Econintersect: The Senate has passed a fiscal cliff resolution act by an overwhelming 89-8 margin at 2:07 am 01 January 2013. The bill will now go to the House, which convenes at noon on New year’s Day. What happens there is not a forgone conclusion, but the strongly bipartisan vote in the Senate may increase the prospects for the more polarized House to find enough votes to pass Senate bill.
The bill delays spending cuts for two months, presumably to give the new Congress time to work out how they will be handled. Such things as current compensation for Medicare patient treatment and federal long-term unemployment benefits will be continued for now.
What happens in the House is not a foregone conclusion:
- The House Republicans could follow what has been their practice not to bring any bill to the floor that does not have enough Republican votes for passage. Only 21 objecting Republicans could keep Speaker Boehner from bringing the Senate bill up for a vote if that practice were followed here.
- The house could modify the Senate bill, either in substance or by amendment and pass a modified bill. In that case the two bills would have to go to a House Senate conference to iron out the differences.
Some of the provisions of the bill passed by the Senate:
- Restrictions on the conversion to Roth plans for tax defered retirement savings (401(k), 403(b), etc.) will be removed
- The top tax bracket will increase from 35% to 39.6% for individuals earning over $400,000 (married couples over $450,000).
- Capital gains taxes and dividend rates will remain unchanged for those under the $400k/$450k limit and will rise to 20% for above that income level.
- The estate tax exemption will remain at $5 million per individual.
Full details of the bill have not been released.
Rumors of what might be in the bill were published in earlier GEI News articles.
- DCs help bail out D.C. as budget agreement struck (Mark Schoeff Jr., Investment News, 01 January 2013)
- Senate approves deal to avert fiscal cliff; vote goes to House (NBC News, 01 January 2012)
- No Cliff Rescue Tonight (GEI News, 01 January 2013)
- The Cliff Rescue (GEI News, 31 December 2012)