” as a “bad” part of the fiscal cliff deal because their cost is not offset, “setting a bad precedent for future extensions.” The mix of tax perks covering the next year, but with budget implications for the next two years includes everything from incentives for employers to hire veterans to incentives for employers to invest in mine safety. But it also includes these:
- $430 million for Hollywood through “special expensing rules” to encourage TV and film production in the United States. Producers can expense up to $15 million of costs for their projects.
- $331 million for railroads by allowing short-line and regional operators to claim a tax credit up to 50 percent of the cost to maintain tracks that they own or lease.
- $222 million for Puerto Rico and the Virgin Islands through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.
- $70 million for NASCAR by extending a “7-year cost recovery period for certain motorsports racing track facilities.”
- $59 million for algae growers through tax credits to encourage production of “cellulosic biofuel” at up to $1.01 per gallon.
- $4 million for electric motorcycle makers by expanding an existing green-energy tax credit for buyers of plug-in vehicles to include electric motorbikes.
Back to top 8:58 p.m. House Hurtles Toward Vote – John Parkinson reports: The House has just began debate on the rule at approximately 8:40pm. Assuming all time is exhausted, the vote on the rule should be at 9:40pm. That will be a 15 minute vote that will surely last longer than 15 minutes. Then the House will debate the clean bill for one hour, before holding another 15 minute vote. Doing the math,…looks like final passage will be shortly after 11pm. Or they could agree to do it all sooner. 8:09 p.m. House Will Vote on Senate ‘Fiscal Cliff’ Bill Without Amendment – The House is now expected to vote Tuesday night on the Senate-passed “Fiscal Cliff” deal, according to a senior GOP leadership aide. If it passes, the bill would head to President Obama’s desk. It had earlier appeared that House Republicans would try to amend the bill, which would have added more spending cuts and improved it in their view. But that would also have delayed passage of the bill. The House Rules committee will meet around 8 p.m., which could place the bill on the floor in the 10 p.m. range. 7:30 p.m. Recess! After voting on two bills unrelated to the fiscal cliff – including one to freeze pay for Congress members – the House went into recess just after 7 p.m. on Tuesday night. ABC’s John Parkinson caught up with Speaker Boehner after members began leaving the floor and asked how the whipping was going. Boehner said he was “Just talking to my friends.” On what to expect tonight, Boehner said he hoped for a vote on fiscal cliff legislation, but he would not reveal whether Republicans will vote on an amendment to add a package of spending cuts to the Senate-passed deal, or run with the option of voting on the clean Senate-passed legislation. Back to top 6:10 p.m. Speaker Gives GOP 2 Options A GOP leadership aide told ABC’s John Parkinson that inside the afternoon’s meeting of House Republicans Speaker Boehner presented his members two options. The first would be to make an amendment to the Senate bill that would add a package of spending cuts. The whip will do a whip check on this spending cuts amendment after the meeting. If 218 members commit to vote for this amendment, House Republicans will bring it to the floor and send it to the Senate, the aide wrote an email. According to the aide, both Boehner and House Majority Leader Eric Cantor cautioned members about the risk in such a strategy. They told them there is no guarantee the Senate would act on it. Without 218 votes tonight, Republicans will bring up the Senate-passed measure for an up-or-down vote in the House. Back to top 6:00 p.m. Senate Leaves for the Night The Senate adjourned until noon on Wednesday, Jan. 2nd. That’s 24 hours before the new Congress takes effect and lawmakers have to go back to the drawing board.
