Daily Independent (Ashland, KY)

January 2, 2013

State delegation split on cliff vote

McConnell: ‘Imperfect solution to prevent very real financial pain’

CNHI News Service

FRANKFORT — For at least the third time in as many years a national fiscal crisis was averted at the last minute by a deal cobbled together by Kentucky U.S. Sen. Mitch McConnell, R-Louisville, and Vice President Joe Biden.

The deal stopped automatic tax increases which would’ve taken place on Wednesday for 98 percent of the country’s taxpayers, raising taxes on those who make more than $400,000 a year, $450,000 for couples, and extending unemployment benefits for a year.

It is estimated to bring in about $620 billion in new federal revenues over 10 years. It puts off for two months draconian cuts in defense and domestic spending other than Social Security and Medicare, the so-called sequester, and it does not address increasing the nation’s debt limit to pay for spending already approved by Congress. Those deferred issues will likely foster yet another partisan fight in the next two months.

Payroll taxes, those dedicated for Social Security and Medicare, however will go back to levels of two years ago, an increase of roughly $1,000 a year for someone making $50,000 a year. Those taxes were temporarily cut 2 percent as part of the economic stimulus program.

The measure passed 89-8 in the Senate, with only five Republicans and three Democrats voting no. But it passed the Republican controlled House only with support from Democrats. The final tally was 256-167 with only 85 Republicans, including Speaker John Boehner, voting for the bill.

Kentucky’s delegation split on the deal. Sen. Rand Paul and Congressmen Brent Guthrie, Thomas Massie, and Ed Whitfield, all Republicans, voted against the measure. McConnell, Republican Rep. Hal Rogers and Democratic Representatives Ben Chandler and John Yarmuth voted for it.

McConnell called the deal “an imperfect solution to prevent very real financial pain.” Nevertheless, he said, “We’ve done some good for the country.”

While many predicted a harsh economic reaction if political leaders were unable to work out a compromise, the stock market reacted with a robust rally, up more than 300 points on the Dow Jones Stock Exchange at 4:30 p.m. EST Wednesday.

President Barack Obama and Boehner began right after the election negotiating ways to avert the automatic spending cuts and tax increases established earlier by Congress to force itself to come up with a solution.

But Boehner and Obama were unable to reach a deal and then Boehner failed last week to pass his “Plan B” in the House when he couldn’t secure a majority of Republican votes. At that point, Obama turned to McConnell and Senate Majority Leader Harry Reid, D-Nev.

But Sunday, Reid and Senate Democrats – who believed they had the greater political leverage and could pass their preferred tax package after the new Congress convenes later this week – declined to make a counter-offer to one McConnell had proposed.

Sunday night, McConnell called his former Senate colleague Biden, and according to national news stories and Senate staffers, the two worked feverishly through Monday morning to come up with the deal that ultimately passed.

It’s not the first time the two have worked out a compromise when Obama and House Republicans were unable to do so. They worked out deals in December 2010 to extend the tax cuts for two years and again in the summer of 2011 to raise the debt limit.

Even Yarmuth, the only Democrat in Kentucky’s congressional delegation who often criticizes McConnell, said McConnell and Biden should be commended for averting a crisis at the last minute.

“I think it’s very safe to say that without (McConnell and Biden) this deal would not have been done,” Yarmuth said. “So I do give McConnell credit.”

McConnell faced a couple of risks, Yarmuth said. First, if the measure failed in the House he would be “sticking his neck out (politically) for nothing.”

Secondly, Yarmuth said, McConnell risked the ire of tea party Republicans who generally are unhappy with the deal.

Indeed, Sarah Durand, president of the Louisville Tea Party, said, “The bill is terrible. We are very disappointed in what Sen. McConnell put together. It does nothing to cut spending.”

But Durand said McConnell “tried to step up and manage the crisis. I’m not happy with how he managed it, but I think it’s to his credit that he tried to manage it.”

Rogers, who voted for the measure, said the deal “saves nearly all Kentuckians from an immediate tax hike,” but he went on to say Congress must hold Obama to promises for a balanced approach of spending cuts as well as tax increases, including entitlement reform.

Yarmuth said he had been on record for some of the items in the measure, including a willingness to accept a $400,000 threshold for tax increases, higher than the $250,000 Obama campaigned on. He said he also favored extensions of unemployment benefits and the Earned Income Tax Credit and child credit.

In a statement released by his office, Paul said he appreciated efforts to protect taxpayers but doesn’t think the measure went far enough on taxes and contained no spending cuts.

“The combination of raising taxes and increasing spending is not in Americans’ best interest, and I could not, in good faith, support this piece of legislation,” Paul said.

Guthrie released his own statement saying the measure wasn’t balanced because it did not include immediate spending cuts.

RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.