A look at the what the Senate fiscal compromise will mean - 1/2/2012
The Senate compromise on the so-called "fiscal cliff" will in many ways act as a band aid passing a number of issues created by the current Congress onto the next Congress. The massive spending cuts, known as the "sequester," will be delayed for two months. In order to cover some of the costs there will be discretionary cuts in both defense and welfare programs. The payroll tax holiday will expire resulting in a two percent increase in payroll taxes. The debt ceiling wasn't touched at all in the fiscal patch. A farm bill that had long been languishing in Congress will see a nine month extension. If that bill had not been pushed through milk prices could have doubled or tripled in 2013 with some regions of the country paying as much as $8 per gallon.
The bill failed to include disaster-relief funds for those still recovering from the impact of Superstorm Sandy. It also doesn't solve the issue of spending cuts creating what will undoubtedly be a second fiscal cliff in early March.
Some of the other changes include the estate tax being raised to $40 percent for those above the $400,000 threshold, but also includes an exemption of $5 million. The capital gains tax will be set at 20 percent for those earning more than $400,000. The Bush era tax cuts were made permanent for any families with income below $400,000 and Individuals under $450,000. Tax rates above that amount will revert to Clinton-era tax rates.
Three Democrats broke ranks and voted against the Senate compromise. Iowa Sen. Tom Harkin said the bill benefited the wealthiest Americans on the backs of the poor.