Let's face facts - Obama and the Dems played the GOP especially the House GOP for chumps........
http://www.politico.com/politico44/2013/01/white-house-declares-a-victory-153090.html?hp=t3_7
White House declares victory
The White House issued a "fact sheet" statement Tuesday declaring the fiscal cliff agreement a victory, even though the House has yet to vote on the measure.
"At this make or break moment for the middle class, the President achieved a bipartisan solution that keeps income taxes low for the middle class and grows the economy," the statement says. "For the first time in 20 years, Congress will have acted on a bipartisan basis to vote for significant new revenue.
"This means millionaires and billionaires will pay their fair share to reduce the deficit through a combination of permanent tax rate increases and reduced tax benefits."
The White House said it achieved 85 percent of what it wanted on taxes, locking in $620 billion in revenue from wealthier Americans over 10 years. The statement, entitled "The Tax Agreement: A Victory for Middle-Class Families & the Economy" and issued less than an hour before Vice President Joe Biden was scheduled to meet with House Democrats on the Hill, includes a list of talking points covering everything from capital gains (hiked to 20 percent) to the extension of unemployment benefits and tax credits for renewable energy.
And in a section sure to please Democrats but unsettle Republicans, the White House said it planned to continue seeking more tax hikes, tying them to debt reduction.
“As we move forward to address our ongoing fiscal challenges, both spending cuts and continuing to ask the wealthy to do a little more will be part of a balanced approach," the statement says. "It is critical for our economy and future generations that we reduce the deficit. We cannot keep racking up this debt on our kids. And the President looks forward to working with Republicans to reduce the deficit in a balanced and bipartisan way.”
Here are the points:
•Permanently extends the middle-class tax cuts and also extends credits for working families, with additional measures to protect families and promote economic growth.• Permanent extension of the middle class tax cuts: This will provide certainty for 114 million households including lower tax rates, an expanded Child Tax Credit, and marriage penalty relief—steps that together will prevent the typical family of four from seeing a $2,200 tax increase next year. In addition, it includes a permanent Alternative Minimum Tax (AMT) fix.• Most progressive income tax code in decades: By raising income tax rates on the wealthiest and keeping taxes low for the middle class, the agreement will ensure we have the most progressive income tax code in decades.• Extension of Emergency Unemployment Insurance benefits for 2 million people: The agreement will prevent 2 million people from losing UI benefits in January by extending emergency unemployment insurance benefits for one year.• Extension of tax cuts for 25 million working families and students: The deal extends President Obama’s expansions of the Child Tax Credit, Earned Income Tax Credit, and the President’s new American Opportunity Tax Credit, which helps families pay for college. The President fought hard to extend these credits, overcoming Republican insistence that income taxes go up by an average of $1,000 for 25 million working families and students. The agreement would extend them for five years.• Extension of renewable energy incentives, the R&E tax credit and other business incentives: The agreement extends tax relief for businesses through the end of next year. This means extending the Production Tax Credit, a key incentive for renewable energy that many Republicans had been trying to end, as well as the Research & Experimentation tax credit. In addition, the agreement extends 50 percent bonus depreciation, a cost-effective temporary measure to support investment and growth. All of these would be extended through the end of 2013.• Fixes the SGR (“doc fix”) with no cuts to the Affordable Care Act or to beneficiaries: The agreement avoids a 27 percent cut to reimbursements for doctors seeing Medicare patients for 2013 by fixing the sustainable growth rate formula through the end of next year (the “doc fix”). The President stood firm against Republican proposals to pay for this fix with cuts to the Affordable Care Act or the beneficiaries.• Postpones the sequester for two months, paid for with $1 of revenue for every $1 of spending, with the spending balanced between defense and domestic: The agreement saves $24 billion, half in revenue and half from spending cuts which are divided equally between defense and nondefense, in order to delay the sequester for two months. This will give Congress time to work on a balanced plan to end the sequester permanently through a combination of additional revenue and spending cuts in a balanced manner.•Raises $620 billion in revenue according to Congress’ Joint Committee on Taxation by achieving the President’s goal of asking the wealthiest 2 percent of Americans to pay more while protecting 98 percent of families and 97 percent of small businesses from any income tax increase.• Restores the 39.6 percent rate for high-income households, as in the 1990s: The top rate would return to 39.6 percent for singles with incomes above $400,000 and married couples with incomes above $450,000.• Capital gains rates for high-income households return to Clinton-era levels: The capital gains rate would return to what it was under President Clinton, 20 percent. Counting the 3.8 percent surcharge from the Affordable Care Act, dividends and capital gains would be taxed at a rate of 23.8 percent for high-income households. These tax rates would apply to singles above $400,000 and couples above $450,000.