Congress has taken an initial step in dealing with nation’s “fiscal cliff.”
Financial markets around the world on Wednesday celebrated the New Year’s Day agreement to avoid middle-class tax increases and spending cuts.
However, there is much work left to be done.
The bill’s passage came on a 257-167 vote in the House late Tuesday after the Senate approved the measure on a vote of 89-8 less than 24 hours earlier. House conservatives demanded a vote to add significant spending cuts to the bill, but they finally called off the effort.
“Thanks to the votes of Republicans and Democrats in Congress, I will sign a law that raises taxes on the wealthiest 2 percent of Americans while preventing tax hikes that could have sent the economy back into recession,” President Barack Obama said.
In addition to neutralizing middle-class tax increases and spending cuts taking effect with the new year, the legislation will raise tax rates on incomes over $400,000 for individuals and $450,000 for couples. That was higher than the thresholds of $200,000 and $250,000 that Obama campaigned for.
Get prepared for new battles in the near future.
The legislation extended the deadline for deep mandatory spending cuts in military and domestic programs for only two months, and it did nothing to deal with raising the nation’s borrowing limit. The debt limit, set by Congress, is now $14.3 trillion — a ceiling the government officially hit on Monday.
The Treasury Department, The Associated Press reported, says it will take “extraordinary measures” to keep paying the government’s bills — but only until sometime in February or March.
Remember last fight over the debt limit? It was costly, to say the least.
After a summer 2011 battle, the American government came close to defaulting for the first time ever. Standard & Poor’s yanked the nation’s blue-chip AAA bond rating.
Obama warned Congress against using a vote on the debt ceiling to try to win concessions on spending cuts. He asserted he wouldn’t negotiate “with Congress over whether or not they should pay the bills they’ve already racked up through the laws they have passed.”
We agree with the president on this point. Until the 2011 confrontation, increases in the debt limit have been largely routine and did not produce the treat of default, which would be devastating to the U.S. economy.
Spending, though, simply must be addressed.
A “grand bargain,” not unexpectedly, was not possible during this lame-duck session of Congress.
A sound plan that combines even more tax changes and spending cuts to reduce federal deficits — one that both sides of the political spectrum can support even if grudgingly so — is essential.
Americans voted for split government, with Democrats controlling the White House and Senate and Republicans the House of Representatives. The best ideas from both sides deserve serious consideration.
“Now the focus turns to spending,” Speaker of the House John Boehner, R-Ohio, said. “The American people re-elected a Republican majority in the House, and we will use it in 2013 to hold the president accountable for the ‘balanced’ approach he promised, meaning significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt.”
The country must move past dealing with financial matters in a crisis mode as deadlines approach. Then the focus can switch toward promoting strong growth — the only real way to significantly reduce the nation’s debt and maintain a standard of living Americans demand and deserve.
Opinion
Congress still has much work to get completed on fiscal matters
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