January 2, 2013

Dear friends,

The country found itself, on the eve of the New Year, exactly where I feared we would be: peering over the fiscal cliff and considering an agreement that addressed only certain aspects of our fiscal problems. The more difficult fights were being put off for another day.

In the early morning hours of January 1st, the House received a Motion to Concur in the Senate Amendments to H.R. 8: American Taxpayer Relief Act of 2012, which was the agreement reached in the Senate on New Year’s Eve. It passed in the House very late last night.

This bill addresses only the tax portions of the so-called fiscal cliff. It delays implementation of the draconian sequester cuts for two months and does not address the debt ceiling issue.

I am very disappointed that a more comprehensive and balanced agreement could not be reached and I am concerned about how future negotiations over spending will play out. I recognize however, that inaction on the fiscal cliff poses a great risk to our economy. Because of that reality, I voted in favor of the Senate bill.

I believe that President Obama shares my general vision for America and our society. When Vice President Biden briefed the Democratic Caucus yesterday on how the agreement had evolved, he expressed confidence that this deal improves our future negotiating position. I have serious concerns that this assessment is incorrect, but there is no way I can be certain of these doubts. Furthermore, the President is our lead negotiator and, without such certainty on my part, I think he deserves the benefit of the doubt on issues of judgment. I hope his assessment turns out to be correct.

It was unclear throughout much of yesterday if there would be enough votes in the House to pass the Senate bill. Many Republicans were demanding that deep spending cuts be added to the bill and as evening approached, it seemed as if the House would amend the bill and send it back to the Senate. Since today is the last day of the 112th Congress, that would have effectively ended action on that particular package until the new Congress convenes.

By early evening, enough Members on both sides of the aisle reconciled themselves to the reality facing the House: delayed action or inaction would impact the budgets of all American and the health of our economy.

The Senate agreement permanently preserves the Bush tax cuts for 98% of taxpayers. Individuals making less than $400,000 and couples making less than $450,000 will not see those tax cuts expire. All income above that level will be taxed at the 39.6% rate in place during the 1990’s.

The agreement also preserves a number of provisions such as an expanded Child Tax Credit and the marriage penalty fix. It permanently updates the Alternative Minimum Tax, which has impacted more and more middle class families over the years. It also extends expansions of the Earned Income Tax Credit and a tax credit that helps families with college tuition costs. All of these tax credits were in danger of expiring, which could have resulted in taxes going up for 25 million families and students.

The bill extends Emergency Unemployment Insurance benefits for one year. Too many people are still looking for work and were facing the prospect of losing benefits this month. Now they have a small measure of security as they seek employment. The bill also returns the capital gains tax rate to 1990’s levels and increases the estate tax.

I think we will need more revenue than this bill generates to sustain our way of life, including Medicare, Social Security, first rate infrastructure, the world’s best military and all the other government funded programs we have come to take for granted. In fact, Vice President Biden stated the same fact on Tuesday. But that will now become part of the debates as we consider other issues.

In the end, with all my concerns, I voted YES because it was this or nothing. The legislation passed and the entire vote is recorded below:

I did not vote to create the budget approach that made the fiscal cliff a possibility, but I certainly hoped it would work as intended. I hoped it would force Congress to finally decide what type of society we want for America, one that holds together and pays our bills, or one that lives for the moment and leaves our children to pay our bills. Last night, that debate was delayed again.

A new session of Congress, the 113th Congress, convenes tomorrow with 89 new Members. Together we will face many challenges, particularly in terms of the economy. Almost all of the Republicans who voted against the compromise yesterday will be returning to Congress, voting on the debt ceiling, sequestration and more. I hope they will be more thoughtful in the new Congress.

I wish you a happy and healthy New Year, and I thank you for your continued support and interest in this newsletter.

Best,