• Reduced tax benefits for households making over $250,000 (for singles) and $300,000 (for couples): The agreement reinstates the Clinton-era limits on high-income tax benefits, the phaseout of itemized deductions (“Pease”) and the Personal Exemption Phaseout (“PEP”), for couples with incomes over $300,000 and singles with incomes over $250,000. These two provisions reduce tax benefits for high-income households. This sets the stage for future balanced approaches to deficit reduction, which could include additional revenue through tax reforms that reduce tax benefits for Americans making over $250,000.• Raises tax rates on the wealthiest estates: The agreement raises the tax rate on the wealthiest estates – worth upwards of $5 million per person – from 35 percent to 40 percent, in contrast to Republican proposals to continue the current estate tax levels.• The agreement’s $620 billion in revenue is 85 percent of the amount raised by the Senate-passed bill, if that bill had been enacted and made permanent: The agreement locks in $620 billion in high-income revenue over the next ten years. In contrast, the bill passed by Democrats in the Senate achieved approximately $70 billion through one-year provisions; these same provisions could have raised a total of $715 billion over ten years if Congress acted again to extend it permanently. However, the Senate bill itself locked in only one year’s worth of savings so would have required additional extensions to achieve those savings.• Part of a balanced process of deficit reduction and stronger growth.• Strengthens our recovery next year by cutting taxes for the middle-class: The independent, non-partisan Congressional Budget Office (CBO) estimated that allowing the full effect of the “fiscal cliff” would cause our economy to enter a recession and actually shrink next year primarily as a result of higher taxes on the middle class and across-the-board spending cuts. The final agreement prevents taxes from rising on the middle class and delays the across-the-board “sequester.”• Temporary measures to support consumer spending and business investment: Extending unemployment insurance is one of the more effective ways to encourage consumer spending. And bonus depreciation will give companies incentives to invest.• Provides greater economic certainty for families and businesses: The agreement will make it easier for families and businesses to plan and will help our economy grow.• Cuts the deficit and reduces the debt as a share of the economy over the next five years: Since April last year, the President has signed into law 1.7 trillion in deficit reduction, including $700 billion in spending cuts from enacted appropriations bills in 2011 and 2012, and $1 trillion in the Budget Control Act. This tax agreement not only further reduces the deficit, but raises $620 in new revenue from high-income households. Together with a strengthening economy these steps will bring down the deficit as a share of the economy over the next five years.• Establishes a foundation for additional balanced, pro-growth deficit reduction through tax and entitlement reform: The agreement leaves substantial scope for reducing tax expenditures for high-income households, reforming corporate taxes to broaden the base and cut the rate to make America more competitive, and to take further steps to reform entitlements.•Extends the farm bill through the end of the fiscal year, averting a sharp rise in milk prices at the beginning of 2013.
http://www.zerohedge.com/news/2013-01-01/house-republicans-fold
( Wonder what the GOP's excuse will be when they fold the next time ? The numbers for the Dems in the Senate and House only get better in the next Congress and these GOP congress critters have demonstrated absolutely no heart , no adherence to party discipline - hard to figure what the GOP actually stands for these days.... Dem lites ? )
House Republicans Fold
Presented with little comment (via Bloomberg):
- *HOUSE REPUBLICANS ABANDON EFFORT TO ADD SPENDING CUTS TO BILL
It appears everyone grows tired of the pantomime, even the main actors. Well that was fun while it lasted...
http://www.politico.com/story/2013/01/senate-clears-fiscal-cliff-deal-89-8-85640.html
( Can the house GOP that has been yipping today find 218 votes to back amendments ? Well , they will get the chance to vote and see if appears - this could take awhile as one assumes the House members would have to have something to vote upon .... if they don't have 218 votes willing to vote yes for amendments , then the fiscal Cliff Bill from the Senate gets an up or down vote and will probably pass.....)
Speaker John Boehner is leaving the fate of the Senate-passed fiscal cliff deal in the hands of the House Republican Conference.
House Majority Whip Kevin McCarthy’s (R-Calif.) vote-counting operation is kicking into full gear on Tuesday night — after the country has officially gone off the cliff — to gauge whether 218 Republicans would support amending the Senate bill with a package of spending cuts.
That would render essentially dead the deal reached early Tuesday morning between Senate GOPers and Vice President Biden, and could shake the nation’s recovering economy by hiking tax rates on all Americans and maintaining steep federal spending cuts because the Senate-approved plan to stop the full effects of the cliff wouldn’t take effect.
If there aren’t enough House Republicans who vote to tack on spending cuts, the House will hold an up-or-down vote on the Senate cliff bill, which hikes tax rates on income over $450,000.
The late move is classic Boehner — he always says he wants the House Republican Conference to work its will, and he’s letting the 241 members decide the fate of tax rates for all Americans.
