Fiscal Cliff Showdown Postponed to March

With a cocky President Obama no doubt grinning from ear-to-ear, federal lawmakers yesterday gave their blessing to legislation that boosts income tax rates and government spending while kicking many of the “fiscal cliff” issues down the road for several weeks.

The $1.2 trillion in scheduled spending cuts –falling largely on the Pentagon– have now been officially postponed for two months. The next manufactured crisis comes March 1, the day the cuts will take effect unless Congress intervenes again to stop them.

Putting off dire problems for another day is now becoming routine in Washington, D.C., commentator Jim Antle opined on Twitter. “We have reached the point where temporarily averting self-inflicted disasters at the last second is a political success.”

The Obama-approved fiscal-disaster procrastination bill received final congressional approval in the House last night with relatively little Republican support after a prolonged fight during a long lame duck session of the outgoing Congress. Obama and Democrats got almost everything they wanted, as many Republicans dropped their long-standing opposition to income tax rate increases. Now Obama comes across to many low-information voters as a kind of champion of the middle class, and Republicans, whom the media would have painted as villains no matter what the fiscal cliff outcome, look like stubborn obstructionists who had to be forced to do the supposedly right thing.

By insisting on tax hikes only for the wealthy, President Obama skillfully played Republicans off against each other, launching what some are now calling a civil war within the Grand Old Party. Republicans were afraid of being blamed by the public for allowing taxes to rise if Bush-era tax rates, which expired Dec. 31, were not extended, so they held their noses and gave Obama largely what he wanted.

Charles Krauthammer called the measure a “complete rout for Democrats.” Many House conservatives “hate the bill for good reason … This is a complete surrender on everything.”

Bill Kristol called the bill a mess that was “ridiculous in too many ways to count” but urged House Republicans to vote for it anyway to get the issue behind them. “The two month delay of the sequester [i.e. spending cuts] will make actual governance even more difficult (how is the Pentagon supposed to plan for the rest of the year?) … And we will face another cliff when we hit the debt ceiling and the sequester again in two months.”

The stage is now set for the approaching battle over out-of-control federal spending. The bill passed Congress hours after the U.S. government bumped up against the limit on federal borrowing. In theory the government could default on its debts two months from now if the debt ceiling is not raised further.

The national debt is now about $16.4 trillion, up from $10.6 trillion on Inauguration Day 2009. But that $16.4 trillion figure is misleading. Government accounting tricks keep another $86.8 trillion in unfunded liabilities related to Medicare, Social Security, and federal employees’ future retirement benefits off the books and out of the public eye. The two figures added together produce the unimaginably large sum of $103 trillion. The U.S. government’s bond rating has been downgraded already and many more downgrades are on the horizon.

It is worth noting that the bill passed last night only because House Democrats supported it.

The measure was approved in a House vote of 257 to 167 after GOP leaders decided not to insist on government spending cuts. Speaker John Boehner (R-Ohio) and Budget Committee chairman Paul Ryan (R-Wisc.) voted for the package, breaking with House Majority Leader Eric Cantor (R-Va.) and Majority Whip Kevin McCarthy (R-Calif.) who voted against it.

In total 85 Republicans voted for the bill and 151 voted no. On the Democratic side there were 172 votes in favor and 16 against.

After going against most of the House Republican conference on such a critical matter, Boehner’s speakership may be in jeopardy. Some conservatives are pressing GOP lawmakers not to reelect Boehner as Speaker when the new 113th Congress convenes on January 3.

American Majority Action spokesman Ron Meyer told Breitbart News late yesterday that enough House Republicans have come together together in an effort to take Boehner’s gavel away. To be considered elected, a candidate for Speaker must receive a majority of the votes.

“At least 20 House Republican members have gotten together, discussed this and want to unseat Speaker Boehner–and are willing to do what it takes to do it,” Meyer said. “That’s more than enough to get the job done, but the one problem these guys face is they need a leader to coalesce behind.” Early discussion on a possible Boehner challenger has centered on House Majority Leader Cantor.

