LAKE COUNTY, Calif. – In its final act, the 112th Congress – which has been criticized for partisanship and stalemates – reached an agreement to extend middle class tax cuts, cut the deficit and prevent the country from going over the edge of the “fiscal cliff.”
The House of Representatives on Tuesday night voted 257 to 167 to approve HR 8, meant to avert the fiscal cliff that has been threatening Americans for weeks.
Earlier on Tuesday, the U.S. Senate had passed its version of the bill 89-8.
Congressman Mike Thompson (D-St. Helena), who represents Lake County and is a senior member of the House Ways and Means Committee, was among those casting votes for the bill. He called the bill a “bipartisan agreement” to avert the fiscal cliff.
“This legislation is far from perfect but it’s better than the falling off the fiscal cliff,” Thompson said in a Tuesday night statement. “Doing nothing would have sent our economy into a tailspin and triggered another recession. Now that we have done what was needed to avoid the fiscal cliff, it’s time to focus on what should have been our priority all along: getting Americans back to work and getting our fiscal house in order.”
In addition to addressing immediate needs such as restoring federal unemployment benefit extensions that had been cut off last week – and which had affected 755 Lake County residents – the bill raises income tax on the wealthiest 2 percent of Americans, estimated to raise $620 billion in revenue.
The White House said it’s the first bipartisan agreement in 20 years to increase tax rates on the wealthy.
The bill also permanently extends payroll tax cuts to the middle class, which prevents 13.2 million Californians from getting a tax hike, the White House reported; fixes the Alternative Minimum Tax; continues for another five years the American Opportunity Tax Credit, which helps millions of students and their families meet higher education costs; and also continues the Earned Income Tax Credit and Child Tax Credit.
President Barack Obama, accompanied by Vice President Joe Biden, said Tuesday night that 98 percent of Americans and 97 percent of small businesses won’t see tax increases as a result of the bill, which he said will help reduce the deficit.
But the president said the government can’t simply cut its way to prosperity, noting that cutting spending has to go hand in hand with further reforms to the tax code.
The wealthiest corporations and individuals can’t be allowed to take advantage of the tax code’s loopholes, and the government also can’t keep cutting basic research and new technology and still expect the nation to succeed in the 21st century economy, Obama said.
“We’re going to have to continue to move forward in deficit reduction, but we have to do it in a balanced way, making sure that we are growing even as we get a handle on our spending,” he said.
The president also warned that he will not have another debate with Congress about paying bills that it has racked up from legislation it already has passed. “We can’t not pay bills that we’ve already incurred.”
Obama said if Congress refuses to give the federal government the ability to pay its bills on time, “the consequences for the entire global economy would be catastrophic,” and far worse than the impact of the fiscal cliff.
He said people remembered the last time that was threatened in 2011 – when the drama then centered on the debt ceiling. The nation’s entire recovery was put at risk in that deadlock: Obama said consumer confidence and business investment plunged, and economic growth dropped. “We can’t go down that path again.”
Obama said the sum of all the budget agreements he and Congress have reached shows there is a path forward, adding he wants to see agreements put forward in the new year with less drama and with less fear for Americans.
Email Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it. . Follow her on Twitter, @ERLarson, or Lake County News, @LakeCoNews.