“The Speaker and the [House Majority] Leader both cautioned members about the risk in such a strategy. They told them there is no guarantee the Senate would act on it,” a leadership aide said.
A Senate Democratic leadership aide said Monday evening: “We will absolutely not take up the House bill if they change the bipartisan agreement reached in the Senate.”
* * *
http://thehill.com/homenews/house/275099-senate-democratic-leaders-say-they-will-reject-house-changes-to-tax-bill-
Senate Democrats will reject House changes to tax bill, aides say
- 01/01/13 03:10 PM ET
Senate Democratic leaders say they will reject any House effort to amend a fiscal cliff deal that passed the upper chamber with overwhelming support on New Year’s Day.
“The House Republicans have two choices: cut their losses and pass the deal now, or else put up a fight they cannot win and pass the same deal a few days now after being further humiliated,” said a Senate Democratic leadership aide.
Another senior Democratic aide said Senate Majority Leader Harry Reid (D-Nev.) will not reconsider the bill, which passed by a vote of 89 to 8.
“We’re done,” said the aide.
House Republicans emerging from a conference meeting Tuesday afternoon predicted they would amend the Senate tax bill and send it back across the Capitol.
"I would be shocked if this bill is not sent back to the Senate," Rep. Spencer Bachus (R-Ala.) told reporters after emerging from the GOP conference meeting.
He said House Republicans are looking to decide whether to add spending cuts to the bill.
A senior Senate Republican aide said Senate GOP leaders would have to review the details of proposed House amendments before commenting.
and.......
http://www.politico.com/story/2013/01/senate-clears-fiscal-cliff-deal-89-8-85640.html?hp=t1_7
House GOP opposition to fiscal cliff bill grows
A carefully-crafted Senate compromise to avert the fiscal cliff could be in jeopardy, as House Republicans are revolting over the measure and Senate Democrats are refusing to budge after it passed overwhelmingly in their chamber.
House Republicans now seem almost certain to tweak the legislation and send it back to the Senate because they believe it lacks sufficient spending cuts. But that would require the Senate to reconsider the measure before the new Congress is sworn in on Thursday, something officials say is all but impossible because any member can object to an effort to schedule a quick vote.
Democrats want to leave House Republicans with a take-it-or-leave it proposition, risking ending the 112th Congress on an ignominious note: With $500 billion in tax hikes and spending cuts about to hit the economy. Senate Minority Leader Mitch McConnell, who labored over the deal in a marathon negotiating session with Vice President Joe Biden, is not coming to the defense of House Republicans.
The anger came to a head in a closed House Republican Conference meeting in the Capitol basement Monday, when opposition to the bill — which would extend tax rates for families making less than $450,000 — was overwhelming, sources inside the room said.
House Republican leadership dispersed from the meeting mulling how to proceed with the Senate bill, which passed shortly after 2 a.m. Republicans are expected to meet again later Tuesday afternoon to try and settle on a decision.
In a real sign of trouble, House Majority Leader Eric Cantor, No. 2 in House leadership, came out against the package.
Amending the legislation — which also extends a number of expiring tax and spending provisions — would throw a big monkey wrench into the deal struck by Biden and McConnell. After an 89-8 Senate vote early Tuesday morning to approve it, President Barack Obama was already trumpeting the deal as a victory.
An analysis by the Congressional Budget Office released Tuesday estimated the accord would add $4 trillion to the deficit over a decade. Many lawmakers are also concerned about the proposed two-month delay to automatic spending cuts known as the sequester. Several lawmakers suggested that removing so-called extenders — business tax provisions — could help lessen the cost.
But changing the bill and trying to send it back to Senate Majority Leader Harry Reid (D-Nev.) would be a legislative high-wire act of the first order. Speaker John Boehner (R-Ohio) and his leadership would have to find a way to get 217 votes for the altered package — and then hope the Senate goes along. Senate sources are warning that the upper chamber will not take up a House-amended bill.
Boehner seems to recognize the precarious position that House Republicans are in. He opened the meeting Tuesday afternoon by pointing out the overwhelming Senate vote and telling lawmakers that they can’t add “poison pills” to the legislation — in other words, amending it in a way that would be roundly rejected by the Senate. Boehner suggested spending reductions from the president’s budget to offset the sequester delay.
Also, financial markets open on Jan. 2. Without a resolution on expiring income tax rates and the automatic cuts to spending, including defense, that take hold at the beginning of the year, markets could see steep losses. This concern was voiced in a closed House Republican Conference meeting Monday afternoon.
One thing is clear: there is serious disdain among House Republicans for what the Senate did in the middle of the night.
Retiring Rep. Steve LaTourette of Ohio asked House Republicans why the House would “heed the votes of sleep-deprived octogenarians,” according to a source in the meeting.