Before the House took action late yesterday, at 1:39 a.m. the Senate approved the bill by a vote of 89 to 8. The only Republicans to vote against the measure were Charles Grassley (Iowa), Mike Lee (Utah), Rand Paul (Kentucky), Marco Rubio (Florida), and Richard Shelby (Alabama). (Jim DeMint of South Carolina and Mark Kirk of Illinois didn’t vote.)

Rubio said he couldn’t vote for the bill because he “wanted to be part of solving the long-term problems this country faces. Time and again, we’re given choices here that don’t involve that.”

“The real fiscal cliff is still there,” he said. “We’ll be back here again. In March, we’ll have a showdown like this all over again.”

Many Tea Party-backed Republicans opposed the legislation because it raises taxes without reducing government spending. According to an analysis by Joseph Henchman of the Tax Foundation, the bill raises taxes by $620 billion tax increase while cutting expenditures by a paltry $15 billion. That’s a ratio of $41 in tax increases for every $1 in savings.

While the legislation preserves the lower-income tax brackets from the Bush era permanently, it raises tax rates for joint filers earning $450,000 or more, phases out exemptions for high earners and limits the personal exemptions and itemized deductions they can claim. It also raises payroll taxes for all and discourages investment by raising the capital gains tax and dividends tax for high earners.

On the positive side, the legislation approved by Congress repeals the CLASS Act, a huge unfunded mandate promoted by the late Sen. Ted Kennedy (D-Mass.) that was part of Obamacare. The Community Living Assistance Services and Supports Act would have created a new national long-term care insurance system.

Quite apart from the fiscal cliff, yesterday Americans were hit with $1 trillion in new taxes to be fully phased in through 2022 to support the president’s unpopular health care reforms.

Among the new job-killing Obamacare-related levies effective January 1 were: an excise tax on gross sales by medical device makers; a  surtax on investment income for households earning at least $250,000; and an increase in the Medicare payroll tax for married couples earning more than $250,000.

Many more tax increases are likely headed our way in President Obama’s second term in office.

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  • Arlie

    The Republicans are Progressives and the Democrats are Communists. America Loses. Michelle Bachmann would be best for Speaker position.

    I will never vote Republican again. It is a lie that there are 2 parties. They are both run by the same globalist cabals. I am encouraging everyone with a thinking brain and cares about America to join the Constitution Party. Please watch this video and see if you don't agree: http://www.youtube.com/watch?v=TY3H9le_ftl Chuck Baldwin: Restoring the Republic. WAKE UP AMERICA and Don't Give UP… There is a better CHOICE while we still have time to choose.

    • objectivefactsmatter

      "The Republicans are Progressives and the Democrats are Communists."

      I laughed for a moment until I realize how unfunny that statement is. I was a Reagan liberal as a teen, then became mainstream conservative during Clinton's terms. Wonder why? No thinking person does. My ideology hasn't changed a bit. Now I'm reactionary, still believing the same things.

    • objectivefactsmatter

      "I will never vote Republican again. It is a lie that there are 2 parties. They are both run by the same globalist cabals. "

      The same globalist cabals try to buy their influence and succeed to varying degrees, but your crazy if you think there are not critical distinctions between the 2 parties. If you expect to throw your vote away for each election until you get change, by then there will only be 1 party. The Democratic Soviet Socialist Party. In other words, the transformation will just be complete by then.

      Vote Republican and lobby your leaders intensely year round. THAT is an answer your kind never seem to consider.

  • Looking4Sanity

    "I'll gladly pay you Tuesday for a hamburger today!" – Wimpy

    Where's Popeye when you need him?

  • Go Bush

    Come on Matthew, you can tell us, that bully obama took your dinner money at school right?!!!!

    • RedWhiteAndJew

      Nah. Pushing down girls was more Hussein's thing.

