Senate easily approves Biden-McConnell 'fiscal cliff' agreement early Tuesday

Senate easily approves Biden-McConnell 'fiscal cliff' agreement early Tuesday

The Senate early on New Year's Day voted overwhelmingly in favor of a "fiscal cliff" deal that would extend tax rates on annual household incomes under $450,000 and postpone automatic spending cuts for two months.  

The bill was approved in an 89-8 vote that came after only 10 minutes of formal floor debate and no official score from the Congressional Budget Office. The Joint Committee on Taxation estimated it would reduce federal revenue by $3.93 trillion over the next decade compared to current law.

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Five Republicans and three Democrats voted against the bill: Sens. Michael BennetMichael Farrand BennetHow Sen. Graham can help fix the labor shortage with commonsense immigration reform For true American prosperity, make the child tax credit permanent Colorado lawmaker warns of fire season becoming year-round MORE (D-Colo.), Tom CarperThomas (Tom) Richard CarperFrustration builds as infrastructure talks drag Democrats pushing for changes to bipartisan infrastructure deal Transit funding, broadband holding up infrastructure deal MORE (D-Del.), Chuck GrassleyChuck GrassleyGrassley pressured to run as Democrats set sights on Iowa The Hill's Morning Report - Pelosi considers adding GOP voices to Jan. 6 panel Ex-Rep. Abby Finkenauer running for Senate in Iowa MORE (R-Iowa), Tom HarkinThomas (Tom) Richard HarkinEx-Rep. Abby Finkenauer running for Senate in Iowa We need a voting rights workaround Romney's TRUST Act is a Trojan Horse to cut seniors' benefits MORE (D-Iowa), Mike LeeMichael (Mike) Shumway LeeBiden signals tough stance on tech with antitrust picks Overnight Defense: US launches another airstrike in Somalia | Amendment to expand Pentagon recusal period added to NDAA | No. 2 State Dept. official to lead nuclear talks with Russia US launches second Somalia strike in week MORE (R-Utah), Rand PaulRandal (Rand) Howard PaulGOP Rep. Cawthorn says he wants to 'prosecute' Fauci Writer: Fauci, Paul clash shouldn't distract from probe into COVID-19 origins S.E. Cupp: 'The politicization of science and health safety has inarguably cost lives' MORE (R-Ky.), Marco RubioMarco Antonio RubioBipartisan congressional commission urges IOC to postpone, relocate Beijing Games Hillicon Valley: Democrats introduce bill to hold platforms accountable for misinformation during health crises | Website outages hit Olympics, Amazon and major banks Senators introduce bipartisan bill to secure critical groups against hackers MORE (R-Fla.) and Richard Shelby (R-Ala.). 

Sens. Jim DeMint (R-S.C.), Mark KirkMark Steven KirkDuckworth announces reelection bid Brave new world: Why we need a Senate Human Rights Commission  Senate majority battle snags Biden Cabinet hopefuls MORE (R-Ill.) and Frank Lautenberg (D-N.J.) missed the vote.

The 89-8 vote puts pressure on the GOP-led House to approve the legislation, though it remains to be seen if most House Republicans will back a bill that would add to the deficit and lacks the deep spending cuts that conservatives have been calling for.

It is unclear when the House will vote to pass or possibly amend the Senate-passed measure. House Republicans plan to huddle on the issue at 1 p.m.

House Republican Leader Eric CantorEric Ivan CantorBottom line Virginia GOP candidates for governor gear up for convention Cantor: 'Level of craziness' in Washington has increased 'on both sides' MORE (R-Va.) told Reuters on Tuesday that no decision had been made on when his chamber will vote on the Senate-passed bill. Cantor said a decision could come later Tuesday. A 90-minute meeting of Senate Democrats ending shortly before midnight sealed the deal negotiated between Vice President Biden and Senate Republican Leader Mitch McConnellAddison (Mitch) Mitchell McConnellGrassley pressured to run as Democrats set sights on Iowa House Democrats grow frustrated as they feel ignored by Senate Democrats question GOP shift on vaccines MORE (Ky.). The passage of the bill is a significant victory for Biden, who might run for president in 2016, and McConnell, who is up for reelection next year.

