House Republicans reject Cliff deal but it passes anyway

The deal to avoid the fiscal cliff is done as the House passed the Senate version in a late night session on Tuesday.

The vote was 257-167. The fact that only 85 Republicans (out of 241) supported the deal calls into question Speaker Boehner's leadership in the next congress, although it is doubtful anyone has the fortitude - or the stature - to challenge him. All but 20 Democrats voted for the bill.

Gone is the payroll tax holiday, which means 77% of American households will experience a tax increase in the new year. Taxes on dividends and capital gains go up for those making over $400,000 ($450,000 for families) while the estate tax now has a $5 million exemption. The rates for the rich climb t0 39.6%.

The deal also rescinded the pay raise granted Congress by an Obama executive order.

The measure also will keep benefits flowing to 2 million unemployed workers on the verge of losing their federal checks. And it will delay for two months automatic cuts to the Pentagon and other agencies that had been set to take effect Wednesday.

Many economists had warned that the scheduled tax increases and spending cuts would have plunged the economy back into recession.

Conservatives complained bitterly that the legislation would raise taxes without making any significant cuts in government spending. For much of the day, the measure appeared headed for defeat as Boehner contemplated tacking on billions in spending cuts, a move that would have derailed a compromise that the White House and Senate leaders had carefully crafted.

In the end, GOP lawmakers decided not to take a gamble that could force the nation to face historic tax increases for virtually every American - and leave House Republicans to take the blame.

"I don't know if playing chicken with the American people at this point is in the best interest of the people," said freshman Rep. Lou Barletta (R-Pa.).

Read carefully what Obama says about the deal:

In a brief statement, Obama praised congressional leaders for advancing the legislation, which he said would produce $620 billion in new tax revenue. "But I think we all recognize this law is just one step in the broader effort to strengthen our economy and broaden opportunity for everybody," he said, noting that the fight over the budget will continue when the new Congress faces the imposition of sequestration cuts in just two months.

Not a word about cutting the deficit, but that new revenue will "broaden opportunity" for all. He's already got it spent.

AT's political correspondent Rich Baehr, appearing on my radio show last night, believes the deal is not all bad. By maintaining the lower rate on investment income and the estate tax, as well as keeping tax rates where they are for most of the country, he believes the GOP won a significant victory in that regard.

Perhaps. But to my way of thinking, a very important principle was lost. We have deficits not because taxes are too low but because spending is too high. It would have been far better to cut every last dollar possible from the budget before anyone even thought of raising taxes on anybody. Congress has now put itself on record that raising taxes to deal with our huge deficits is the preferred method of dealing with the problem. I find it disquieting and feel a foreboding for the future.

Update from Thomas Lifson:

Richard Baehr focuses on the lipstick (he's right that the limitation on investment income tax increases prevented a worse catastrophe for the economy), but William Jacobson of Legal Insurrection looks straight at the pig itelf:

The "fiscal cliff" was mishandled from day one.  There was a lack of strategy and the tactics could not make up for that.

To borrow Kurt Schlichter's phrase:

a skilled lawyer understands the awesome power of being the craziest, most unreasonable and scariest guy at the table.

That guy was Obama, contrary to what the media and Democrats told you.

Obama insisted he was willing to go over the cliff, we insisted we weren't.  He won, we lost.

The Republican leadership failed miserably.

Boehner, whose speakersip is on the line today, is a lousy spokesman for the opposition, and plays a game of incrementalism within the narrative framework established by the progressives. He plays their game, instead of insisting that the ground rules themselves be changed, that the narrative is flawed, a con job foisted upon the public by the media and the Democreats.

I think that the conservative base is hungering for a spokesman who can offer a convincing counter-framework, and steadfastly expose the falsehoods, the self-serving greed (for example, the Hollywood tax giveaways in the cliff legislation), and the consequences of the game as defined by the progressive media-political system. President Reagan showed us how to do it. The media are deeply unpopular and mistrusted. But someone like Boehner is not going to be able to change the narrative.