  • pierce

    And just who and why is this being postponed again. So that the President can intimidate, and once more make accusations that the Republicans are to blame. Or is it whimpering Harry Reid, who tries to make the American people think he is the ultimate negotiator, when he is in my opinion the most disgusting little man I have ever seen. Even John Boehner is without blame. This whole thing is like watching HOMER SIMPSON on Sunday night after NFL Football on FOX, but at least I can turn that off.
    Our Congress and the President are jokers, or maybe their jerks, but stop playing games with us.

    • http://www.youtube.com/watch?v=nLNn2YflwNs Roger

      They couldn't come up with enough excuses to give Obama everything he wanted. And people were awake and watching. So, they'll wait and slip the rest in legislation along the way.

      Too bad they won't actually try fixing the problems we face.

  • http://libertyandculture.blogspot.com/ JasonPappas

    Republicans cave! No news here.

    1. They've joined the Dems in backing Occupy Wall Street demands for taxes on the 1%.
    2. Spending and debt is still out of control.
    3. Regulations strangle our economy.

    If this is the best deal they can get with their control of the House, I'm not bothering to vote until we see a Party of principle. With the largest tax increase in 20 years the Republicans lost the last principle they had. They have nothing now.

    • http://www.youtube.com/watch?v=nLNn2YflwNs Roger

      RINO's caved.
      We need to use this vote from a lame duck congress to campaign and tea party / primary out the RINO's.

      • http://libertyandculture.blogspot.com/ JasonPappas

        Agreed!

  • WildJew

    I don't think Chuck Baldwin has the answers either.

  • melvin polatnick

    Higher taxes on those who live in obscene luxury will provide some crumbs for those who must feed themselves and their hungry children. Shortening the leash on the rich and powerful was necessary in order for the less fortunate to have some elbow room.

    • http://www.youtube.com/watch?v=nLNn2YflwNs Roger

      Why, you think that the longer leash allowing the rich to hire the poor won't get the hungry children fed?

  • http://twitter.com/USnavy1967 @USnavy1967

    There is no Republican party left, Obama took that party and ringed it out. What do us conservatives have left, nothing, we have been left out to dry. What is left??? Congratulations to the Democrats they are the party that is left after the smoke has cleared. Obama will get everything he wants for the next four years; God bless America, we will need it.

    • http://www.youtube.com/watch?v=nLNn2YflwNs Roger

      There are sparks of life. Lee in Utah, Fischer in Nebraska… not many. But we have to find our core and rebuild. Keeping the dead corpse on life support won't help the republican base. The RNC needs to be spanked and I'll gladly watch on the sidelines as they starve to death.

  • http://twitter.com/paulvmarks @paulvmarks

    The situation is hopeless. Some 95 million people in the "private sector" can not fund 85 million government dependents (entitlement people and governent employers). and government stuff for themselves – and support themselves and their children.

    Stop clinging to illusions. De facto bankuptcy is comming – prepare for it.

    • http://www.youtube.com/watch?v=nLNn2YflwNs Roger

      It didn't work in Rome, it never works and Obama knows this.

      But he's using it as a predictable tool to collapse our system. If he knows from history Communism never works, there must be another reason. The resurgent growth of radical islam and his dreams of caliphate are the only things that make sense.

      • Asher

        Obama doesn' t care if anything works…his mission is the destruction of the USA and Israel.

      • http://twitter.com/paulvmarks @paulvmarks

        I do not believe that Barack Obama is a Muslim any more than I believe that Mr "Collective Salvation" is Christian. His "Liberation Theology" is just wamed up Marxism – and, at bottom, Marxists despise Islam as much as they despise Christianity (or any religion – other than their own secular religion).
        Of course the Marixists have long tried to ally with Islam – and, with his background, Barack is well suited to that effort (although his Red mother did not even win over her Muslim second husband).