There is also some regret among Republicans about the party defeating Boehner’s “Plan B” before the holidays, which would have raised taxes on millionaires.
Defeated California Rep. Dan Lungren said at the House Republican Conference meeting that “we harmed ourselves by undercutting our leader on Plan B,” according to a source present.
It is not at all certain whether the House will even vote Tuesday.
House Democrats, for their part, met with Biden in the Capitol at 12:15 p.m. It was Biden’s second appearance in the Capitol in as many days, after meeting with Senate Democrats late Monday before they passed his tax package. House Democrats said they would provide a good number of votes for passage.
The desire to amend the package wasn’t a surprise to leadership. On Monday night, Boehner promised that the House would consider the legislation, but said that “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.”
As of Tuesday, when Bush-era tax rates officially expire, income above $250,000 will be taxed at a rate of 39.6 percent. So if GOP lawmakers were to vote for the Senate bill, it technically cuts taxes, instead of raising them on income above $450,000.
Until Thursday afternoon, when the 112th Congress ends, there are 241 Republicans in the House and 191 Democrats. The 113th Congress will have 233 Republicans and 200 Democrats.
For the time being, Congress has sent the nation over the fiscal cliff — though perhaps for only a day or two and, assuming the House complications can be resolved, without incurring the double whammy of another recession and higher unemployment.
The $620 billion agreement would be a major breakthrough in a partisan standoff that has dragged on for months, spooking Wall Street and threatening to hobble the economic recovery. It would turn back the GOP’s two-decade refusal to raise tax rates, delivering a major win for President Barack Obama, who has said he would sign this legislation.
“Leaders from both parties in the Senate came together to reach an agreement that passed with overwhelming bipartisan support today that protects 98 percent of Americans and 97 percent of small business owners from a middle-class tax hike,” Obama said in an early morning statement. “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.”
In addition to raising tax rates on annual family income above $450,000, the bill delays deep across-the-board spending cuts for two months, canceled pay raises for members of Congress and averted an expected hike in the price of milk by extending expiring dairy policy.
The bill contains winning items for both parties. Democrats get a yearlong extension of unemployment benefits and business-friendly tax provisions. In a major win for the Obama administration, tax cuts for families first enacted in the 2009 stimulus — an expanded earned income tax credit, child tax credit and college tax credit — would be extended for five years.
Continue Reading
The deal would also prevent rate cuts to doctors who treat Medicare patients, sources said. Dividends and capital gains on family income above $450,000 would be taxed at 20 percent, up from the current 15 percent rate.
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.
“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,” McConnell said on the Senate floor before the vote. “The president wanted tax increases, but thanks to this imperfect agreement, 99 percent 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.”
The deal was crafted by McConnell and Biden — old friends from decades of Senate service — after two months of talk between other leaders collapsed.
Biden served as the conduit to the president and Democratic congressional leaders, while McConnell did the same for Republicans. It was the third year in a row that they played an instrumental role in a major policy battle — in 2010, they hashed out a tax deal, and in 2011, they helped secure the debt limit agreement.
McConnell and Biden negotiated by phone until about 12:45 a.m. Monday, then the president met with Biden in the Oval Office with other key aides until 2 a.m., talking over the emerging deal. When that meeting ended, White House legislative director Rob Nabors headed to the Hill to draft legislative language with Senate staff.
The direct negotiations started back up only a few hours later, when Biden and McConnell spoke before 7 a.m. and dragged on through the day, as Democrats and Republicans wrangled over how to pay for a short delay in the across-the-board spending cuts known as the sequester.
Shortly before 9 p.m. Monday, with only hours to spare before the deadline, Obama called Reid and House Minority Leader Nancy Pelosi (D-Calif.) to get their sign-off on the agreement, although they had been looped in all along.
Reid thanked McConnell for his work on the agreement and said it’s now up to Boehner to usher it through the House.
Continue Reading
“I’m disappointed that we weren’t able to make the grand bargain, as we have tried to do for so long, but we tried,” Reid said. “If we do nothing the threat of a recession is very real, and passing this agreement does not mean negotiations halt. Far from it. We can all agree there is more work to be done.”
It’s not the grand bargain that Wall Street and corporate CEOs wanted to see — and spent millions advocating . But it is still fairly broad in scope. And it reflects significant concessions by both sides, but particularly for McConnell.
McConnell’s first offer on Friday night was far from where the deal ended up, according to sources familiar with the talks. That proposal included raising the income threshold to $750,000, instituting means testing for Medicare, reverting to a less generous inflation calculator for government programs, no extension of middle class tax credits and continuing the current estate tax rates, which many Democrats opposed. None of those elements made it into the bill.