Back to top 5:27 p.m. Senate Dems Will Say No to Changes from House
House Dem Leadership aide: “If the House changes the Senate’s bipartisan agreement, we will absolutely not consider it.” — Jonathan Karl (@jonkarl) January 1, 2013
Back to top 5:06 p.m. House Tweets
Speaker Boehner and I are working with House Leadership and our conference to find best path forward. — Eric Cantor (@GOPLeader) January 1, 2013
Back to top 4:50 p.m. Sandwich Time for Joe Biden What did Vice President Joe Biden eat after selling the fiscal cliff deal he helped broker to House Democrats Tuesday afternoon? According to CNN, the vice president made his way over to a Potbelly Sandwich Shop just a few blocks from the White House for a New Year’s Day lunch. Aides were spotted carrying donuts and coffee cartons labeled “Box O’ Joe” into the House Democratic Caucus meeting Biden attended earlier today, but it’s unclear if he consumed any of the breakfast treats. Biden often frequented Dairy Queen restaurants across the country while on the campaign trail, but probably to the vice president’s disappointment, there are no Dairy Queens located in Washington, D.C.
Back to top 4:48 p.m. The Morning After: Senators say Vote is “Nothing to Be Proud of,” But House Must Act ABC’s Sunlen Miller reports from the Senate: You could call it a New Years Eve vote hangover. A few lingering Senators on Capitol Hill with cracked voices, nearly all with bags under the eyes, defended their vote in the wee hours of New Years day as “nothing to be proud of” but necessary. “We can do this in the right way and not have to be here in the middle of the night.” Sen. Barbara Boxer, D-Calif., said this afternoon on the Senate floor. “I don’t think that’s anything to be proud of. However, I do believe what we did early this morning was the right thing. And a very important thing. Boxer said that if the House votes today on the Senate bill it will be a vote for cutting taxes, not a tax hike, attempting to put a positive spin on a hard vote for some conservative House Republicans. “Now it’s the first of the year, you’re actually cutting taxes now. Because as of today, they went up,” the Senator from California said. “So you could take credit for cutting taxes. I just hope and pray that the House will do the right thing.” Sen. Dick Durbin, D-Ill., said he hopes Congress “learned a lesson” from this debacle. “The American people are sick and tired of incompetence and political posturing and failure of Congress to come together on a bipartisan basis to some of a problem,” Durbin said, “and they want us to get the problem solved and get this nation moving forward.” Back to top 4:28 p.m. Pelosi Pushes For Vote on Fiscal Cliff Deal Emerging from a nearly three-hour caucus meeting, House Minority Leader Nancy Pelosi, D-Calif., called for an up-or-down vote on the fiscal cliff package that passed the Senate early this morning. “We expect, the American people deserve, an up or down vote on what was passed in the Senate,” Pelosi said at a Capitol Hill news conference. Pelosi characterized the Senate’s deal as “historic” due to the “uncharacteristically, very strong bipartisan way” in which it was passed, and Democrats urged their Republican colleagues to follow the senate’s lead and reach a compromise. “The 112th congress has about 46 hours left to go. This congress unfortunately has been most known for a unwillingness to compromise, an unwillingness to come together to act on behalf of the American people,” House Minority Whip Steny Hoyer, D-Md., said. “Today is January 1st. Taxes will be going up on everyone in America if we don’t act.” The Democrats huddled behind closed doors for an hour and a half with Vice President Joe Biden, who made his second trip to Capitol Hill in 24 hours after selling his deal to Senate Democrats late last night. Pelosi indicated “members are making their decisions now,” but she would not say how many Democratic votes they currently have in support of the deal. Back to top 4:17 p.m. Some Conservatives Call Fiscal Cliff Deal A ‘Surrender’ ABC’s Michael Falcone reports: Republican members of the House of Representatives who are balking at the fiscal cliff deal that was overwhelmingly passed by the Senate are reflecting even broader discontent coming from within the conservative community. A number of influential fiscal and social conservatives have been registering their opposition to the legislation today, including Family Research Council President Tony Perkins who blamed a “dysfunctional Congress” that “waited until the last minute” and reached a bad deal. “This deal fails the American people by allowing for more runaway spending from the federal government. President Obama has made it clear he has no real intention to address Washington’s out of control spending problem. By voting for this package, Congress gives the green light to finance his liberal agenda and further burden taxpayers,” Perkins said in a statement. Another leading conservative figure, Brent Bozell, the chairman of the small-government, low-tax group, ForAmerica, called the bill a “monstrosity”: “The bill passed by the Senate last night is not a ‘deal,’ it’s a surrender. The problem our nation faces is over-spending, and spending is ignored: the perfect Washington, DC ‘solution.’ And not only does this bill fail to make meaningful spending cuts, it actually spends another $4 trillion we don’t have! If the House passes this bill, the GOP loses its soul and co-owns the resulting fiscal disaster with President Obama. Conservatives should want nothing to do with any Republicans, no matter how ‘conservative’ they tell us they are, if they support this monstrosity.” But other important voices on the right have been more accepting. Grover Norquist, head of Americans for Tax Reform and keeper of the Congressional anti-tax pledge, said in an interview with CNN yesterday — before the bill passed the Senate — that he would vote for it. “It doesn’t violate the pledge,” Norquist told CNN’s Wolf Blitzer. “We need to go back and at the end of the day make sure that the tax cuts are made permanent for everybody, but that’s a fight for the weeks and months to come. This is progress, making 84 percent of the Bush tax cuts permanent.” Back to top 3:53 p.m. Danger Ahead: Cliff Deal Falling Apart in House ABC Chief White House Correspondent Jon Karl reports: A top House GOP aide bluntly told me this about the deal that overwhelmingly passed the Senate: “It ain’t coming out of the House as is.” Houston we have a problem. House Republicans are infuriated the bill includes virtually no spending cuts and, in fact, includes some $300 billion added spending (on unemployment benefits, on various tax credits, on Medicare doctors). In fact, the non-partisan Congressional Budget Office estimates that the bill’s added spending combined with the cost of extending tax cuts for those making under $400,000 will actually add $3.9 trillion to the deficit over the next 10 years. House Republicans, as John reports below, will attempt to change the bill by approving an amendment to include spending cuts. BUT – Senators have left town. And senior Democratic Senate aides tell me – point blank – the Senate will not come back to debate and vote on a bill amended by the House. Their attitude is this: A deal is a deal, and, besides, it passed 89-8. They are not open to any changes. Period. ABC’s Sunlen Miller adds from the Senate – Don’t hold your breath for the Senate to take up an amended House bill, if that’s what move the House of Representatives makes next. A Senate Democratic leadership aide tells ABC News, “we did our work, and McConnell’s office said they were confident of House passage. All bets are off if they amend our bill.” A small note, while a few Senators are still around today the overwhelming majority are at home, dismissed early this morning by the Majority Leader. Back to top 3:50 p.m. What Do House Republicans Think of the Senate? On CNN retiring Republican Rep. Steven LaTourette called Senators “some sleep-deprived octogenarians.” He blamed the fog of New Year’s Eve on their decision to pass the compromise bill senators hoped would avert the Fiscal Cliff. But LaTourette said he’ll likely follow House leadership on any votes. Ouch. Back to top 3:48 p.m. New Deadline: High Noon on January 3 Analysis from World News’ Rick Klein: GOP objections to the fiscal cliff bill passed in the Senate make it virtually impossible that the House will pass the deal today, and harder than ever to foresee anything passing even before the current session of Congress expires. The new deadline to watch will be noon on Jan. 3 – when the old congressional session ends and the new one begins. This is one deadline (maybe the only deadline) Congress can’t just change. The end of congressional terms is dictated by the Constitution, 20th Amendment. That would force everything to start all over, with a new House bill starting from scratch. We know how efficiently Congress works with a hard deadline, so we can imagine how well things will work when members have lots of time to debate and argue again. Plus, any changes done by the House will upset the tenuous compromise reached by the White House and Senate leaders. Even if the House were to immediately pass its changes, the Senate may see otherwise, and Thursday is just two days away. Every time it seems the dysfunction could not possibly get worse, it’s gets worse. Forget the cliff – we’re into the abyss. Back to top 3:31 p.m. Cantor Opposes Senate Deal ABC’s John Parkinson reports: After a conference meeting that lasted more than two hours, House Republicans appear disenchanted