In the wee hours of 2013, members of the Senate overwhelmingly passed their version of a fiscal cliff deal. It would increase income, capital gains and dividend taxes on individuals making more than $400,000 a year.
The payroll tax cut almost all of us have enjoyed for the past two years is also gone. On those automatic spending cuts, the compromise buys a little bit of time — only about two months, and they will be looming again, right about the same time lawmakers are forced to grapple with raising the U.S. national debt ceiling.
The deal dispenses with some of the other immediate issues tied up with the fiscal cliff: the alternative minimum tax goes away; expanded child tax credits and earned income tax credits are preserved. President Obama said he regretted that now was not the time for the “grand bargain” on deficit cutting that had once seemed within reach.
The latest is that the House will convene this afternoon, but it is not clear yet what members will be considering. Speaker John Boehner has notably not said that he endorses the Senate bill or promised the chamber will vote on it in its current form.
Markets around the world are closed today for New Year’s. Yesterday, some 10 hours before the Senate passed the fiscal cliff compromise, the S&P 500 closed up 1.7 percent on hopes of a deal. The Dow Industrials ended the year up more than 7 percent. That marks four years of gains for the Dow.
The fiscal cliff was hardly the only important deadline today in Washington. Today’s the day for the Secretary of Health and Human Services to tell states whether their plans for health insurance exchanges pass muster.
These are the new insurance marketplaces provided for under Obamacare. In the end, 24 states and the District of Columbia have applied to set up exchanges. Consumers in the rest of the states can use a single, federally maintained exchange to help find coverage when the insurance mandate goes into effect a year from today. Oregon is one state that’s been near the head of the pack in setting up its exchange.
And finally, we have just a moment to note one passing from last year: Korean pop star Psy announced last night on Dick Clark’s New Years Rockin’ Eve that aside from a few already scheduled performances, he is retiring “Gangnam Style.” It was arguably the year’s most popular song but it became, in Psy’s words, “too popular,” and he needs to do something new. Gangnam Style, we’ll always have 2012.