THE CLIFF – AT 10:31 A.M. ET: Happy new year. Ho ho ho. So you think we're saved, do you? So you've heard the Senate passed, in a Hollywood nick of time, legislation that would avert the economic mess predicted for today, do you?
Well, as the great philosopher George Gobel used to say, just a gosh-darned second. True, the Senate passed legislation that would handle some of the pressing tax issues – raising taxes on some affluent people, keeping the rates the same for the great majority – and kicking spending down the road. But there's a little matter of the House of Representatives. This is not a done deal. WaPo:
The Senate approved a bipartisan agreement early Tuesday morning to let income taxes rise sharply for the first time in two decades, fulfilling President Obama’s promise to raise taxes on the rich and avoiding the worst effects of the “fiscal cliff.” The agreement, brokered by Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.), passed 89 to 8 in a highly unusual New Year’s morning vote. It now heads to the House, where leaders have not guaranteed passage but top officials believe it could win passage in the next few days.
The agreement primarily targets taxpayers who earn more than $450,000 per year, raising their rates for wages and investment profits. At the same time, the deal would protect more than 100 million households earning less than $250,000 a year from income tax increases scheduled to take effect Jan. 1.
The measure is now at the House, where Speaker John A. Boehner (R-Ohio) pledged to bring it to a vote in the coming days. “Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members — and the American people — have been able to review the legislation,” Boehner and other GOP leaders said in a written statement.
Senior aides predicted the measure would pass the House with bipartisan support. But Boehner’s decision to delay the vote meant the nation would tumble over the cliff at least briefly.
COMMENT: Unless there's a major Republican revolt, I think the aides are probably right. It's not a great deal, or even a complete deal. The spending cuts and reform of federal programs aren't even there. But I don't think Republicans will want to be seen as blocking the maintenance of tax rates for most Americans. The Republican Party is, for both legitimate and false reasons, unpopular enough.
Stand by. This will be taken up by the House in an hour or so.
January 1, 2013