The legislation would indefinitely extend the Bush-era income tax rates on individual incomes up to $400,000 and family incomes up to $450,000. Also, it sets the estate tax rate at 40 percent, up from 35 percent, and exempts inheritances below $5 million.  

It would postpone the automatic spending cuts known as the sequester for two months and offset the $24 billion cost of the delay with a mix of spending cuts and new revenues. The measure would also extend unemployment benefits for one year without offsetting their impact on the deficit, preventing 2 million people from losing government assistance.

And it would prevent a hike in congressional pay that was authorized in an executive order from President Obama to raise federal worker pay.

Biden made a late-night visit to Capitol Hill to convince Democrats to back the agreement, but he did not need to do much arm-twisting.  

"I am feeling very, very good. I think we'll get a very good vote tonight,’ Biden said, leaving the meeting with Democrats.  

Obama called on the House to pass the Senate measure "without delay."

"This agreement will also grow the economy and shrink our deficits in a balanced way – by investing in our middle class, and by asking the wealthy to pay a little more," Obama said in a statement following the vote.

"There’s more work to do to reduce our deficits, and I’m willing to do it," he added.

Senate approval sends the bill to the House, where Speaker John BoehnerJohn Andrew BoehnerFreedom Caucus presses McCarthy to force vote to oust Pelosi Stripping opportunity from DC's children Here's what Congress is reading at the beach this summer MORE (R-Ohio) said the House will review the Senate bill.

With the stage set for a New Year’s Day vote, it remains unclear if the House will vote on the bill before Thursday, when the 113th Congress will be sworn in.

“The House will honor its commitment to consider the Senate agreement if it is passed,” BoehnerJohn Andrew BoehnerFreedom Caucus presses McCarthy to force vote to oust Pelosi Stripping opportunity from DC's children Here's what Congress is reading at the beach this summer MORE said. “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 is not a fan of moving significant legislation in lame-duck sessions, and he has made it a top priority to give members and the public time to read bills before scheduling votes on them.

The bill would appear to be a hard sell with House Republicans, many of whom objected to an earlier bill sought by Boehner that extended tax rates on annual incomes under $1 million as a tax hike. However, unlike Boehner's "Plan B" bill, the Senate-passed measure will attract significant support from House Democrats.

The Senate measure includes few spending cuts, which House Republicans have repeatedly demanded.  

“I don’t see any balance yet, that’s the fundamental problem,” Rep. Jason ChaffetzJason ChaffetzCongress's latest hacking investigation should model its most recent Fox News Audio expands stable of podcasts by adding five new shows The myth of the conservative bestseller MORE (R-Utah) told The Hill. “If you don’t cut spending, there’s no way you’re going to pick up Republican votes.”  

Heritage Action for American, a conservative advocacy group, urged lawmakers to oppose the deal.  

“To be clear, this is a tax increase.  In 2013, the top marginal rate, death tax, and taxes on long-term capital gains and dividends will all be higher than in 2012.  Comparing tax rates to hypothetical rates that have hardly any support is nothing more than misleading Washington spin,” the group declared in a statement. 

Liberal groups and labor unions have begun to line up against the deal, as well. They complained the White House and Democrats were giving up too much, particularly after Obama campaigned on a pledge to raise tax rates on households with annual income above $250,000.

“We just finished an election in which the American people made clear that they want the wealthiest 2 percent to finally pay their fair share of taxes, but this agreement fails to meet that test,” said Justin Ruben, executive director of MoveOn.org. “Voters gave President Obama a mandate to end the Bush tax cuts for those making more than $250,000. He has not delivered.”

