Capitol to Capitol
An Information Service of NCSL's Standing Committees

Volume 19   Issue 35 - December 20, 2012


Negotiations to avert the fiscal cliff have narrowed as the stalemate reaches the final stages. Less than two weeks remain until an assortment of tax cuts sunset and spending cuts commence. After meeting with Speaker John Boehner earlier in the week, President Obama offered a new plan to avoid the cliff and achieve debt savings. This proposal would reduce the deficit by more than $2 trillion, including $200 billion in cuts to discretionary spending, $400 billion in health care cuts and more than $225 billion for a less generous cost-of-living calculation for Social Security and other benefit programs. The president lowered his revenue projection to $1.2 trillion, extending the marginal tax rates for all households besides those making $400,000 or more. The plan would make permanent the expiring tax extenders, including the alternative minimum tax, and would eliminate sequestration “except in select areas.” The president remained firm in his desire to include $80 billion in new spending for infrastructure and extending federal unemployment benefits. In response, Speaker Boehner offered a “plan b,” which proposes to extend marginal tax rates for all taxpayers who earn less than $1 million a year. This option (H.J. Res. 66) would also retain the current estate tax parameters and ensure more taxpayers are not affected by the alternative minimum tax. The House also will vote on a second measure (H.R. 6684), which is targeted at eliminating sequestration and instead reducing the current discretionary cap on FY 2013 by $19 billion and achieving more than $300 billion in savings over 10 years from mandatory programs. Both of these votes are expected to occur today. As information is made available, NCSL will provide updates at: NCSL staff contacts: Michael Bird, Jeff Hurley


The Senate has votes scheduled for today on legislation that would address some of the response and recovery funds sought by states affected by Hurricane Sandy. H.R. 1 is the legislative vehicle and it contains $60.4 billion sought by the administration as laid out in a 77-page Office of Management and Budget document. That document is available at: Obstacles abound. First, some Senate Republicans prefer a package less than half the requested amount. Second, the administration’s request includes approximately $13 billion in longer-term mitigation funding that is frequently sought separately after initial emergency funding is provided. Some members have balked at its inclusion. Third, the request already has stirred debate about whether all or some of the funding sought should be offset with spending reductions in other parts of the federal budget. Finally, the pending “fiscal cliff” is obscuring action on virtually any other major issue. NCSL staff contacts: Michael Bird, Jeff Hurley (appropriations generally), Susan Parnas Frederick (disaster assistance)


In the background of the fiscal cliff negotiations is how to handle the federal government’s impending brush with the debt limit. The current statutory debt limit, which is just under $16.4 trillion, is expected to be breached in late December. The Department of Treasury, however, has affirmed it can use “extraordinary measures” to avoid a federal default until February 2013. The last debt limit battle resulted in a tense debate between the administration and Congress that resulted in the passage of the Budget Control Act. The president has insisted on increasing the debt limit for two years as part of a fiscal cliff "deal." Speaker Boehner has offered one year. Along the way, the president has suggested giving the executive branch authority to increase the ceiling unless negated by a congressional vote. Some Republicans have insisted on postponing the debt ceiling conversation for Sandy and using it as a tool or extracting additional spending cuts. Stay tuned. NCSL staff contacts: Michael Bird, Jeff Hurley