No deal reached in WashingtonPublished 6:56pm Tuesday, January 1, 2013
The United States went over the “fiscal cliff” Tuesday morning, but because financial markets were closed for the holiday, there is hope damage could be limited.
The lack of agreement in Washington and the start of 2013 heralded in across-the-board income tax increases and automatic cuts to defense and other programs.
And while the blow to the economy was softened by financial market closures on New Year’s Day, another big deadline looms for the House, who at 6 p.m. Tuesday had not voted on the plan the Senate passed shortly after 2 a.m. the same day. If no agreement is reached by the House and Senate by 11 a.m. on Jan. 3, 13 new Senate members and 82 new House members will inherit the country’s problem.
While it’s no secret Washington has been at odds over tax hikes and spending, Alabama’s Republican Senators Jeff Sessions and Richard Shelby are also divided on the Senate-proposed deal that would keep middle class Americans safe from tax increases.
The Senate voted 89-8 early Tuesday to approve a bill negotiated by Vice President Joe Biden and Senate Republican Leader Mitch McConnell of Kentucky. The proposed legislation prevents tax increases on the middle class, but imposes steeper rates on people with higher incomes.
The White House released a statement Tuesday that said the bill would impose a 39.6 percent tax on single people who earn more than $400,000 per year and married couples who together earn more than $450,000. Officials also said the congressional Joint Committee on Taxation estimates that raising taxes on the wealthiest two percent of Americans would generate $620 billion in revenue.
Shelby was one of the eight who voted against the bill, noting the country needs to exercise fiscal restraint.
“Instead, this package raises taxes, increases spending, and will lead to more borrowing,” Shelby said. “It falls far short of the measures necessary to promote job creation, economic growth, and fiscal stability.”
Sessions, on the other hand, said he believes the legislation will help end a period of uncertainty that may impact the country’s opportunities for economic growth.
“This legislation is necessary to prevent a large and painful tax increase from falling on the vast majority of Americans,” Sessions said in a statement. “Now, it is important that we place our focus directly on the real cause of our nation’s looming debt crisis: the continued surge in spending.”
The emergency legislation passed by the Senate ran into heavy opposition from House Republicans on Tuesday.
It was unclear, as of deadline Tuesday, if the House would take a straight up-or-down vote on the bill as-is, or if House members would attempt to modify the Senate’s plan.
The Associated Press contributed to this report.