Three Democrats — Sens. Michael Bennet of Colorado, Tom Harkin of Iowa and Tom Carper of Delaware voted against the bill. They joined Republicans Marco Rubio of Florida, Richard Shelby of Alabama, Chuck Grassley of Iowa, Rand Paul of Kentucky and Mike Lee of Utah in opposition.
Harkin said just prior to the vote that the deal fell short of his goal to help “real middle-class families.” Bennet is chairman of the Democratic Senatorial Campaign Committee — his role is to hang onto the Democratic majority in 2014, so his “no” vote is also significant.
Democrats needed Biden to make the final sell. He traveled to the Capitol around 9:15 p.m. with other top White House officials to press his former Senate Democratic colleagues to get behind the plan, which they did in big numbers.
Monday saw both sides hurrying to finalize an accord before 2013. The final sticking point was over delaying the so-called sequester, across-the-board spending cuts slated to begin Jan. 2. Those cuts will be replaced in equal parts by fresh government revenues and other targeted spending reductions.
— Seung Min Kim contributed to this report
Correction: This story has been corrected to show that Sen. Tom Carper of Delaware was a “no” vote.
and....
http://www.zerohedge.com/news/2013-01-01/citis-worst-case-scenario-coming-true-house-amend-bill-send-back-senate
( Just part of the political posturing , gamesmanship , baffle them with BS and confusion - oh , and nothing like a nice selloff to help grease the skids for adjustments regarding entitlements ....)
Citi's Worst Case Scenario Coming True: House To Amend Bill, Send Back To Senate
UPDATE: *LATOURETTE SAYS CANTOR WON'T SUPPORT BILL `IN CURRENT FORM'
It seems all is not going according to plan in D.C.. Perhaps it was the $4 Trillion deficit rampage the CBO just scored, or that the Republicans awoke from their slumber but as House meetings end, it appears Citi's worst case scenario is about to take place - the bill is going back to the Senate with spending cut amendments. As Politico notes, amending the bill would throw into serious flux the carefully negotiated agreement between Senate Minority leader Mitch McConnell and Vice President Joe Biden. While headlines noted the possibility, Rep Spencer Baucus (via Robert Costa) just confirmed the deal will "go back to the Senate."
- *BACHUS SAYS HOUSE REPUBLICANS 'THERE' ON TAX PROVISIONS
- *BACHUS SAYS HOUSE MAY SEND BILL BACK WITH SPENDING CUTS ADDED
One thing is clear, Politico adds: there is serious disdain among House Republicans for what the Senate did in the middle of the night. Retiring Rep. Steve LaTourette of Ohio asked House Republicans why the House would “heed the votes of sleep deprived octogenarians,” according to a source in the meeting.
What is limit down in S&P 500 futures again?
What is limit down in S&P 500 futures again?
http://www.businessinsider.com/will-house-gop-torpedo-the-fiscal-cliff-deal-2013-1
UH-OH: There Are Mounting Concerns About Whether The House Will Pass The Fiscal Cliff Deal
Based on tweets from politicos and reporters, such as Ed Henry from Fox News there are growing concerns that the House will actually pass the Senate bill:
It's not surprising that there are concerns.
As we explained here, there's frustration about there being zero cuts.
And as the CBO just announced, the bill adds $4 trillion to the current debt baseline. Any reversal of tax increases was always going to produce a huge deficit increase, but this is still a tough headline to swallow.
3:11 PM | House Democrats are holding a press conference
House Minority Leader Nancy Pelosi is calling for a "straight up-or-down" vote on the fiscal cliff deal.
"There shouldn't even be a question," Pelosi said. "It's long overdue for us to have a solution."
"We expect — and the American people deserve — an up-or-down vote."
3:15 PM | CANTOR: "I do not support the bill"
House Majority Leader Eric Cantor just told reporters that he cannot support the fiscal cliff bill in it's current form.
He added that Republicans have made no decisions on the path forward.
House Majority Leader Eric Cantor just told reporters that he cannot support the fiscal cliff bill in it's current form.
He added that Republicans have made no decisions on the path forward.
3:26 PM | BOEHNER SPOX: Lack Of Spending Cuts Was 'A Universal Concern' Among Republicans
House Speaker John Boehner's spokesperson Brendan Buck sends this update from this afternoon's House GOP conference meeting:
“The Speaker and Leader laid out options to the members and listened to feedback. The lack of spending cuts in the Senate bill was a universal concern amongst members in today’s meeting. Conversations with members will continue throughout the afternoon on the path forward.”
