Some of the fiscal cliff deal details are now in is as we begin the new year. However, a plan to avoid a tax increase and spending cuts still hasn't been officially passed by Congress, CBS news reports. Although the Jan. 1st midnight deadline was not met, a fiscal cliff deal was passed by the Senate.
The Senate vote total was 89-8 in favor of the bill, which means the deal is now on its way to the House. It is expected that the House will pass the bill, thereby officially averting the "fiscal cliff".
A recent report by CBS states:
"The House is expected to vote on the deal as early as today, but given tepid signals from House Republican leaders, the vote there will be an interesting one to watch."
House Speaker John Boehner had this to say about the deal:
"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."
On Tuesday, President Obama praised the Senate and encouraged House members to follow suit in the following 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,"
At Capitol Hill Vice President Joe Biden, told media reporters:
"Being in the Senate as long as I have, there's two things you shouldn't do: you shouldn't predict how the Senate will vote - you won't make a lot of money - and number two, you surely shouldn't predict how the House is going to vote. I feel very, very good. I think we'll have a good vote tonight, but Happy New Year,"
Because the deal was not passed before the midnight deadline, America technically went over the "fiscal cliff", however if the deal passess Congress, there will be no negative effects on the economy. Some of the key "fiscal cliff" deal details are listed below per CBS:
- Tax rates: Current tax rates will be extended for all wage earners making below $400,000 and couples making below $450,000. This was a key concession for both Republicans and Democrats. Democrats wanted the threshold for tax increases to rest at $250,000 and Republicans didn't want marginal tax rates to increase for anyone.
- The estate tax: It was set to increase from rom 35 percent to 55 percent in 2013. Instead, the compromise sets the new rate at 40 percent with the first $5 million worth of property exempt from being taxed.
- Capital gains tax: Capital gains and dividend tax rates will increase from 15 to 20 percent.
- Alternative Minimum Tax: A permanent fix to the tax that would hit middle class families
- "Doc Fix": Doctors will be shielded from a massive reimbursement gap for treating Medicare patients.
- Unemployment benefits: Unemployed workers will receive their benefits which expired over the weekend.
- Renewable energy tax credit: The tax credit for renewable energy companies will be extended for another year.
The list below describes what was left out of the deal:
- The sequester: The $110 billion worth of automatic spending cuts under the sequester will be delayed for two months. The cost of continuing current federal spending levels will be offset by revenue increases and some spending cuts. In two months, the delayed spending cuts will kick in half will come from defense and half from non-defense accounts.
- The two-month window is to allow Congress and the White House to come up with a larger deal on spending cuts, leading to another (though smaller) "fiscal cliff." Democrats see this deal as a victory because Republicans had objected to using any new tax revenue to offset the loss of sequester spending cuts.
- Payroll tax extension: payroll taxes will increase by 2 percent for all wage earners. This was passed and extended by Congress to give taxpayers additional relief during the slow economic recovery.
- Debt limit: The country reached its debt ceiling today, according to a latest estimate by Treasury Secretary Timothy Geithner, but because of maneuvering and shuffling the nation's balance books, bills can be paid for another two months. Another debt ceiling fight is poised to happen around the same time the new sequester is expected to kick in.