Three hours shy of the midnight deadline, the White House and congressional leaders reached a deal to avert the so-called fiscal cliff, several sources confirmed to The Huffington Post.
Under the deal brokered by Vice President Joe Biden and Senate
Minority Leader Mitch McConnell (R-Ky.), Congress would permanently
extend the Bush income tax cuts at $400,000 and below, keep the estate
tax threshold at $5 million and extend unemployment benefits for one
It would also temporarily delay the sequester -- i.e., billions of
dollars in across-the-board spending cuts -- for another two months. The
cost of continuing current spending levels will be paid for through an
even mix of tax revenue increases and later spending cuts. Half of those
cuts will come from defense spending; half will come from nondefense
The deal includes other tax provisions as well: It extends the child
tax credit and the college tuition credit for five years, individual and
business tax extenders for two years, and the Medicare "doc fix" for
one year. The Alternative Minimum Tax will be permanently fixed. The
agreement also extends the farm bill for one year.
Notably, the fiscal package does nothing to address the debt ceiling,
which the government just hit Monday.
Treasury Secretary Timothy
Geithner sent a letter to congressional leaders earlier in the day
outlining emergency measures he can take to prevent the government from
defaulting on the debt, but those measures will only delay default for a
matter of weeks, until right around the time when lawmakers will have
to address the sequester again. That sets up another major fiscal fight
between the White House and Congress.
The deal still requires buy-in from members of both parties, and
Biden was set to meet with Senate Democrats Monday night to try to sell
them on the package. That could prove challenging given that key
progressive groups, including the AFL-CIO,
made it clear earlier Monday that they would oppose any deal that
raised the income limit for extending the Bush tax cuts above $250,000.
Still, both Senate Majority Leader Harry Reid (D-Nev.) and House
Minority Leader Nancy Pelosi (D-Calif.) gave the deal their blessing
Monday night in a phone call with President Barack Obama, sources
A Pelosi aide suggested that while the House Democratic leader backs
the proposal on the table, she isn't completely wedded to it.
"She's been supportive all along," said the aide. "Though if House Dems have serious problems, that could move her."
Reid spokesman Adam Jentleson said Senate Democrats would have
preferred to push off the sequester for longer than two months, but
Republicans wouldn't agree to that. The deal on the table is "what we
could get," he said. POST