After weeks of uncertainty, bluffing and posturing in Washington D.C., the Senate voted in the early hours of Tuesday morning to avoid the "fiscal cliff" of tax increases and spending cuts. However, the fiscal bargaining is far from over and more budget drama is likely on the way.
The deal brokered by Vice President Joe Biden and Senate Republican Leader Sen. Mitch McConnell of Kentucky would raise income taxes on single earners with annual incomes above $400,000 and married couples with incomes above $450,000.
The measure will now be turned over to the House, which needs to give its backing and will hold a session on Tuesday starting at noon.
House Speaker John Boehner -- the top Republican in Congress -- said the House would consider the Senate deal. But he left open the possibility of the House amending the Senate bill, which would spark another round of legislating.
"The House will honor its commitment to consider the Senate agreement if it is passed. Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members ... have been able to review the legislation," Boehner and other House Republican leaders said in a statement.
Although the Senate agreed at the last minute to avert broader tax increases, the very idea of a "deadline" has lost some of its meaning since each budget deal seems to be merely a prelude to another fixed date when some critically important action must be taken - next up: Congress will have to decide what to do about the "sequester" spending cuts which will come up again in February, as well as decide in March on whether to increase the federal borrowing limit.
Congress is also set to embark on fundamental tax reform legislation in the New Year - as Obama himself seemed to acknowledge Monday when he said he's intent on "doing some more work to reform our tax code so that wealthy individuals, the biggest corporations can't take advantage of loopholes and deductions... that aren't available to most Americans. So there's still more work to be done in the tax code to make it fair...."
The indecision over taxes, spending, and borrowing has become chronic, in part a reflection of the fact that neither party controls both the executive and legislative branches. Ever since the Republicans won the House in 2010, the intermittent rounds of bargaining between GOP congressional leaders and Obama have run aground over the fundamentals: the future cost of the entitlement programs -- especially Medicare -- and who should bear the burden of paying for their growth.
The two sides' clashing definitions of "fairness" make it hard for them to decide who should be paying a bigger tax bill.
And while tax revenues have been increasing - they're up 10 percent in the first two months of fiscal year 2013 even under the current tax law -- the increase, even if it is sustained, won't be enough to pay for future benefits that have been promised.
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