Done Deal - For Now (The Note)

By MICHAEL FALCONE ( @michaelpfalcone ) and AMY WALTER ( @amyewalter )


  • WE'VE GOT A DEAL: Congress waited to the last minute - and beyond - but a deal finally got done. ABC's Devin Dwyer, John Parkinson, and Sunlen Miller report: The House of Representatives approved a bipartisan Senate deal to avert the "fiscal cliff" and preserve Bush-era tax cuts for all Americans making less than $400,000 per year. The compromise is now on its way to President Obama for his signature. "I will sign a law that raises taxes on the wealthiest two percent of Americans while preventing a middle class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America," said Obama, who was joined by his top negotiator, Vice President Joe Biden, for late-night televised remarks after the House vote. "Under this law, more than 98 percent of Americans and 97 percent of small businesses will not see their income taxes go up," he added. "A central premise of my campaign for president was to change the tax code that was too skewed towards the wealthy at the expense of working middle-class Americans."
  • REPUBLICANS RESISTED: More from ABC's Devin Dwyer, John Parkinson, and Sunlen Miller: House Republicans agreed to the up-or-down vote Tuesday evening, despite earlier talk of trying to amend the Senate bill with more spending cuts before taking a vote. … A majority of the Republicans in the GOP-majority House voted against the fiscal cliff deal. About twice as many Democrats voted in favor of the deal compared to Republicans. One hundred fifty-one Republicans joined 16 Democrats to vote against the deal, while 172 Democrats carried the vote along with 85 Republicans. The Senate passed the same bill by an 89-8 vote in the wee hours of New Year's Day. If House Republicans had tweaked the legislation, there would have been no clear path for its return to the Senate before a new Congress is sworn in Thursday. The vote split Republican leaders in the House. House Speaker John Boehner, R-Ohio, voted yes, and so did the GOP's 2012 vice presidential candidate, Rep. Paul Ryan, R-Wis. But House Majority Leader Eric Cantor, R-Va., the No. 2 Republican in the House, voted no. It was his opposition that had made passage of the bill seem unlikely earlier in the day.
  • HOUSE SCRAPS VOTE ON SANDY AID: ABC's John Parkinson reports: In a surprise move, the House of Representatives will not vote on Sandy aid in the 112th Congress, a GOP leadership aid confirmed late Tuesday evening. A vote to provide aid to victims affected by the storm could come later this week during the 113th Congress, leaving lawmakers to start from scratch on a resolution to the standoff. After the House passed the "fiscal cliff" deal, members from Sandy-stricken areas on both sides of the aisle took to the floor to decry the lack of action. … The Senate has already acted to provide $60.4 billion to the region. But many House Republicans outside the damage zone believe the price tag is too high and includes extraneous spending.
  • A BOOST FOR THE MARKETS: ABC News Business Correspondent Richard Davies predicts a big stock market bounce after the House passed the Senate's fiscal cliff agreement. Futures shot up after the drama finally ended late Tuesday. Economists had warned hundreds of billions of dollars in automatic tax hikes and spending cuts could have triggered a U.S. recession this year. Several leading European averages are up 2 percent today. Australian and Hong Kong stock indexes closed overnight at their highest levels since June 2011. And, there is good news for milk drinkers. The fiscal legislation that passed Congress averts the "dairy cliff"- putting off a steep increase in milk prices. The legislation includes a nine month extension for a 2008 farm bill that ran out at the end of December. Without the fix dairy subsidies would have plunged, and milk prices could have doubled.


Mark this date on your calendar: March 1.

After months of hand-wringing about whether lawmakers would be able to avert the fiscal cliff of 2012, the fiscal cliffs of 2013 are right around the corner.

By early March, Congress will need to act on the debt ceiling and find an alternative to the deep cuts to the Pentagon and other government agencies that were only put off by two months under the agreement passed by the House last night.

"For now we have a short breather from the political brinksmanship," ABC's Chief White House Correspondent Jonathan Karl noted on "Good Morning America" today.

But even before President Obama left Washington for Hawaii late last night to continue his vacation, he was already drawing a line in the sand on the debt ceiling.

"While I will negotiate over many things, I will not have another debate with this Congress over whether they should pay the bills for what they've racked up," Obama said. "We can't not pay bills that we've already incurred."

He acknowledged the passage of the bill that staved off the fiscal cliff. It made it through the House by a vote of 257 to 167 (172 Democrats and 85 Republicans voted in favor, while 151 Republicans and 16 Democrats were opposed).