by the fiscal cliff package devised by Senate Minority Leader Mitch McConnell and Vice President Biden and passed by the Senate early this morning. Now, it’s almost certain that Republicans will attempt to amend the bill in order to win over the support of more conservatives. “I do not support the bill,” House Majority Leader Eric Cantor, R-Va., said as he left the meeting. “We’re looking for the best path forward. No decisions have been made yet.” On his way out, House Speaker John Boehner declined to comment on the meeting. Instead, a short time later, Brendan Buck, a spokesman to Boehner, explained that “the lack of spending cuts in the Senate bill was a universal concern amongst members in today’s meeting.” “The Speaker and Leader laid out options to the members and listened to feedback,” Buck said. “Conversations with members will continue throughout the afternoon on the path forward.” Cantor refused to say how soon the Republicans could meet again to finalize a path forward, although aides said they expected the conference to meet again today. Meanwhile, the White House put out their guide to the Senate bill:
Senate in Session is ‘Waiting’ on the House ABC’s Sunlen Miller reports: After their 2 a.m. vote passing the fiscal cliff deal the Senate was back in session today, “waiting” on the House of Representatives to act on the bill. “We are waiting here on the House to do something finally on the cliff we hope,” Senate Majority Leader Harry Reid, D-Nev., said in brief remarks opening up the Senate floor. While they wait, some Senators are taking to the floor to put pressure on the House to “follow through” and pass the measure. “I hope they take it up today or as quickly as possible and pass it with the same bipartition spirit and vote that we saw on the floor of the United States Senate last night,” Sen. Durbin, D-IL., said of the 89-8 vote in the Senate last night, “a significant bipartisan vote.”
Compromise Adds Nearly $4 Trillion to Deficit A report by the Congressional Budget Office suggests the compromise legislation would add $3.9 trillion to federal budget deficit over ten years. A similar report by the Joint Committee on Taxation suggests the bill would add about $3.9 trillion over the same period. Part of the reason for that is the bill does not include promised spending cuts that lawmakers would hash out later. It is still a large number and could spook some wavering House Republicans.
1:45 p.m. Republican establishment voices (who aren’t in elected office) have begun to mobilize against the Senate ‘fiscal cliff’ deal.
Marco rubio and rand paul were right to vote no on this terrible last minute tax and spend bill. — Newt Gingrich (@newtgingrich) January 1, 2013
Here’s a radio report from ABC’s Vic Ratner and Steven Portnoy:
Staffers carry in boxes of donuts and coffee cartons reading “Box O’ Joe” into House Dems + Biden meeting — Arlette Saenz (@ArletteSaenz) January 1, 2013
Biden doesn’t answer questions as he walks into meeting with House Dems, just wishes a Happy New Year — Arlette Saenz (@ArletteSaenz) January 1, 2013
12:23 p.m. Despite Criticism, White House Sees Deal as Game Changer – And a particularly harsh review from Paul Krugman – ABC’s Devin Dwyer and Matthew Larotonda report: The spin from the White House – casting the new revenue as a major victory – is at least partly aimed at grumbling liberals who have accused Obama of capitulating on a key campaign pledge: hiking tax rates on households making $250,000 or more. “Anyone looking at these negotiations, especially given Obama’s previous behavior, can’t help but reach one main conclusion: Whenever the president says that there’s an issue on which he absolutely, positively won’t give ground, you can count on him, you know, giving way – and soon, too,” liberal economist Paul Krugman wrote today in the New York Times. “The idea that you should only make promises and threats you intend to make good on doesn’t seem to be one that this particular president can grasp.” Still, the White House believes the concessions Obama extracted from Republicans on taxes puts him in a stronger position for negotiating on the debt ceiling and “sequester” in the coming weeks. The president now says any deal to offset the automatic “sequester” spending cuts will have to be balanced – including additional new tax revenue, not cuts alone. Read Devin and Matt’s full post.
2016 Potentials Ring in 2013 With ‘Nos’ – ABC’s Chris Good reports:
The bill was brought to the floor by a Democrat up for re-election in 2016, Senate Majority Leader Harry Reid of Nevada; it was finalized with Republicans, and sold to Democrats, by one who could maybe run for president in 2016 (big maybe): Vice President Joe Biden.The eight no-voters were:
- Sen. Michael Bennet, D-Colo., up in 2016
- Sen. Tom Carper, D-Del.
