The House joined the Senate in avoiding the fiscal cliff when it passed the Tax Relief Extension Act late Tuesday evening by a vote of 257 to 167.
The legislation keeps the Bush era tax cuts for individuals making less than $400,000 and couples making less than $450,000 a year. That means the rate on the wealthiest Americans will go back up to 39.6 percent. The capital gains and dividend tax rate will increase from 15 percent to 20 percent.
The legislation passed the U.S. Senate on an 89-8 vote early Tuesday morning.
The bill, which President Barack Obama said he would sign, also extends federal unemployment insurance for 2 million Americans, including 43,000 in Connecticut who would have lost their emergency unemployment benefits if Congress failed to act. The deal brokered by Senate Minority Leader Mitch McConnell of Kentucky and Vice President Joe Biden also extends the Child Tax credit, Earned Income Tax Credit, and the president’s new American Opportunity Tax credit, which helps families pay for college. The agreement also increases the estate tax rate from 35 to 40 percent on estates worth more than $5 million.
In addition to extending middle class tax cuts, the agreement also avoids the 27 percent cut to reimbursements for doctors accepting Medicare patients in 2013. Click here to read more about that issue.
But it delays some harder decisions about spending cuts for a few months.
The agreement saves $24 billion — half in revenue and half from spending cuts evenly divided between defense and nondefense — in order to delay the sequester for two months, according to White House officials. This will give Congress time to work on a plan to end the sequester permanently through a combination of additional revenue and spending cuts in a balanced manner.
U.S. Rep. Joseph Courtney voted in favor of the deal to avoid the cliff, but is well aware of what sequestration would mean for the state of Connecticut and its defense industry.
“Having spent months calling for a big, balanced approach to prevent sequestration, I am pleased that across-the-board cuts have been postponed for the time being, but it is only a temporary reprieve,” Courtney said. “Now it is time for people of good faith to come together, show Congress can work, and restore the American people’s faith in their government.”
In a statement earlier Tuesday, Blumenthal said he’s “frustrated and unhappy that we couldn’t reach a better solution much sooner, but this deal is better than no deal at all.”
Meanwhile, Blumenthal, like Courtney, already seemed to be preparing for an even tougher fight in the new year.
“Also important, it avoids for now, slashing arbitrary spending cuts that would particularly damage defense spending, endangering our national security, and Connecticut’s defense industry jobs,” Blumenthal said.
Four of Connecticut’s five U.S. House members and two U.S. Senators voted in favor of the deal. Congresswoman Rosa DeLauro voted against the bill, and later Tweeted that she did so because it didn’t go far enough: “Reluctantly voted no on #ficsalcliff. Needed to do more to prioritize middle, working class. Had some good but not enough.”
Click here to read more about why DeLauro voted against the deal.