But as ABC's Devin Dwyer, John Parkinson, and Sunlen Miller noted, President Obama also lamented the failure of a much larger fiscal deal that would have cut spending and dealt with entitlement reforms and said he hoped future debates would be done with "a little less drama, a little less brinksmanship, and not scare folks quite as much."

But, given the vitriol during this round of negotiations, that might be impossible. This exchange between House Speaker John Boehner and Senator Majority Leader Harry Reid, reported by Politico, pretty much says it all:

"It was only a few days before the nation would go over the fiscal cliff, no bipartisan agreement was in sight, and Reid had just publicly accused Boehner of running a 'dictatorship' in the House and caring more about holding onto his gavel than striking a deal. 'Go f- yourself,' Boehner sniped as he pointed his finger at Reid, according to multiple sources present. Reid, a bit startled, replied: 'What are you talking about?' Boehner repeated: 'Go f- yourself.' The harsh exchange just a few steps from the Oval Office-which Boehner later bragged about to fellow Republicans - was only one episode in nearly two months of high-stakes negotiations laced with distrust, miscommunication, false starts and yelling matches …"


ABC's RICK KLEIN: Any analysis that depicts this agreement as a triumph for bipartisanship is flawed - someone either wasn't watching or should know better. The vote created intriguing splits - Rep. Paul Ryan and House Speaker John Boehner voting with the president, Sen. Michael Bennet and Rep. Xavier Becerra voting against his wishes. But this was an awful mishmash of a bill that's no model for progress, even if it proves successful in keeping the economy on track. The depressing truth for the New Year is that there's no path out of the cycle of brinksmanship, confrontation, and governance by cliffs, threats, and crises.

ABC's AMY WALTER: The fiscal cliff saga also taught us that there's more than just one lame duck in Washington. Speaker Boehner acts like a man who wants to cement his legacy while his deputies, Eric Cantor and Kevin McCarthy, act like men who are positioning for their next step up the leadership ladder. This is going to be the most interesting - and important - dynamic to watch as Congress and the White House are forced to tackle the even more incendiary issues like debt ceiling and immigration.

WHAT THE CLIFF DEAL DOES AND DOESN'T… It does extend price subsidies for milk, peanuts, and sugar, along with tax credits for energy-efficient homes and alternative-fuel vehicles. It doesn't raise salaries for members of Congress. See this rundown from ABC's Sarah Parnass and Z. Byron Wolf:

…IT ALSO DOLES OUT MILLIONS FOR HOLLYWOOOD, RAILROADS, RUM PRODUCERS. ABC's Devin Dwyer reports: 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 … $430 million for Hollywood through "special expensing rules" to encourage TV and film production in the United States. … $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.


with ABC's Chris Good ( @c_good)

THE CLIFF IN 2016: RYAN, RUBIO SPLIT ON THE DEAL. Two of the GOP's top White House prospects for 2016 chose opposite sides in the fiscal cliff battle-something that will surely come up in 2016, if they both run for president. Marco Rubio voted against the deal along with seven other senators early Tuesday morning, acknowledging painstaking negotiations but warning that small businesses would have to pay higher taxes under the deal: "[R]apid economic growth and job creation will be made more difficult under the deal reached here in Washington … Thousands of small businesses, not just the wealthy, will now be forced to decide how they'll pay this new tax," referring to small businesses filing as S corporations under the individual tax code. House Budget Committee Chairman Paul Ryan, on the other hand, sided against most of his Republican House colleagues and supported the bill. "Today, I joined my colleagues in the House to protect as many Americans as possible from a tax increase," Ryan said after the vote, in a press release. "[It] is unfortunate that President Obama insisted on taking more from hardworking taxpayers … The American people chose divided government. As elected officials, we have a duty to apply our principles to the realities of governing."

SIMPSON, BOWLES: WASHINGTON MISSED A 'MAGIC MOMENT.' ABC's Devin Dwyer reports that Alan Simpson and Erskine Bowles, co-leaders of the president's failed deficit-reduction commission, released the following statement on the cliff deal: "The deal approved today is truly a missed opportunity to do something big to reduce our long term fiscal problems, but it is a small step forward in our efforts to reduce the federal deficit. … Our leaders must now have the courage to reform our tax code and entitlement programs such that we stabilize our debt and put it on a downward path as a percent of the economy. Washington missed this magic moment to do something big to reduce the deficit, reform our tax code, and fix our entitlement programs."