- Sen. Chuck Grassley, R-Iowa, up in 2016
- Sen. Tom Harkin, D-Iowa
- Sen. Mike Lee, R-Utah, up in 2016
- Sen. Rand Paul, R-Ky., up in 2016
- Sen. Marco Rubio, R-Fla., up in 2016
- Sen. Richard Shelby, R-Ala., up in 2016
The three senators who didn’t vote:
- Sen. Jim DeMint, R-S.C., resigned from the Senate
- Sen. Mark Kirk, R-Ill., up in 2016
- Sen. Frank Lautenberg, D-N.J.
It’s not as if the majority of Republicans up for re-election voted “no” on the cliff deal: 24 Republicans will face re-election in 2016, and 19 voted for the deal.
But two names might stick out, among the five who didn’t. Sen. Marco Rubio is widely considered to have a decent shot at the Republican presidential nomination in 2016 and, as Roll Call’s Jonathan Strong aptly tweeted, his “no” vote could put some pressure on another potential White House aspirant, Rep. Paul Ryan, R-Wis., who will likely have to vote on this deal in the next couple days. Big votes like this one are the kind that come up in presidential primary debates; last time around, the 2011 debt-limit vote was a topic. Rubio explained in a news release after the vote that he appreciated the hard work that went into the deal, but “rapid economic growth and spending reforms are the only way out of the real fiscal cliff our nation is facing,” and those “will be made more difficult” by this bill.
Perhaps an unsurprising name on this list is Sen. Rand Paul, never shy about bucking the policies of his fellow Kentuckian, Senate Minority Leader Mitch McConnell. A Rand Paul 2016 presidential run has also been the subject of speculation, albeit more quietly than Rubio’s taken-for-granted status as a GOP star.
Another “no” voter, Utah. Sen. Mike Lee, is a tea-party star in his own right, having ousted longtime GOP Sen. Bob Bennett with help from the Club for Growth at Utah’s 2010 nominating convention, one of the early upsets that ginned up enthusiasm and signaled the 2010 primary bum rush on GOP incumbents.
Fear and Self Loathing in the Senate Chamber
ABC’s Michael Falcone reports: Although 89 senators eventually voted to approve the legislation that headed off across-the-board tax increases on all Americans and, at least temporarily, painful spending cuts in defense and domestic programs, they didn’t sound particularly happy with themselves.
In fact, many of their statements in the hours after the early morning vote sound like an exercise in self-flagellation and an acknowledgement that although they found common ground, they took far too long and took the country far too close to a potential fiscal meltdown.
“It shouldn’t have taken this long to come to an agreement, and this shouldn’t be the model for how we do things around here,” Senate Minority Leader Mitch McConnell, R-Ky. (voted “yes”), told reporters on Capitol Hill early this morning.
And other lawmakers echoed his criticism:
Sen. John McCain, R-Ariz. (voted “yes”): “It should be embarrassing to all of us that it took until the last hours of the last day of the year to address an issue we should have dealt with months ago. This marks another sad chapter in what has been the least productive Congress since 1947. Moreover, the fact that we’re again kicking the can down the road with a short-term measure rather than moving forward with the fundamental tax and entitlement reform we all know our nation needs is yet another signal of the lack of leadership at all levels in Washington today.”
Sen. Jay Rockefeller, D-W.V. (voted “yes”): “The American people are sick and tired of seeing their elected officials bicker over petty politics while they are working hard every day to feed their families and keep or find jobs. … The House must move swiftly to pass this legislation, and I deeply hope that Congress can work together better going forward.”
Sen. Dan Coats, R-Indiana (voted “yes”): “Careening from crisis to crisis, addressing the fiscal cliff in the 11th hour is no way to govern. Once again, Washington missed an opportunity to present a real, long-term deficit reduction plan that would address our fiscal crisis. This stop gap measure is simply the lesser of two evils. Allowing our country to slip off the fiscal cliff and raise taxes on every American is unacceptable. American taxpayers should not have to pay the price for Washington’s dysfunction.”
