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With tax deal, US is off the cliff but not out of the woods
Jan 04, 2013 11:50 am
WASHINGTON — A day after the nation edged away from a fiscal cliff that had threatened economic doom, the realization that other ominous fiscal battles loom tempered any sense of celebration Wednesday in the nation’s capital.
The American Taxpayer Relief Act of 2012, passed late Tuesday, addressed just one of the three major issues that composed the cliff, the expiring Bush-era income tax cuts.
The deal, which President Barack Obama is expected to sign into law, retains the Bush-era tax rates for all but individuals who earn more than $400,000 annually and families that make more than $450,000. The top rate, 35 percent last year, climbs to 39.6 percent.
Lawmakers readily conceded that the agreement does virtually nothing to reduce the nation’s $16.4 trillion debt. In fact, the debt will continue to grow every year over the next decade.
“This deal completely disregards the root of our fiscal problem: out of control spending,” said U.S. Rep. Diane Black (R-Tenn.). “While I strongly support the permanent extension of middle class tax relief, this legislation unfortunately allows taxes to go up on many families and small businesses and kicks the can down the road on deficit reduction.”
U.S. Rep. Jim Cooper, who joined Black in voting against the measure Tuesday, agreed.
“No real spending cuts. No real deficit reduction. No acknowledgement of America’s out-of-control national debt. This is a popular vote today, but it will harm America in the long run,” said Cooper (D-Tenn.). “It is good to see a return to bipartisanship, but not when it makes our fiscal problems worse…Today’s fiscal Band-Aid may feel good now, but its relief will not even last until spring.”
“I hate this agreement. I hate it with every fiber of my being, because this is not the grand bargain that I hoped for,” said Senate Budget Committee Chairman Kent Conrad ( D-N.D.), who voted for the deal nevertheless. “This is not by any standard a deficit-reduction plan.”
Budget watchdogs were equally unimpressed.
“The main accomplishment of this bill was to make permanent most of the Bush tax cuts, and the Republicans seem to be ticked off about it and the Democrats are crowing about it. If you go back to 2007, this would have seemed like Alice in Wonderland,” said Robert Bixby, the executive director of the Concord Coalition, a nonpartisan budget-watchdog group. “If you see it as an attempt to deal with the long-term structural deficit, it’s a near failure.”
At the Capitol, partisan fury was as intense as ever on Wednesday, suggesting little hope for the kind of grand bargain Obama and Republicans have been seeking for years.
“Let’s hope Reid and President Obama resolve to be honest about the crisis our nation faces with the coming wave of entitlement obligations,” said Rep. Ed Royce, R-Calif., referring to Senate Majority Leader Harry Reid, D-Nev., and to rising Medicare costs.
Hearing that, Rep. Sander Levin of Michigan, the top Democrat on the tax-writing House Ways and Means Committee, was annoyed.
“That is not true,” he said of Royce’s comment. “It was the Republican leadership in the House that walked away from a big package.”
It’s unclear when talks will resume on a grand bargain. On spending reductions, the White House and House Speaker John Boehner, R-Ohio, were seen as close in the fall, with Obama proposing $1.2 trillion in spending reductions and Boehner offering $1 trillion.
David Lightman and Kevin G. Hall of McClatchy Newspapers contributed to this report.