No Dent Made in 4 Trillion Debt Increase in 10 Years

The legislation postpones for two months the deep federal spending cuts, known as the "sequester," that were a central worry of the "fiscal cliff." That delay could set up another fiscal cliff in late February, analysts said.
Corporate America has dedicated millions of dollars in recent months to lobbying lawmakers for deficit and debt reduction, seen as crucial to preserving the nation's credit standing and financial power. The legislation would do little on that.
NO 'TERRITORIAL' SYSTEM
The compromise also makes no mention of setting up a new method of taxing profits made offshore and brought into the country by U.S. multinational corporations. Many such businesses have been pushing for a "territorial system" that would let them bring foreign-earned profits home with little or no taxation.
The White House did note in its summary of the legislation that it left "substantial scope' for "reforming corporate taxes" and cutting the corporate tax rate to make it more competitive with the rate in other industrialized countries.
That had been a key goal of lobbyists.
Guggenheim Partners policy analyst Chris Krueger said the deal was "far above what was expected" for business.
He said, "On the deficit reduction side of things, it was clearly a miss, but I suspect they will take the short-term certainty with extenders over entitlement reform any day."
On the other side of the business tax fence, advocates of closing special loopholes that help certain industries had reason to be disappointed. The legislation contains no mention of ending key tax breaks for the oil and gas business, or for senior managers of private equity firms and hedge funds.
Also left out was a proposal once trumpeted by Obama, in a piece of political symbolism, to end accelerated depreciation of corporate jets. An Obama proposal to end last-in-first-out accounting, a cost-saving business accounting method, also was nowhere in sight.
Those omissions from the compromise plan mean much work remains for those wishing to overhaul the U.S. tax code. That is a project that may or may not materialize in 2013.
     The legislation contains a long list of tax "extenders," or temporary tax provisions that will be perpetuated for a year.
Some big-ticket items were part of that, including an extension through 2013 of the widely claimed research and development tax credit. Also included was a provision allowing businesses to write off immediately half the value of new investments, known as 50 percent bonus depreciation.
The legislation also includes a wide range of other favors for select industries, including tax breaks for railroad track maintenance, restaurant and retail store improvements, auto racetracks, film and television production, and rum production in Puerto Rico and the U.S. Virgin Islands.
WIND POWER BACKED
Numerous tax breaks for wind power production and other alternative energy technologies were also included.

 

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Washington (CNN) -- The House of Representatives voted Tuesday night to approve a Senate bill to avert a feared fiscal cliff.
The measure that sought to maintain tax cuts for most Americans but increase rates on the wealthy passed the Democratic-led Senate overwhelmingly early in the day.
There was discussion about amending the Senate bill by adding spending cuts, but in the end, House lawmakers voted on the bill as written -- a so-called up or down vote.
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The legislation would raise roughly $600 billion in new revenues over 10 years, according to various estimates.
"I'd say let's take the Senate deal, fight another day," Rep. Tom Cole, R-Oklahoma, told CNN before the House vote. He predicted the House would pass the bill with a "pretty strong bipartisan majority."
"I'm a very reluctant yes," said Rep. Nan Hayworth, an outgoing Republican representative from New York.
"This is the best we can do given the Senate and the White House sentiment at this point in time, and it is at least a partial victory for the American people," she said. "I'll take that at this point."
The timing of the vote was crucial, as a new Congress is set to be sworn in Thursday.
The legislation averted much of the fiscal cliff's negative near-term economic impact by extending the Bush-era tax cuts for the majority of Americans. It also extends long-term unemployment benefits that were set to expire.
Had the House not acted, and the tax cuts enacted last decade expired fully, broad tax increases would have kicked in, as would $110 billion in automatic cuts to domestic and military spending.