Sen. Marco Rubio, R-Fla. (voted “no”): “Many Americans will be relieved in the short term that their taxes won’t go up. However in the long run, they will be hurt when employers pass on to them one of the largest tax hikes in decades. Furthermore, this deal just postpones the inevitable, the need to solve our growing debt crisis and help the 23 million Americans who can’t find the work they need.”
House Democrats Will Meet at 12:15 – And reprising his role from last night’s meeting of Democrats in Senate, Vice President Biden will appear to sell the deal to wavering Democrats. (Parkinson)
House GOP will Meet after Noon – Republicans in the House will meet at 1 p.m. in a closed session to consider the Senate-passed fiscal cliff deal. It probably won’t be clear until after that meeting if or when there could be a vote in the House on the bill. (John Parkinson)
The House convenes at noon, but first Republicans are expected to meet to consider the Senate’s dramatic early-morning show of bipartisan agreement.
House Speaker John Boehner and House Minority Leader Nancy Pelosi each offered terse statements long before the Senate voted 89-8 to pass their hurriedly written bill.
Neither offered support for the bill. Boehner’s statement, which was cosigned by his entire leadership team, said only:
“The House will honor its commitment to consider the Senate agreement if it is passed. Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members — and the American people — have been able to review the legislation.”
Beyond the difficulty of getting House Republicans to support the bill, which includes higher tax rates, that point about the American people being able to review it could be a tough one for some House Republicans to get around. They had accused Democrats of hatching their health reform bill in private and pledged when they took control of the House in 2010 to make all legislation publicly available on the House website for 72 hours before a vote.
For Democrats, the road could be easier. A White House official told Jonathan Karl that House Speaker Nancy Pelosi had signed off on the proposal before the Senate vote.
But she has not publicly endorsed it.
“I understand at the present time, Senate Democrats are meeting with the Vice President,” Pelosi said in a written statement about four hours before the Senate vote. “When a final agreement is reached and passed by the Senate, I will present it to the House Democratic Caucus.”
ABC’s John Parkinson, who covers the House, thinks it will take more than 100 Democrats to support the bill if it can get to the floor.
Here’s how ABC’s Sunlen Miller, Devin Dwyer and John Parkinson described it:
Two hours after a midnight deadline for action, the Senate passed legislation early New Year’s Day to avert the so-called fiscal cliff with an overwhelming vote of 89-8.
Senate passage set the stage for a final showdown in the House, where a vote could come as early as today.
“While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay,” President Obama said in a statement shortly after the vote.
“There’s more work to do to reduce our deficits, and I’m willing to do it. But tonight’s agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans,” he added.
… The deal at hand will not entirely solve the problem of the “fiscal cliff,” however. Indeed, it could set up a new showdown on the same spending cuts in two months that would be amplified by a brewing fight on how to raise the debt ceiling beyond $16.4 trillion. That new fiscal battle has the potential to eclipse the “fiscal cliff” in short order.
The bill passed by the Senate extends Bush-era tax cuts permanently for individuals making less than $400,000 per year and couples making less than $450,000. These thresholds apply to taxable income, which is calculated after deductions for things like Medicare, employer-sponsored health insurance, and contributions to retirement plans. The top rates for those households would rise from 35 to 39.6 percent. Households earning between $250,000 and $450,000 could see tax rates rise because of some expiring tax deductions.
- Raise the estate tax from 35 percent to 40 percent for individual estates over $5 million and household estates over $10 million.
- The steep “sequester” budget cuts – $110 billion across the board – that were scheduled to go into effect with the New Year will be postponed for two months. This sets up a tough new debate over those same budget cuts along with a brewing fight over the $16.4 trillion debt ceiling.
- Capital gains taxes would rise to 20 percent from 15 percent.
- Prevent a $900 pay raise for lawmakers due to take effect this spring.