OBAMA HEADS BACK TO HAWAII. The president has gotten out of town and back to his family as quickly as possible, ABC's Devin Dwyer reports: Less than an hour after Congress and the White House resolved the fiscal cliff, President Obama boarded Air Force One to return to his planned Hawaiian holiday vacation. He boarded the plane at Joint Base Andrews in Camp Springs, Md., shortly before midnight Wednesday following a New Year's Day of political drama on Capitol Hill. … he will reunite with First Lady Michelle Obama and daughters Sasha and Malia, who have been vacationing there since just before Christmas.

DEAL RAISES TAXES ON 77% OF HOUSEHOLDS. Congress and the White House are letting a payroll tax cut expire, and Bloomberg's Richard Rubin reports: The budget deal passed by the U.S. Senate today would raise taxes on 77.1 percent of U.S. households, mostly because of the expiration of a payroll tax cut, according to preliminary estimates from the nonpartisan Tax Policy Center in Washington. More than 80 percent of households with incomes between $50,000 and $200,000 would pay higher taxes. Among the households facing higher taxes, the average increase would be $1,635, the policy center said. A 2 percent payroll tax cut, enacted during the economic slowdown, is being allowed to expire as of yesterday.

ISSA SUGGESTS NEW YEAR'S DRINKING CAUSED SENATE VOTE. For opponents of the cliff deal, it was an easy joke to make: That New Year's Eve drinking had impaired the Senate's judgment. Well, Rep. Darrell Issa made it, ThinkProgress's Igor VOlsky notices: "You know, Wolf, frankly I can't account for what happens after midnight and all of that partying and revelry and drinking that goes on on New Years Eve at 2:00 in the morning," said of the senators who voted for the deal, in an interview Tuesday with CNN's Wolf Blitzer.

GROVER NORQUIST LIKES THE DEAL. Grover Norquist, founder of Americans for Tax Reform and keeper of the famous/infamous Taxpayer Protection Pledge, urged House Republicans to pass the bill in a phone interview with ABC News Tuesday evening, as they considered adding new spending cuts that could threaten the deal. "The House should move on this because mixing up tax issues and spending issues is a fool's errand," 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." Norquist compared saving taxpayers from a rate hike to saving drowning passengers on a sinking ship. If you can save 90 of 100, Norquist said, you do it. "You can't save all 100, so I'm not going to try? I don't think that's what the Red Cross guys teach you," Norquist said. "Get as many out as you can. Save as many taxpayers as you can. That's what this fight is about right now. The next fight is over spending." Norquist had lent his approval to House Speaker John Boehner's "Plan B" proposal, which raised taxes on incomes over $1 million; the deal that passed last night raised taxes on incomes over $400,000 (individual) and $450,000 (married couples).

BILL KRISTOL ALSO LIKED IT - SORT OF. The Weekly Standard editor William Kristol summed up the prespective of conservative pragmatists, in a Tuesday post on the magazine's website: "The deal is a sad commentary on our politics today. On the other hand, the deal is substantively better than going over the cliff and having all income and investment taxes go up, and having the defense sequester hit right away. And politically, Republicans are escaping with a better outcome than they might have expected, and President Obama has gotten relatively little at his moment of greatest strength. In particular, this should do it for new tax revenues, at a number lower than Speaker Boehner originally offered-and it should be pretty easy to have the next debate focus on spending and entitlements."

LIBERAL BACKLASH FOR OBAMA. The New York Times' Peter Baker reports: "While Mr. Obama got most of what he sought in the agreement, he found himself under withering criticism from some in his liberal base who accused him of caving in to Republicans by not taxing the rich more … the wave of grievance from liberal activists, labor leaders and economists suggested that the uneasy truce between Mr. Obama and his base that held through the campaign season had expired … Richard L. Trumka, the president of the A.F.L.-C.I.O., said in a Twitter message on Monday that the agreement was 'not a good fiscal cliff deal if it gives more tax cuts to 2 percent.' Senator Tom Harkin, Democrat of Iowa, said on the floor on Monday that 'this looks like a very bad deal.'"

