Congress Opens Parachute, As Nation Teeters on Edge of “Fiscal Cliff”
Like a kid pleading for an extension on a term paper that was due the day before yesterday, the United States House of Representatives finally voted late Tuesday night on a deal designed to prevent big tax increases and huge spending cuts from taking effect — a bill that keeps the entire nation from plunging to the bottom of the so-called “fiscal cliff.”
By a vote of 257 to 167, the House okayed a bill that the U.S. Senate approved in the wee hours of New Year’s Day.
Had the House not approved the deal, all Americans – including your parents – would have faced big tax increases, effective immediately.
And government programs would have faced big spending cuts – including the U.S. Defense Department, which is in charge of the Armed Forces.
(To find out how we got into this mess in the first place, click on the STORY ARCHIVE section of this website and check out a story called “What’s a Fiscal Cliff? And What Happens if We Fall Off?”)
By passing the bill, Congress prevented tax increases for individuals who earn less than $400,000 a year — and couples who earn less than $450,000.
Many Congressional Republicans strongly objected to tax increases for anyone – including the richest Americans.
They also claimed that the bill included almost no cuts at all in government spending – cuts they’ve repeatedly called for, in order to balance the federal budget.
But by rejecting the deal, they would have increased everyone’s taxes.
And when they faced that reality, enough Republicans finally decided to support it.
“We need to avert the fiscal cliff,” New York Congressman Tom Reed said Tuesday night, according to the Wall Street Journal. “We need to wrap this up in this Congress.”
If the House had not voted on the bill before Thursday, it would have died, because the current session of Congress is about to end.
And had it died, all those tax increases and spending cuts would have begun to take effect.
Why did so many people consider it so urgent for Congress to approve the deal?
Because many financial experts have warned that the tax increases and program cuts that would have taken effect were likely to plunge the nation back into another economic recession – the same problems President Obama inherited from President Bush four years ago.
Why another recession?
Because people who have to spend more on taxes are likely to spend less on other things – clothes, food, vacations and everything else.
In addition, millions of unemployed Americans would have lost their jobless benefits – money that keeps them from running out of cash while they’re looking for work.
So they would have had next to nothing to spend.
And if people don’t have money to spend, companies don’t get the money they need to pay their workers.
So many experts predicted a new round of job cuts if Congress didn’t approve the deal – cuts that would have put even more people out of work.
And that would have crippled the economy even further.
The deal approved by Congress grants a one-year extension on unemployment benefits to approximately two million Americans, according to the Associated Press.
It also includes a provision to prevent a major increase in milk prices – an increase that had been scheduled to take effect at the beginning of this year.
And it extends many tax breaks for middle-class families, including families with kids and families that are putting a kid through college.
(A “tax break” means your tax bill is cut by a certain amount.)
President Obama was expected to sign the bill right after the House approved it.
On New Year’s Eve, he called out Congress for once again waiting until the last minute to take care of its business.
“One thing we can count on with respect to this Congress is that if there’s even one second left before you have to do what you’re supposed to do, they will use that last second,” Mister Obama said.