House Leadership Statement on Senate Agreement
December 31, 2012
Press Release
WASHINGTON, DC - House Speaker John Boehner (R-OH), Majority Leader Eric Cantor (R-VA), Majority Whip Kevin McCarthy (R-CA), and Republican Conference Chair Cathy McMorris Rodgers (R-WA) issued the following statement on the Senate agreement:
“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.”
http://www.washingtontimes.com/blog/inside-politics/2013/jan/1/deficit-fiscal-cliff-bill-actually-spends-330-bill/
The "fiscal cliff" deal that was designed to save money actually includes $330.3 billion in new spending over the next decade, according to the official estimate the Congressional Budget Office released Tuesday afternoon.
CBO said the bill contains about $25.1 billion in new cuts, but those are swamped by the new spending on extended unemployment benefits for the long-term jobless and other new refundable tax credits that President Obama fought for.
Of those cuts, only $2 billion are scheduled to take effect in 2013.
And CBO also warned that some of the cuts Congress is counting are from programs on which CBO never expected the money to be spent anyway — such as cuts to the Consumer Operated and Oriented Plan, which was part of Mr. Obama's health care law.
All told, the bill deepens the deficit by nearly $4 trillion over the next decade, when the new tax cuts and spending are combined.
The bill also delays by two months the automatic spending cuts slated to take effect Wednesday, with a promise to reduce spending in the future to cover for them.
and.....
http://thehill.com/blogs/floor-action/house/275067-tuesday-houses-turn-to-react-to-senate-cliffhanger
Focus now turns to the House
- 01/01/13 09:34 AM ET
The House returns to work on the first day of the new year, and will have to sort out its reaction to a Senate-passed bill meant to avoid the fiscal cliff.
The Senate bill, which the upper chamber approved in a 89-8 vote at about 2 a.m. on Tuesday, keeps current tax rates on individual income under $400,000, and family income below $450,000. It lets the estate tax rise to 40 percent from 35 percent, but exempts inheritances below $5 million.
The Senate bill, which the upper chamber approved in a 89-8 vote at about 2 a.m. on Tuesday, keeps current tax rates on individual income under $400,000, and family income below $450,000. It lets the estate tax rise to 40 percent from 35 percent, but exempts inheritances below $5 million.
It postpones the sequester for two months to give policymakers more time to identify spending cuts. It also extends some farm programs — including dairy programs needed to avoid rising milk prices — and blocks a planned increase in pay for members of Congress, something that should make it easier for some to vote for it in the House.
It also extends unemployment insurance benefits for another year, without being offset.Because tax rates have now increased on paper, voting for the Senate-brokered agreement might also be easier for some, because the bill is now one that cuts taxes, not one that maintains current tax levels. The easy Senate vote also bodes well for House passage.
But it was still unclear late Monday night how House Republicans would react, especially given that the deal essentially delays the $109 billion in planned spending cuts, and offsets that delay with some cuts and new tax revenue.
House Republicans plan to huddle on the issue at 1 p.m.
House Republicans plan to huddle on the issue at 1 p.m.
House Majority Leader Eric Cantor (R-Va.) told Reuters on Tuesday morning that the GOP had not decided when a vote would be held on the Senate bill.
"We have not made a decision yet," Cantor said, telling the news agency a decision would be made soon.
Before leaving Monday, House Republicans planned separate votes on some of these issues. For example, the GOP planned a vote on standalone bills to stop a congressional pay hike, and to avoid a possible doubling of milk prices.
If the House takes up the Senate bill, votes on these separate pieces of legislation may not be necessary. But as of late Monday, Republicans indicated it is unclear whether they would take up the bill as it stands or move to amend it right away. It was also unclear how quickly the House would act."The House will honor its commitment to consider the Senate agreement if it is passed," House GOP leaders said. "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."
If the cliff legislation doesn't occupy the House all day, GOP leaders planned to consider other bills as well. They include:H.R. 1464, the North Korean Child Welfare Act, and
S. 3677, making technical corrections to the Flood Disaster Protection Act of 1973.
Votes on several other suspension bills that still need votes could also happen.
After its late night, the Senate returns to work at 2 p.m., and will be in morning speeches until 3:30 p.m. No additional Senate votes are expected until January 3.
and.....
http://www.zerohedge.com/news/2013-01-01/what-look-out-today-three-congressional-scenarios
What To Look Out For Today - The Three Congressional Scenarios
From Citi's Steven Englander
What To Look Out For Today: Posturing OK, But Watch Out For Amendments
The key for markets when they reopen is whether the House passes the fiscal cliff fix. Both Boehner and Pelosi have indicated they support bringing the bill to a vote but they have not endorsed it. There are reports that the House vote would be as early as 2PM but that seems unlikely given the need for debate and posturing. Other reports suggest a vote around 5PM. The key is not when the vote occurs or how much Representatives denounce the imperfections of the fix, but whether they get a majority to pass it. So it’s a case of ignoring the rhetoric and seeing how many votes there are, and for reasons discussed below they are likely to be there.