DING DONG, THE AMT PATCH IS FINALLY DEAD. The wicked witch of the tax code is almost dead. By passing the "fiscal cliff" deal hammered out between the White House and Senate Republicans, Congress has finally found a permanent patch to the Alternative Minimum Tax, a piece of tax code that has morphed from a provision to make sure the rich paid their taxes to a trap that has threatened to ensnare millions of middle class Americans. Almost every year, Congress has had to pass temporary legislation to fix the recurring glitch in the tax code. When the Senate passed its fiscal-cliff deal, it graciously indexed the AMT to inflation. Now that the House has followed suit, with President Obama's signature this yearly congressional headache will go away.

WSJ OP-ED: RYAN CROCKER FOR CHUCK HAGEL. Former ambassador Ryan Crocker, who represented the U.S. in Iraq, has penned an op-ed backing Chuck Hagel for secretary of Defense. Crocker writes at the Wall Street Journal, giving Hagel cover for opposing unilateral Iran sanctions: "Mr. Hagel understands far better than most the evils of Hamas and Hezbollah, both backed by Iran. He also appreciates the importance of looking in and among those groups for fissures that might lead to internal debate, dissension or division-or even to areas of agreement with the U.S. In the months after the 9/11 attacks, I negotiated with Iranian officials regarding Afghanistan; it accomplished a little of both, spurring agreement on some issues and internal debate among the Iranians on others. Chuck Hagel understood this, as he understood the importance of the unsuccessful talks I had with the Iranians in 2007, when I was serving as U.S. ambassador to Iraq. The failure of those talks helped convince Iraqi Prime Minister Nouri al-Maliki that a diplomatic solution to Iranian interference in Iraq wasn't possible, at which point he decided to use his army successfully against Iranian-backed militias."


-COMING TO A METRO STOP NEAR YOU. Bankrupting America, a project of the group, Public Notice, launched their new "Talk is Cheap, Overspending is Not" campaign today, which aims to hold Washington lawmakers accountable for "promises to cut wasteful spending and get America's debt and deficits under control. The campaign will feature advertising at Capitol South and Union Station metro stops in Washington, D.C., as well as online advertising. … The 'Talk is Cheap, Overspending is Not' campaign will continue throughout the month with several additional initiatives yet to be announced. 'In the wake of the fiscal cliff fiasco and the prelude to the debt ceiling debate, now is the time to remind our leaders in Washington of their promises. We've heard the talking points and no longer believe them. We've grown tired of the posturing and fear the seemingly constant game of political chicken,' said Gretchen Hamel, Executive Director of Public Notice."

-SEIU LIKES THE DEAL. Progressives generally opposed this deal, as the AFL-CIO,, and the Progressive Change Campaign Committee all had negative things to say about it. Not the Service Employees International Union (SEIU), which emailed Tuesday night: "This deal is the right move to protect America's middle class families, who were facing a New Year with higher taxes, and to prevent two million Americans from losing their unemployment benefits. Unfortunately, right wing extremists once again pushed the debate outside the mainstream … Working families have already made significant sacrifices in the name of deficit reduction. In 2013, working families need elected leaders to turn away from the politics of painful cuts and focus on creating good jobs and jumpstarting our economic recovery. The best way to get our economy moving again is to get people back to work."

-TEA PARTY PATRIOTS: AMERICANS HAVE LOST ALL CONFIDENCE IN GOVERNMENT. An e-mail from Tea Party Patriots Tuesday night: "'Sadly, our New Year's predictions have all come true,; said Jenny Beth Martin, National Coordinator of Tea Party Patriots. 'Congress and the President had all year to do their jobs and be fiscally responsible … We wish our predictions were wrong,' added Martin, 'but, most Americans have lost all confidence in the federal government. Besides predicting that our 'leaders' would fail, again, to cut overspending and that taxes would go up we also predicted the President, the Senate and House leadership would play politics and look out for themselves, instead of the American people, and that's exactly what they did.'"


@lovenheim: best sort of #Senate trivia: On Thurs, #NH becomes 1st state in U.S. history to send an all-female delegation to Washington #fem2

@robertcostaNRO: I remain very skeptical about talk of a Boehner challenge. Is there discontent? Of course. Rampant. But I don't see revolt. Just exhaustion

@evanmc_s: Eleanor Holmes Norton told @bpshow this AM that internal Dem divisions on entitlements could play role

@nationaljournal: Why Harry Reid was sidelined on the cliff deal for Joe Biden, the "McConnell whisperer"

@BW: Welcome to California, lab rat for the nation's policy ideas |