 
“Its [sic] not a good fiscal cliff deal if it gives more tax cuts to 2 percent and sets the stage for more hostage taking,” AFL-CIO president Richard Trumka wrote in a Twitter post on Monday night.  

House Democratic Leader Nancy Pelosi (Calif.) remained non-committal publicly but has signed off the deal in private, according to a source familiar with the talks.  

“I understand at the present time, Senate Democrats are meeting with the Vice President.  When a final agreement is reached and passed by the Senate, I will present it to the House Democratic Caucus,” she said in a statement.  

Some Senate Democrats balked at the last minute over a Republican demand to index the estate tax exemption for inflation, but finally relented after centrists such as Sen. Max BaucusMax Sieben BaucusCryptocurrency industry lobbies Washington for 'regulatory clarity' Bottom line Bottom line MORE (D-Mont.) weighed in to support the provision.  

In the end, both Democratic and Republican senators concluded it was better to accept a deal despite their objections than go over the fiscal cliff.  

“There is a feeling, again, that it’s not that this proposal is regarded as great or is loved, in any way, but it’s a lot better than going over the cliff,” Sen. Charles SchumerChuck SchumerCould Andrew Cuomo — despite scandals — be re-elected because of Trump? Democratic negotiator: 'I believe we will' have infrastructure bill ready on Monday DACA court ruling puts weight of immigration reform on Democrats MORE (D-N.Y.) said.  

Senate Republicans also said an imperfect deal is better than letting middle-class families get hit with income tax increases and $109 billion in domestic and defense spending cuts take place.  

Sen. Kay Bailey Hutchison (R-Texas) said: "It's not something that any of us would say, 'Oh, I love it.' I don't love it, but I think it is a very good job of negotiating where there are some wins and some losses and it's about even."   

The legislation will add trillions of dollars to the federal deficit over the next 10 years compared to current law, under which the Bush-era tax rates expired at midnight. White House officials and Senate Democratic aides said tax increases on the wealthy would raise about $620 billion in revenue compared to current policy.  

The bill includes a host of tax rate extensions, including five-year extensions of the college tuition tax credit, the child tax credit and the earned income tax credit, which were part of the 2009 economic stimulus package.  

It sets the capital gains and dividends tax rate at 20 percent, up from 15 percent. Capital gains and dividend income would be taxed at 23.8 percent for singles earning above $400,000 annually and families earning more than $450,000, according to a White House fact sheet.  

It reinstates the Clinton-era limit itemized deductions for individuals earning more than $250,000 a year and families earning above $300,000.  

It permanently patches the Alternative Minimum Tax and extends a variety of expiring business and energy tax provisions for one year, including the research and experimentation tax credit and 50 percent bonus depreciation.  

The legislation will freeze scheduled cuts to doctors’ Medicare payments for one year, paying for them with spending cuts in other healthcare spending. This avoids a 27 percent cut in reimbursements to doctors treating Medicare patients.  

White House officials argue the agreement leaves substantial opportunity to further reduce tax breaks for high-income households, reform corporate tax rates and reform entitlement programs in the 113th Congress.  

It will also include a one-year extension of the 2008 farm bill without dairy reforms, to the chagrin of Senate Agriculture Committee Chairwoman Debbie StabenowDeborah (Debbie) Ann StabenowHere's evidence the Senate confirmation process is broken Schumer: Democrats considering option to pay for all of infrastructure agenda Democrats closing in on deal to unlock massive infrastructure bill MORE (D-Mich.).  

"This is Mitch McConnell's farm bill" she said. "I will vote for it but I am on record that I am not happy with what was done to agriculture."  

The farm bill provision stops a possible doubling of milk prices but does not contain reforms and $24 billion in deficit reduction in a Senate passed five-year bill.  


—Erik Wasson, Vicki Needham and Mike Lillis contributed.  

This report was originally published at 2:08 a.m. and last updated at 10:27 a.m.