Saturday, May 25, 2013
Andrew Taylor / The Associated Press
WASHINGTON — Squarely in the spotlight, House Republicans planned a closed-door meeting Tuesday to decide their next move after the Senate overwhelmingly approved compromise legislation negating a fiscal cliff of across-the-board tax increases and sweeping spending cuts to the Pentagon and other government agencies.
House Minority Whip Steny Hoyer of Maryland, center, and others, arrives for a Democratic caucus meeting with Vice President Joe Biden, on Capitol Hill on Tuesday.
HIGHLIGHTS OF BILL
Here are highlights of a bill approved Tuesday by the Senate aimed at averting wide tax increases and budget cuts scheduled to take effect in the new year. The House is expected to vote on the bill Tuesday or Wednesday.
— Income tax rates: Extends decade-old tax cuts on incomes up to $400,000 for individuals, $450,000 for couples. Earnings above those amounts would be taxed at a rate of 39.6 percent, up from the current 35 percent. Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.
— Estate tax: Estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent.
— Capital gains, dividends: Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families would increase from 15 percent to 20 percent.
— Alternative minimum tax: Permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle- and upper-middle income taxpayers from being hit with higher tax bills averaging almost $3,000. The tax was originally designed to ensure that the wealthy did not avoid owing taxes by using loopholes.
— Other tax changes: Extends for five years Obama-sought expansions of the child tax credit, the earned income tax credit, and an up-to-$2,500 tax credit for college tuition. Also extends for one year accelerated "bonus" depreciation of business investments in new property and equipment, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity.
— Unemployment benefits: Extends jobless benefits for the long-term unemployed for one year.
— Cuts in Medicare reimbursements to doctors: Blocks a 27 percent cut in Medicare payments to doctors for one year. The cut is the product of an obsolete 1997 budget formula.
— Social Security payroll tax cut: Allows a 2-percentage-point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2 percent.
— Across-the-board cuts: Delays for two months $109 billion worth of across-the-board spending cuts set to start striking the Pentagon and domestic agencies this week. Cost of $24 billion is divided between spending cuts and new revenues from rule changes on converting traditional individual retirement accounts into Roth IRAs.
In a New Year's Day drama that climaxed in the middle of the night, the Senate endorsed the legislation by 89-8 early Tuesday. That vote came hours after Vice President Joe Biden and Senate Republican Leader Mitch McConnell of Kentucky sealed a deal.
It would prevent middle-class taxes from going up but would raise rates on higher incomes. It would also block spending cuts for two months, extend unemployment benefits for the long-term jobless, prevent a 27 percent cut in fees for doctors who treat Medicare patients and prevent a spike in milk prices.
The measure ensures that lawmakers will have to revisit difficult budget questions in just a few weeks, as relief from painful spending cuts expires and the government requires an increase in its borrowing cap.
House Speaker John Boehner pointedly refrained from endorsing the agreement, though he's promised a vote on it or a GOP alternative right away. But he was expected to encounter opposition from House conservatives, and it was unclear when the vote would occur.
"We're going to work," said Rep. Cathy McMorris Rodgers, R-Wash., as she entered a meeting of House GOP leaders Tuesday. Asked if they had the votes needed for passage, she said, "I have no idea."
Boehner planned to brief his caucus early afternoon Tuesday. Biden scheduled a separate meeting with House Democrats to reprise his role of Monday night, when he promoted compromise to Senate Democrats before that chamber voted.
Boehner and House Majority Leader Eric Cantor, R-Va., arrived at the Capitol in late morning, and both bid "Happy New Year" to greeters but didn't say anything substantive about the Senate-passed bill.
One of the more conservative House Republicans, Rep. Tim Huelskamp, had no such reticence to speak.
"It's three strikes in my book and I'll be voting no on this bill," he told CNN Tuesday morning, saying the legislation would impose a hardship on small businesses around the country and falls short of addressing the need for cuts in spending.
The measure is the first significant bipartisan tax increase since 1990, when former President George H.W. Bush violated his "read my lips" promise on taxes. It would raise an additional $620 billion over the coming decade when compared with revenues after tax cuts passed in 2001 and 2003, during the Bush administration. But because those policies expired at midnight Monday, the measure is officially scored as a whopping $3.9 trillion tax cut over the next decade.
President Barack Obama praised the agreement after the Senate's vote.
"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," Obama said in a statement. "This agreement will also grow the economy and shrink our deficits in a balanced way — by investing in our middle class, and by asking the wealthy to pay a little more."
The sweeping Senate vote exceeded expectations — tea party conservatives like Pat Toomey, R-Pa., and Ron Johnson, R-Wis., backed the measure — and would appear to grease enactment of the measure despite lingering questions in the House, where conservative forces sank a recent bid by Boehner to permit tax rates on incomes exceeding $1 million to go back to Clinton-era levels.
In the Senate, three Democrats and five Republicans voted against the legislation.
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