It is far from perfect, but the compromise approved by Congress to head off middle class tax increases and delay arbitrary spending cuts achieves some significant results. The bipartisan legislation avoids the damage that would have been done to the recovering economy if Washington had failed to act. It breaks the Republican antitax fever that has paralyzed the capital for years and resulted in the disastrous combination of cutting taxes and fighting two wars without additional revenue. And it offers a glimmer of hope that if mainstream Democrats and Republicans can compromise once, they can do it again.
President Barack Obama was right to push for the New Year's Day deal, however flawed, and he can claim some significant accomplishments. Tax rates will return to the 1990s levels for single taxpayers with incomes above $400,000 and couples with incomes above $450,000. The capital gains tax rate for those taxpayers also will rise to what it was under President Bill Clinton. But 98 percent of all families and 97 percent of small businesses will see no income tax increase. For once, the income tax code will become a bit more progressive.
There are other positives as well. Extended unemployment benefits will continue for another year, which helps 2 million long-term unemployed stay afloat while looking for work as the economy creates more jobs. Other important tax credits such as those that offset college costs will remain in place, and there finally is a permanent fix to the Alternative Minimum Tax that has required annual patches to spare middle class families. The 2 percent payroll tax cut expires for everyone, but that was always a temporary cut aimed at helping the nation get through the worst of the recession.
Yet this legislation is far from satisfying. It raises $620 billion in new revenue over 10 years, but that hardly makes a dent in the federal deficit. Instead of adopting meaningful spending cuts, the deep arbitrary cuts that would have taken affect this week are just delayed for two months. Congress also put off until no later than March dealing with raising the debt ceiling, which limits how much the government can borrow to pay existing bills. The result will be another manufactured crisis and another showdown between Obama and congressional Republicans when what is really needed is a long-term solution. That will require a combination of more revenue, spending cuts and entitlement reform that will require more compromise from both Democrats and Republicans.
The New Year's Day antics offer little hope for a grand bargain. Vice President Joe Biden and Senate Minority Leader Mitch McConnell deserve credit for negotiating the last-minute compromise. But House Speaker John Boehner is unable to lead his Republican members to the middle, and there remain too many conservative Republicans in too many safe districts who cling to the rigid antitax, antigovernment ideology. They include Tampa Bay Republican Reps. Gus Bilirakis of Palm Harbor, Richard Nugent of Brooksville and Dennis Ross of Lakeland. They voted against the compromise, which would have let the nation fall off the fiscal cliff and harmed Florida's economic recovery. Rep. C.W. Bill Young, R-Indian Shores, acted more responsibly and voted for the legislation.
Particularly disappointing but not surprising was Republican Sen. Marco Rubio's vote against the bill. If House Budget Committee Chairman Paul Ryan, R-Wis., Mitt Romney's running mate, could vote for the package, Rubio should have been able to do the same. Rubio was one of only eight senators to vote against the legislation, and a politician with higher aspirations should have risen to the occasion rather than hide behind empty rhetoric.
This was an avoidable crisis, and a compromise was reached only when time had run out and Obama had backed congressional Republicans into a corner. Let's hope the same scenario doesn't play out again in March, when another deadline could force another short-term compromise that fails to address the nation's long-term fiscal challenges.