U.S. Saved From Fiscal Cliff

In the waning hours of New Year’s Eve, the U.S. hit the debt ceiling.  By midnight, it was over the fiscal cliff.  However, late last night the government pulled itself back from the brink and successfully voted to end the fiscal cliff crisis.

In a vote of 257 to 167, the House of Representatives approved the 11th hour fiscal cliff bill that the White House reached with the Senate on Monday.  Previously, the Republican controlled House of Representatives had been less than compromising.  House Speaker John Boehner was unable to control his own conference, failing to get them to coalesce and agree to a deal he backed and brought unsuccessfully to a vote on the House floor.  However, once Republicans realized they were taking a PR hit and the brunt of blame for the fiscal debacle, it was necessary for them to finally come to an agreement.

The bill raises taxes on the top 2% of Americans, while protecting the middle class — a promise President Obama vowed during his reelection campaign.  This was monumental for Republicans, since they have been bound for many years to a pledge by conservative leader Grover Norquist against ever approving any tax increase.  Still, several Republicans, including former GOP vice-presidential nominee Paul Ryan, were forced to break rank and approve the bill.

President Obama held a late night press conference to announce the new fiscal cliff deal, before flying back to Hawaii to be with his family.  The bill includes the following:

– Tax rates will increase for couples making more than $450,000
– Itemized deductions cap for couples making more than $300,000
– Emergency Unemployment benefits will be extended for 1 year
– Estate tax will increase from 35% to 40%

The bill does not address the $16.4 trillion dollar debt ceiling or automatic federal spending cuts, which will have to be negotiated in later legislation.