The term "fiscal cliff" became part of the national jargon suddenly in the waning days of fall, 2012. It was hyped into a feverish pitch from Halloween through Christmas, nearly as much as the vaunted Mayan Calendar end of the world scenario. Without action, Americans were told, the economic world as we know it would end.
Then, in the wee hours of January 1, 2013, Senate leaders reached agreement on legislation designed to avert the so-called "fiscal cliff." That agreement has now been approved by the House by a 257 to 167 vote.
According to The Washington Post the measure "would let the top tax rate rise immediately from 35 percent to 39.6 percent on income over $450,000 for married couples and $400,000 for single people."
Although the bill passed will protect middle income families from an increase in income taxes, the legislation passed Tuesday night will not stave off an increase in payroll taxes. A 2 percent payroll tax cut passed during the economic downturn expired Dec. 31.
According to Bloomberg the average increase would be $1,635. The increase will impact approximately 80 percent of households with incomes between $50,000 and $200,000, Bloomberg reported.
The Senate had previously passed the package by an 89-9 vote. While both of Georgia's Republican senators - Saxby Chambliss and Johnny Isakson - voted for the bill, each of the state's eight GOP congressmen voted against it when it was sent to the House.
Of Georgia's five Democratic congressmen, three voted yes, while Rep. John Lewis did not vote as he returned to Atlanta following the passing of his wife, Lillian, on Monday.
Some highlights of the so-called McConnell-Biden plan:
- The payroll tax rate, which is used to fund Social Security, will rise to 6.2 percent from 4.2 percent. For a worker making $30,000 annually, that would mean about $50 less monthly in take-home pay.
- Extends tax cuts in the 2009 stimulus act for five years, including a child tax credit, and an expanded earned income credit.
- Federal unemployment insurance would be extended for a year for 2 million people.
The entire Senate bill can be reviewed here.
The New York Times reported that the debt limit was not part of the deal. The country officially hit its debt limit Monday, and the Treasury reportedly is undertaking “extraordinary measures” to put off default.
- Patch contributor Alex Keown contributed to this story