The news that would tank markets when they open is the House passing the bill with significant amendments. It is unlikely that Democrats have the votes to significantly amend the bill, so any amendments would come from the Republican side. That would mean another round of voting in the Senate and quite probably an unchoreographed fall over the cliff.Markets would sell off badly on that outcome. House Republicans meet at 1PM before the House reconvenes, so be prepared for a storm of invective.
The Senate voted 89-8 overnight to pass the fiscal cliff fix. The provisions were pretty much as discussed Monday afternoon and a very good summary is found in theWashington Post link.
Technically, the US has gone over the fiscal cliff, as the IRS pointedly indicated early today, so House members will be voting to cut taxes rather than raise them. So between the dairy fix (which extends dairy subsidies), the Medicare doctor fix, the permanent AMT fix, the unemployment benefits extension fix, the estate tax fix, the capital gains/dividend tax pretty good fix, and so on, there are enough important Democrat and Republican constituencies that will be severely damaged that the House cannot afford to vote it down. The voting in the House will likely be closer as Representatives who may face a 2014 challenge will be given a pass to show a ‘Demonstration of Character’ but the odds are strong that the votes will be there.
The other reason that Republicans will likely vote ‘yes’ is that the sequester is delayed, not derailed, so those spending cuts will come on line in two months. In the meantime, they are obligated to find some savings elsewhere in the budget to lower spending partially in line with the sequester over the next two months. Combined with the debt ceiling, the republicans will have a couple of bites at the spending apple in coming months, so they are not giving up much by voting ‘yes’ today.
Scenarios:
- A close vote before 6PM – Asian markets open up, catching up to the Monday S&P move; S&P futures probably have priced in most of the benefit of the fiscal cliff resolution. EUR CAD, and AUD have a bit of catching up to do with the S&P, but there should be little drama
- A rancorous debate that extends into the night – again the key will be whether the votes are there, however, reluctantly, but if it looks as if support is waning we will see sharp moves in markets. With brinkmanship the new normal, the sell-off will be partial on the view that a last minute rabbit will be pulled from a hat.
- Amendments or rejection – markets will sell off sharply. If it turns out that the House can’t vote ‘yes’ on an acceptable, yet inelegant fix, the confidence that has emerged in 11th hour fixes will dissipate and tail risk scenarios will shift into baseline outcomes. This would be USDJPY negative, but risk-correlated currencies now price in 80-90% probably of a successful fix in our view, so the downside pressures will be large.
and......
http://www.zerohedge.com/news/2013-01-01/new-definition-rich-620-billion-tax-hike-offset-15-billion-spending-cuts-and-much-mo
On The New Definition Of "Rich", A $620 Billion Tax Hike Offset By $15 Billion In Spending Cuts, And Much More
We greet the new year with an America that has a Fiscal Cliff deal. Actually no, it doesn't - not even close. What it does have is an agreement, so far only at the Senate level which voted a little after 2 AM eastern in an 89-8 vote (Nays from Democrats Bennet, Cardin, Harkin, and Republicans - Lee, Paul, Grassley, Rubio and Shelby), to delay the all-important spending side of the Fiscal Cliff "deal" which "can is kicked" in the form of a 60 day extension to the sequester, to be taken up "eventually", but hopefully not on day 59 at the 11th hour, the same as fate of the all important US debt ceiling, which remains in limbo, and which now effectively prohibits America from incurring any new gross debt as the $16.4 trillion debt ceiling was breached yesterday. In other words, America's primary deficit sourcing mechanism is now put on hiatus, and all new net debt will come at the expense of defunding various government retirement funds as the 60 day countdown to the real showdown begins: the debt ceiling, as well as the resolution of the spending side of the Fiscal Cliff deal.
What did happen last night was merely the legislating of the inevitable tax hike on the 1%, which was assured the night Obama won the presidential election, something not even the most rabid Norquist pledge signatories had hope of avoiding. This was the first income tax hike in nearly two decades. A tax hike which, regardless of how it is spun, will result in a drag in consumption. It was also the brand new definition of rich, with the "$250,000" income threshold now left in the dust, and "$400,000 for individuals ($450,000 for joint filers)" taking its place. If you make more than that, congratulations: you are now "rich". You will also be hated for being part of the 1%. and be the target in the ongoing class war.
Who knew that "New Normal" would also bring us the "New Rich" definition.
Ironically, not even the tax hike component of the deal was fully worked out, as it still remains unclear just what the new tax brackets and what the tax increases for the much maligned 1% will be.
What is generally known is that the Senate bill boils down to the following: $620 billion in tax hikes over the next decade offset by $15 billion in spending cuts now. Hardly "fair and balanced." Anyone who, therefore, thinks this bill is a slam dunk in the House is a brave gambling man.
