- The Washington Times - Monday, December 31, 2012

Congress careened over the edge of the fiscal cliff at midnight, but a solution was in the offing after the Senate voted early Tuesday to approve a deal that combined tax-rate hikes and new stimulus spending, along with a two-month delay of automatic spending cuts.

Democrats and Republicans linked arms and powered the bill through the Senate on an overwhelming 89-8 vote, sending the measure over to the House, where a final showdown looms, and where it could have a more difficult path.

Sen. Mitch McConnell said it was the best bill that could be written.

“The president wanted tax increases, but thanks to this imperfect agreement, 99 percent of my constituents won’t be hit by those hikes,” the Kentucky Republican said just ahead of the vote, which didn’t end until after 2 a.m. Tuesday morning.

An early estimate of the tax provisions found the bill amounted to a nearly $4 trillion tax cut when calculated over the next decade — all of which will be added onto the deficit.

House Republican leaders released a statement saying they are still considering whether to try to amend the deal or put it up for a vote as-in, and said those decisions “will not be made until House members — and the American people — have been able to review the legislation.”

The White House and Mr. McConnell, the top Republican negotiator, settled on the outlines Monday evening, and Vice President Joseph R. Biden visited the Capitol to sell the deal to reluctant Democrats, spending more than an hour with them.

Democrats emerged saying they weren’t happy with the deal, but most of them said it was the only option.

“For the first time in literally years, we have a major issue settled by bipartisan vote,” said Sen. Dianne Feinstein, California Democrat.

Some Democrats though, backed by liberal pressure groups, said their leaders caved on too many key issues. AFL-CIO President Richard L. Trumka tweeted that the deal “set the stage for further destabilizing hostage taking from Rs in the form of another debt ceiling crisis & another sequester crisis.”

The final sticking point was over how to postpone at least two months of those automatic spending cuts, or sequesters, scheduled to happen Wednesday.

Tax rates technically rose to their Clinton-era rates as the clock struck the new year, though taxpayers won’t see an immediate change. Still, unless Congress acts soon, the government will begin to withhold more money from future paychecks to reflect the higher rates, which will average about $3,500 per taxpayer in 2013.

In the absence of a deal, President Obama also is required to begin imposing the $110 billion in automatic spending cuts Wednesday.

“This is disgusting, and everybody involved should be embarrassed,” said Rep. Steven C. LaTourette, an Ohio Republican retiring when Congress ends its current “lame duck” session in two days.

House Republican leaders told members they’ll reconvene Tuesday, New Year’s Day, but offered no guarantee they can pass the deal Mr. McConnell and Mr. Biden worked out.

Instead, they released a schedule that included a measure to head off a rise in milk prices in January thanks to Congress‘ inability to pass a new farm bill. Aides said the House might also take up a bill to provide relief for Hurricane Sandy.

The outlines of the deal Mr. McConnell and Mr. Biden worked out included raising tax rates for individuals making more than $400,000 and families with incomes more than $450,000, and extended unemployment benefits for the long-term jobless. It also continued a number of programs from Mr. Obama’s 2009 stimulus law, including tax credits for college tuition and for green-energy programs.

The deal included no net spending cuts, however, which left conservative Republicans complaining. Meanwhile, liberal Democrats balked at not holding firm on tax increases for families making more than $250,000 — a stance on which Mr. Obama campaigned.

Regardless of their income, all taxpayers will still see at least some tax increases with the expiration of the payroll tax holiday, which was worth about $1,000 to the average family in 2012.

In an early-afternoon speech at the White House complex, surrounded by those he said were middle-class taxpayers, Mr. Obama took a victory lap on the deal, pointing to the tax increases he won.

“Keep in mind that just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans. Obviously, the agreement that’s currently being discussed would raise those rates and raise them permanently,” Mr. Obama said.

He also said he had hoped for a bigger deal and said he will insist on more tax increases in the next round of budget fights, which begins almost immediately.

But his fiery speech left Republicans enraged.

Sen. Daniel Coats, Indiana Republican, said it reminded him of football players taunting their opponents.

“It’s in-your-face. It was demeaning. It was insulting. It was sad,” he said.

Republicans agreed with Mr. Obama that the tax deal marked a total win for the White House.

“Congratulations on your tax rate increase. You fought hard and won,” Sen. Lindsey Graham, South Carolina Republican, said on the Senate floor.

But he warned that this was just round one in what’s a much longer battle, and said round two is coming up in a couple of months when the Treasury Department once again bumps up against its borrowing limit.

Mr. Graham said he will not vote to give Mr. Obama another debt increase unless the president agrees to changes that reduce Medicare and Social Security spending, including limits on benefits.

“The next time we meet is going to be around the debt ceiling. And the image I want is not a bunch of people behind the president clapping for him, but members of Congress, Republicans and Democrats, clapping for the president,” Mr. Graham said.

The deal on the table late Monday included a patch to prevent millions of taxpayers from being hit by the Alternative Minimum Tax, and also included an extension of full payments to doctors treating Medicare patients.

The tax rate agreement would see the top marginal rate rise from 35 percent to 39.6 percent — the rate during the Clinton years — for individuals with incomes more than $400,000 and for households with incomes more than $450,000.

Senate aides said the deal also would delay the looming spending “sequesters,” due to take effect Wednesday, by two months. The final sticking point Monday evening was over how to account for the cost of the delay.

Republicans wanted the cuts to be replaced with other cuts, while Democrats wanted to tap tax increases to replace the spending cuts.

David Sherfinski contributed to this article.