…well, in part. To say that Congress is fond of last minute deals might be the understatement of 2012. With negotiations for avoiding the so-called fiscal cliff down to the wire, Congress agreed late on New Year’s Day to the passage of a measure that would maintain tax cuts for most Americans and increase rates on the wealthy, effectively pulling back from the much dreaded fiscal cliff. The legislation aims to raise roughly $600 billion in new revenue over 10 years. The timing of the vote was rather exceptional, coming just hours after the US was set to ‘fall over’ the fiscal cliff, and just two days before a new Congress is set to be sworn in.
House Republicans, who had all but guaranteed not to approve any tax hikes, helped support a bill in a 257-167 vote that raised tax rates for individuals earning more than $400,000 and families earning over $450,000. The legislation allows for taxes on capital gains and dividends to rise, and extends benefits for the unemployed. The bill was previously approved by the Senate in a much more lopsided 89-8 vote less than 24 hours before the House convened on New Year’s Day for the first time since 1951.
Despite coming to some accord on tax cuts, any movement on the across-the-board spending cuts under the Budget Control Act, known as the ‘sequester’ was delayed for two months under the legislation, thus assuring us of another go around sooner rather than later. The new agreement saves $24 billion in spending, half in revenue and half from spending cuts equally divided between defense and nondefense to delay the sequester.