The said, the "good news" is that 99% of Americans will see no change in their taxes, as was the idea all along. And the evil 1% will get their just deserts, which was the whole purpose of this relentless soap opera
The bad news is that starting today millions of wage earners, will see a smaller paycheck as a result of the lapse in the 2% payroll-tax cut, enacted in 2010, which lowered the employee portion of the Social Security tax from 6.2% to 4.2%. The direct cost of the payroll tax expiration will be $125 billion per year, or nearly a full percentage point of GDP, and in practical terms, an individual earnings the maximum cap of $113,700 (for 2013), will see their paycheck drop by $200/month.
That's just the beginning. The WSJ detailsthe various other implications of the expiration of the payroll tax cut:
It will take up to four weeks after a bill is passed for many workers to know exactly what their 2013 take-home pay will be, according to Michael O'Toole, an official of the American Payroll Association, a group of 21,000 payroll managers.
Just before midnight, the Internal Revenue Service issued new withholding tables for 2013 reflecting the expiration of the 2001-3 tax cuts and the two-percentage point Social Security tax cut. But the IRS noted that the tables might change given pending legislation.The 2013 tax-filing season also is likely to be disrupted by Washington's wrangling on deadline. In November, acting Internal Revenue Service Commissioner Steve Miller warned that the filing season would be delayed by several weeks. Normally the season opens in mid-January, but this year it may be delayed till mid-February or later.As a result, many filers won't be able to receive tax refunds as early as they normally do. "Congress's delays have pushed back the repayment of interest-free loans to the government for millions of taxpayers," said Lawrence Gibbs, a former IRS Commissioner now with the Miller & Chevalier law firm in Washington. The average refund is approaching $3,000, according to IRS data.
So very much still remains unknown. Here is what is known on the tax side of the "deal":
Income-tax rates. The top rate on ordinary income such as wages for joint filers earning more than $450,000 ($400,000 for single filers) would rise to 39.6%. Current law would be permanently extended for income earned below that level. Left unclear is whether the $450,000/$400,000 threshold refers to adjusted gross income (AGI) or taxable income. AGI doesn't include subtractions for itemized deductions, while taxable income does.The individual income tax is the government's biggest single source of revenue, supplying nearly half the total.
Investment tax rates. For joint filers with income above $450,000 ($400,000 single), the top rate on long-term capital gains and dividends would rise to 20% from 15%. For taxpayers earning less than the thresholds, there would be a permanent 15% top rate on long-term capital gains and dividends, except perhaps for the lowest-bracket taxpayers, who currently have a zero rate.
Alternative minimum tax. The bill permanently and retroactively adjusts the alternative minimum tax to stop it enveloping more taxpayers than designed. The current fix expired at the beginning of 2012.
PEP and Pease provisions. The deal restores and makes permanent two backdoor tax increases for joint filers with incomes above $300,000 ($250,000 for singles).
When it was last in effect, the Personal Exemption Phaseout reduced or eliminated the value of personal exemptions for taxpayers earning more than the income threshold. The Pease provision—named after the late Rep. Donald Pease (D., Ohio)—reduced itemized deductions for taxpayers above a certain threshold. The formula's net effect was to add a bit more than 1% to the top tax rate, says Mr. Williams of the Tax Policy Center, including the top rate on capital gains.
Estate and gift tax. The estate and gift tax exemption would remain $5 million or more per individual vs. the $3.5 million sought by President Obama. But the current 35% top tax rate on amounts above the exemption would increase to 40%.
Tax "extenders." This term refers to several provisions that lapsed either at the beginning or the end of 2012. They would be extended for varying periods, and provisions that expired in early 2012 would be extended retroactively. Among these provisions are deductions for $250 of teachers' classroom expenses; state sales taxes in lieu of state income taxes; tuition and related expenses; a conservation donation benefit; and the direct charitable contribution of up to $100,000 of IRA assets for people 70½ and older.
The deal would also extend for five years the American Opportunity Tax Credit; for many taxpayers this dollar-for-dollar credit is worth up to $2,500 and therefore the most valuable education benefit. And it would extend for five years the current versions of the Child Tax Credit and Earned Income Tax Credit, which are claimed by many lower-income workers making up to about $50,000.
Depreciation. A one-year extension of current "bonus" depreciation rules, which allow businesses to deduct up to 50% of the cost of a wide variety of property and equipment, excluding real estate. "This will be very helpful to a lagging economy," says Don Williamson, an accountant who also heads the Kogod Tax Center at American University.
In other words: congratulations America, you have a Fiscal Cliff deal. Oh sorry, no you don't. But it does make for even better political grandstanding and melodramatic theater.
And now, we look forward to late February, early March, when as we said all along, the real showdown will take place, one which the market will no longer be able to avoid.
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