- Prevent the alternative minimum tax from hammering millions of middle-class workers.
- The deal would also extend for one year unemployment insurance benefits set to expire today for 2 million people, and
- Avert a steep cut to Medicare payments for doctors.
Here’s what ABC’s Matt Larotonda writes after a briefing by sources familiar with the negotiations:
The President is counting this as a major victory, by using a comparison of where the Republicans were a year ago. Two summers ago the Republicans wouldn’t even consider closing tax loopholes on corporate jet sales. A month ago they were ok with closing tax loopholes, but would never raise rates. A week ago Boehner said he wouldn’t raise rates past incomes of $1 million.
Now Democrats are looking at $620 billion in new revenues and confirmed income threshold of $450,000 and above.
They believe having taxes taken care of puts them in a stronger position for negotiating in the coming cliffs.
The president has broken two decades of the GOP’s no-tax pledge; permanent tax increases on the rich they count as one of their biggest tax victories in modern times.
Here’s what Mitch McConnell said on the Senate floor in support of the deal:
“It’s late, so I’ll be very brief. I want to thank everyone for their patience and their counsel throughout this process.
“I also want to thank the Vice President for recognizing the importance of preventing this tax hike on the American people and stepping up to play a crucial role in getting us there.
“It shouldn’t have taken this long to come to an agreement, and this shouldn’t be the model for how we do things around here, but I appreciate his willingness to get this done for the country.
“I know I can speak for my entire conference when I say we don’t think taxes should be going up on anyone, but we all knew that if we did nothing they’d be going up on everyone today. We weren’t going to let that happen.
“Each of us could spend the rest of the week discussing what a perfect solution would have looked like, but the end result would have been the largest tax increase in American history.
“The President wanted tax increases, but thanks to this imperfect agreement, 99% of my constituents won’t be hit by those hikes.
“So it took an imperfect solution to prevent our constituents from very real financial pain. But in my view, it was worth the effort.
“As I said, this shouldn’t be the model for how to do things around here. But I think we can say we’ve done some good for the country. We’ve taken care of the revenue side of this debate.
“Now it’s time to get serious about reducing Washington’s out-of-control spending. That’s a debate the American people want. It’s the debate we’ll have next. And it’s a debate Republicans are ready for.”
From Matt Larotonda after that briefing by sources familiar with the negotiations:
The original offer that came back from Senate GOP after the leadership meeting was tax hike threshold at $750,000 for a family, including decreased future social security increases (known as “chained CPI”, no extension of unemployment insurance, no extension of the child tax credit, and continuation of estate tax at the current 35 percent level. That GOP proposal, according to these sources, also wanted to pay for sequester by means-testing Medicare.
Democrats counteroffer with tax hikes for people making more than $275,00. It went back and forth from there.
Talks between Mitch McConnell and Senate Majority Leader Harry Reid ultimately fell apart because they could not find a way to delay the automatic spending cuts (known as the “sequester”) that kick in Jan. 2.
McConnell suggests to Reid that he use Biden as a negotiator instead; Reid signs off on the idea. Reid and Pelosi still played a role through the whole process, according to these sources, especially the latter because of the Democratic votes needed in House.
McConnell brings tax hike threshold down to $550k, with short term extensions for child tax credit but gave ground on estate tax.
President says his final offer is tax hikes for households making more than $450,000, that extending unemployment cannot be offset with spending cuts, and some sort of provision to avert spending cuts in the sequester had to be part of deal.
2:00 AM – White House negotiator Rob Naybors goes to Capitol Hill with Senate Democratic staffers to start drafting legislation. That started a marathon of legislative drafting for the staffers and Naybors that lasted through Monday evening.
The final sticking point was how to pay for the short-term delay of automatic spending cuts. Republicans wanted to offset them with other spending cuts. President Obama insisted on a 50/50 formula – half of the delayed cuts are offset with spending cuts and half with new revenue. This went back and forth all day long. The indexing estate tax (that $5 million threshold for a 40 percent tax rate will rise with inflation) was also an issue for many Democrats.