Report: Reid Burns Obama Fiscal Cliff Proposal Hours Before Senate Vote
WASHINGTON (CBSDC/AP) — Senate Majority Leader Harry Reid was so upset with President Obama’s proposed “fiscal cliff” deal to Senate Minority Leader Mitch McConnell that he burned it.
Politico reports that Reid tossed the proposal documents into the burning fireplace at his Capitol office hours before the Senate vote because he thought Democrats should have waited to get a more favorable deal.
Reid, who reportedly felt it was a “bad deal,” called Obama before the vote to express his displeasure with the bill, according to Politico.
Despite his feelings, Reid and other Senate Democrats overwhelmingly approved the measure in the early-morning hours on New Year’s Day.
The House of Representatives followed suit late Tuesday night, somewhat begrudgingly, and approved the measure 257-167.
“A central promise of my campaign for president was to change the tax code that was too skewed towards the wealthy at the expense of working middle-class Americans,” Obama said, following the vote. “Tonight we’ve done that.”
The bill would boost the top 35 percent income tax rate to 39.6 percent for incomes exceeding $400,000 for individuals and $450,000 for couples, while continuing decade-old income tax cuts for everyone else. In his re-election campaign last year Obama had vowed to boost rates on earnings at somewhat lower levels – $200,000 for individuals and $250,000 for families.
Scores of GOP lawmakers voted for the measure, reversing a quarter-century of solid Republican opposition to boosting any tax rates at all.
The bill would also raise taxes top earners pay on dividends, capital gains and inherited estates; permanently stop the alternative minimum tax from raising levies on millions of middle-income families; extend expiring jobless benefits; prevent cuts in Medicare reimbursements to doctors; and delay for two months billions in budget-wide cuts in defense and domestic programs slated for this year.
Both sides lamented their failure to reach a significant deficit-cutting agreement. But neither much mentioned another omission: The immediate expiration of a two-year, 2-percentage-point cut in the Social Security payroll tax.
That break, which put an extra $1,000 in the wallets of typical families earning $50,000 a year, was an Obama priority two years ago as a way to boost consumer spending and spark the flagging economy, but it fell victim this time to other priorities.
Speaker of the House John Boehner, R-Ohio, took no public stance on the measure before the vote. But he guided the compromise to the House floor after an unsuccessful attempt by many conservatives to persuade leaders to add spending cuts to the bill.
Had the House inserted those budget cuts and the Senate refused to consider them, the legislation could have died. That left House Republicans worried that voters might blame them for a huge, sweeping tax increase and for any swoon the nation’s financial markets might take when they reopened Wednesday.
“You can be right and you can be dead right. Which is it?” said Rep. Rich Nugent, R-Fla., of the quandary Republicans faced. “Right now you need to take the tax issue off the table” and move on to a focus on curbing spending, he said.
Boehner voted for the bill, an unusual step because speakers seldom vote, and he was joined by Rep. Paul Ryan, R-Wis., the GOP’s vice presidential candidate last fall. Voting “no” were the other two top GOP leaders, Reps. Eric Cantor of Virginia and Kevin McCarthy of California.
Passage came nearly 24 hours after a decade’s worth of tax cuts enjoyed by tens of millions of Americans expired with the stroke of the new year, technically raising taxes by more than $500 billion in 2013 alone.
Those tax increases – plus $109 billion in defense and domestic spending cuts that were to be automatically triggered Wednesday – became known as the fiscal cliff. Economists warned that their combined impact would hurl the economy back into recession, but Obama’s signature on the bill would prevent the “cliff” from taking hold.
Obama can sign the bill remotely using a machine called an “autopen,” or the bill can be flown to Hawaii for his signature.
Overall, the legislation would add nearly $4 trillion to federal deficits over the next decade compared with what would have happened had all the tax cuts expired, according to the nonpartisan Congressional Budget Office.
“I’m embarrassed for this generation. Future generations deserve better,” complained one foe, Rep. Louie Gohmert, R-Texas.
The agreement’s journey to passage was a tortured one. It included negotiations between Obama and Boehner on a larger, deficit-cutting deal that collapsed, and a failed effort by the speaker to drum up enough GOP votes to pass a “Plan B” that would have limited tax boosts to incomes exceeding $1 million.
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