In an historic New Year’s Day session, the House of Representatives passed a bill that preserved Bush-era tax cuts for the middle class, but raised taxes on people making more than $400,000 a year.
The compromises also averts a 27 percent cut in reimbursement levels for doctors who treat Medicare patients, and fixes the “dairy cliff,” which analysts say could have sent milk prices soaring to $8 a gallon. The move raises $680 billion in new taxes.
But it doesn’t stop sequestration. Spending cuts of 10 percent across the board for most government programs were merely delayed for two months, giving rise to the promise of more money squabbles once the new Congress convenes Thursday.
“I recognize that this last-minute push to avoid the so-called fiscal cliff has been frustrating for the American people,” said U.S. Rep. Doug Lamborn, representative from Colorado Springs for District 5. “I share in that frustration. The House passed bills to avoid the fiscal cliff last year. We are only in this position now because Senate Democrats and President Obama failed to take any action for months. So tonight, the House is voting on a rushed bill that does not address the underlying cause of our nation’s fiscal problem: overspending.”
The spending cuts, now set to take effect in March, equal $110 billion in automatic cuts to domestic and military spending.
To some, the delay is the worst-case scenario.
Dan Stohr, spokesman for the Aerospace Industries Association, said that delaying the cuts – and letting them go into effect in their current form – would mean squeezing a year’s worth of cuts into a few months.
The risk is highest to the Department of Defense, he said. That’s because the DoD is set to take half the $1.2 trillion in cuts, about $53 billion a year.
“They might as well shut the place down,” he said.