Partial Fiscal Cliff Deal Enacted; Paves the Way for Another Showdown

After weeks of tense negotiations, both the Senate and House passed a measure to address the series of harmful tax increases and spending cuts that had been set to take effect today. Most of the tax cuts that had been scheduled to take effect have now been permanently extended, while the automatic spending cuts (originally $1.2 trillion over 10 years) for discretionary programs have been slightly reduced and put off for a two month period. President Obama is expected to sign the bill as soon as it is presented to him.

The measure represents a partial victory for both the Obama Administration and House Republicans who have been at odds over tax increases and spending cuts to entitlement programs in order to reduce federal deficits.   The law will bring in only about $750 billion in new tax revenue over the next decade, rather than the $1.6 trillion sought by The Obama Administration.   Meanwhile, House Republicans succeeded in raising the threshold on household incomes to $450,000 that will see a tax increase rather than the $250,000 that the Obama Administration wanted.

While the newly passed legislation does not include any cuts in benefits for the entitlement programs, this issue is expected to take center stage in the coming weeks as it becomes a bargaining chip in the upcoming debt ceiling negotiations.   In the first three months of 2013, additional legislation will be necessary to address other aspects of the nation’s fiscal situation, including an increase in the debt ceiling, the end of the 2-month extension of the sequester (automatic cuts), and appropriations for the remainder of Fiscal Year 2013.  These deadlines will set the stage for additional negotiations between the Congress and the White House.  There will be mounting pressure to generate additional revenue and to cut the entitlement programs (Social Security, Medicaid, and Medicare) as well as the discretionary programs (such as housing, education, employment) that people with intellectual and developmental disabilities rely on to live in the community. The Arc will remain actively involved in seeking a balanced approach to deficit reduction by advocating for increased revenue and protecting critical spending programs for our constituents.

Learn more about the fiscal cliff deal at the Center on Budget and Policy Priorities website http://www.cbpp.org/ and view The Arc statement on our blog.