According to the latest reports out of Washington, last-minute negotiations between Republicans and Democrats have led to a tentative agreement to raise taxes on the wealthiest Americans, but here's the catch: The House has adjourned and will not vote on the measure until sometime next week.
This means that a deal will not be reached in time to avoid the combined spending cuts and tax increases commonly referred to as "the fiscal cliff."
However, the New York Times is reporting that if Congress acts quickly in 2013, the economic impact will be limited.
President Obama expressed optimism earlier in the day that a deal could be reached. "Today, it appears that an agreement to prevent this New Year's tax hike is within sight," NBC News quoted Obama as saying. "But it's not done."
With compromises apparently reached on letting the Bush tax cuts expire on individual incomes above $400,000 and household incomes of $450,000, as well as a tentative agreement on estate tax details, the main remaining point of contention has to do with "sequestration," automatic spending cuts to numerous programs that would kick in if a deal is not reached.
Earlier, Senate Majority Leader Harry Reid of Nevada told reporters Monday that he sees progress in negotiations between congressional Democrats and Republicans in down-to-the-wire attempts to reach a budget agreement before midnight.
When asked by reporters Monday morning if he thought a deal could be reached, Reid said: “I really hope so. We’re not there yet, though.”
According to various reports over the weekend, the Republicans agreed to take cuts to Social Security off the table, and President Barack Obama has agreed to an increase in the level where Bush-era tax cuts would expire, from the $250,000 the administration originally proposed to somewhere between $400,000 and $500,000.
As of 8:45 p.m. EST on New Year's Eve, no further information on the fate of Social Security under the tentative deal has been released.
Senate Minority Leader Mitch McConnell, a Kentucky Republican, told reporters that he and Vice President Joe Biden had been in contact around 12:45 a.m. and again at 6:30 a.m. on New Year’s Eve.
Speaking on the Senate floor Sunday, McConnell said: “The sticking point appears to be a willingness or interest or frankly, the courage to close the deal. I’m willing to get this done, but I need a dance partner.”
If no deal is reached by midnight tonight, the Bush-era tax cuts enacted more than a decade ago will expire, leading the US over the so-called fiscal cliff. If that happens, all taxpayers, not just those making less than a few hundred thousand dollars annually, will see their taxes increase in 2013.
Oh, the drama. I thought the president’s nickname was “No Drama Obama,” but I guess congressional Republicans have other ideas.
We may or may not see a budget deal before midnight, but why did we have to see such theatrical shenanigans leading up to this point? Whatever happened to getting the job done without all the oh-so-public back-and-forth?
Some might say that’s the way Washington works, and to a large degree, they’re right. But with the vast majority of Americans siding with Obama on the income tax aspect of the deal, and Americans of all ages still voicing their support for Social Security and Medicare, it seems like legislators who are truly striving to represent the people would take that into consideration from the beginning.
Maybe they did. Maybe they only put Social Security “on the table” so they could take it off later, ever so subtly softening Americans’ resistance to the idea of Social Security cuts in the process. But Obama was not re-elected to weaken Social Security, and few if any representatives or senators were elected to force his hand on these popular programs.
If anything, the No. 1 question going into the budget negotiations should have been “What do we have to do to preserve Social Security?” Maybe the answer lies in gradually raising the cap for Social Security taxes from $110,000 in annual income to a higher figure that would allow the program to remain strong and effective for many decades to come. After all, more Americans of all parties support that approach than simply taking the budget ax to programs so critical to our most vulnerable citizens.
Sources & Resources:
GOP senators: Social Security off table, Washington Post, Dec. 30, 2012
Reid Hopeful Negotiators to Reach Last-Minute Budget Deal, Bloomberg Businessweek, Dec, 31, 2012
Millennials Favor Preserving Social Security Over Reducing Deficit, Despite Skepticism: Pew Poll, Huffington Post, Dec. 31, 2012
Additional sources and resources linked to in text.