Well, here we are on December 31 and there’s still no deal on Capitol Hill to avoid the Fiscal Cliff. Negotiations on Sunday had Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell holding closed-door meetings. Their goal was to reach a compromise by mid-day, but they fell short, even as Vice president Joe Biden joined in.
Senator Reid announced the Senate would meet again Monday, December 31, at 11:00 AM, noting that “Although there is still significant distance between the two sides, there is still time left to reach an agreement.”
A major point of contention remains individual income-tax rates. President Obama has called for raising taxes on family income above $250,000. In the latest round of Senate talks, Republicans proposed a $550,000 threshold, which Democrats moved to $450,000.
Bitter disagreement on tax increases extends to how the money raised should be spent. Republicans want any tax increase, which they have reluctantly accepted, to go toward reducing the deficit. Democrats want any increased tax revenue to offset spending cuts that are scheduled to kick in as part of the fiscal cliff, and to pay for extending unemployment benefits.
Of course, with this much distance between the two parties on tax rates, there’s little hope of getting any resolution on the estate tax this year.
In the absence of a bipartisan deal later today, Senator Reid has said he will ask for a vote on a bill to carry out President Obama’s backup proposal, which addresses only a few items on the long list of tax sunsets and budget cuts. Most significantly, the bill includes extending current tax rates for incomes up to $250,000 for couples filing jointly. Democrats say they could pass the bill through the Senate. However, it’s questionable whether the Republican controlled House would approve it.
We’ll know the outcome in just a few hours. As all the political rhetoric and posturing on the Hill continues, I think Senate Chaplain Barry Black’s opening prayer for last weekend’s session accurately describes the desperate situation our elected leaders have put us in. “We gather this weekend with so much work left undone,” he said. “Look with favor on our nation and save us from self inflicted wounds.”
I will address this once again in the New Year. In the meantime, my wish to you is that you will have happiness, good health and prosperity in the New Year! Happy New Year!