House Approves Senate Deal to Push Back Automatic Defense Cuts
The House Tuesday night approved the New Year’s Eve deal passed by the Senate earlier in the day to extend Bush-era tax cuts for most Americans and postpone by two months automatic spending cuts slated to go into effect starting Wednesday.
Throughout the day, widespread opposition from the House GOP to the Senate bill over the lack of spending cuts threatened to doom the eleventh-hour agreement reached by the White House and Senate leaders to avoid the fiscal cliff.
The agreement, which passed the Senate early Tuesday morning with overwhelming support from both parties, would postpone government-wide spending cuts — slated to go into effect Wednesday — until the beginning of March. Half of the cost of the delay would be covered by reducing the fiscal 2013 and 2014 discretionary spending caps by $12 billion. The other half of the cost would be paid for through new revenue generated by making it easier for owners of some tax-deferred retirement plans to switch to Roth IRAs, reported CQ.
The two-month delay is intended to give lawmakers more time to reach a deal to reverse sequestration, which would force the Pentagon to slash spending by $52 billion during the remaining nine months of fiscal 2013 and a total of $500 billion through 2021.
On income taxes, the legislation would allow the top tax rate to rise from 35 percent to 39.6 percent on income over $450,000 for married couples and $400,000 for single people, while shielding families earning less than $250,000 a year from substantial tax increases scheduled to take effect this month.