      • http://twitter.com/paulvmarks @paulvmarks

        Roger – "he must know Communism never works",. You forget the "Star Trek" vision of the American left – just because the Klingons or the Romulans (or whoever) can not get colletivism to work, does not mean that the "good people" can not. The wonderful new society – with no money and no material scarcity and…… (the ancient insane dream). No amount of experience can cure some of these people.

  • tagalog

    Well, they found a BIPARTISAN way to kick the can down the road for a little while.

    We have to get rid of all of them. The rule was, we go over the cliff if we can't deal with our economic problems. Now we just got rid of that rule. We can just go on taking our respective postures and we have two more months of bickering ahead of us. When that two months is over, we'll just extend things for ANOTHER two months. How sad and revolting.

    It's like the so-called spending ceiling; neither the "fiscal cliff" nor the spending ceiling put any deadline on anyone in Congress. They only pretended to, and there is no final reckoning until we crash. It's only us folks down here at the operational level who have to pay the piper when he presents his bill.

    Screw them and their taxes. Why do we continue to put money in their hands?

  • John C. Davidson

    As a repairmen, I never got paid for not fixing something.

  • Gislef

    "It is worth noting that the bill passed last night only because House Democrats supported it."

    Ummm, not according to basic math. 85 Republicans voted for the bill. The bill passed 257 to 167.

    If the Republicans who voted for it, voted against it, it woudl have failed, 172 to 252.

  • clarespark

    I agree that the Progressive movement was bipartisan, but the progressives changed as communist infiltration into the academy and the mass media proceeded, merging with populism. I also think that Obama wants a command economy and Lenin-style internationalism. See http://clarespark.com/2012/07/19/communist-ideas-…. "Communist ideas go mainstream." The original progressives wanted to stave off red revolution, copying Bismarck and Christian Socialists. They were not reds in 1919.

  • Asher

    Most of the Politicians in Washington are dysfunctional…showing an inability to connect with reality, debt, and are totally self centered. Eric Cantor, and Tim Scott did not vote for the bill, Michele Bachmann is also a strong leader who shows values and principles in her votes…

  • Rostislav

    During the presidential debates I was hungrily waiting for just one question of Mr. Romney: "Comrade Obama, can you tell me and all the Americans, why your second term is officially endorsed by the CPUSA?" Alas, I was waiting in vain – though I am sure that it was the crucial central problem of the infamous November elections. All the rest was secondary at best. Now, when your Communists have got their candidate to rule the country in full accordance with their program, it's already too late to use obsolete terms like RINO, GOP, majority whip, bipartisan, etc: these familiar words have nothing to do with the new harsh reality. Well, your benevolent CPUSA maybe would permit their existence for a year or two more, like it was in my Russia after 1917… But the result of 1917 was a tragedy for one country only, and the result of 2012 is a tragedy for all the world. Rostislav, Saint-Petersburg, Russia.

  • June

    What fiscal cliff? US has been bankrupt for years and is living off handouts from China. US is to China what Pakistan is to US, a basket case.

  • tagalog

    What would the IRS/Department of Justice be able to do if half the taxpayers (I bet among taxpayers, the righties constitute MORE than 1/2) simply refused to pay their 2013 taxes when they fell due?

    "You don't do your job, I won't do mine."

    " I decided to kick the can down the road a piece. Deal with it."

    Hell, the politicians get a case of the vapors when they have to contemplate enforcing the law against a mere 12 million illegal aliens present in this country…

  • mlcblog

    Drudge is saying O left town without signing this bill. Had to go to Hawaii.

  • Thomas Wells

    Barack the magician gestures with his right hand,while making the pigeon disappear with his left.

  • JacksonPearson

    Meanwhile, the debt clock keeps relentlessly ticking!
    http://www.usdebtclock.org/

  • slider 96

    Obama should be grinning , Republicans have just put the final nail in their own coffin .

  • Chanameel

    Obama just needs the convenient,

    "scapegoat".

    Israel.

    Economic "colapse" can be blamed on the Christians and the Jews.

    Lions and tigers and bears,

    oh, my.

    I think that we have witnessed this scenario before…………………