Fiscal cliff avoided, Obama resumes Hawaii vacation - Hawaii News Now - KGMB and KHNL

Fiscal cliff avoided, Obama resumes Hawaii vacation

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Congress finished passing legislation to avoid the worst effects of the fiscal cliff on Tuesday night, and President Obama landed at Joint Base Pearl Harbor-Hickam in Honolulu early Wednesday morning, rejoining his family and resuming his holiday vacation. 

The House voted 257-167 to pass the package - after the Senate earlier voted 89-8 for the plan that largely negotiated on the Senate side. House Majority Leader Eric Cantor, seen as a rival to House Speaker John Boehner, was among those voting no.

Hundreds of thousands of Hawaii households will be affected by what is and isn't in the bill, mostly by seeing more money withheld from their paychecks, the deal having failed to block expiration of lower payroll taxes. The impact is roughly $1,000 a year for someone making $50,000 a year, which will vanish through increased withholding.

It extended or made permanent the Bush income tax rate cuts for all taxable income up to $400,000 for individual filers or $450,000 for couples filing jointly. For taxable income above those levels, tax rates return to their pre-Bush levels.

"I will sign a law that raises taxes on the wealthiest 2% of Americans," President Obama said, "while preventing a middle class tax hike that could have sent the economy back into recession."

Obama went straight from a White House news conference to Marine One, the helicopter taking him to Andrews Air Force Base for a redeye flight to Hickam.

There were concessions on the estate tax benefiting high net worth individuals. Instead of rising from 35% to 55%, had their been a cliff plunge, it rises to 40% with the first $5 million of property entirely exempt.

The deal prevented the expiration of extended jobless benefits, affecting 2 million Americans nationwide who have exhausted their regular unemployment benefits but are still out of work. In Hawaii, during the most recent reporting week, 11,617 people filed claims for unemployment checks, most of them still within the timeline of regular benefits.

The deal also prevented a reduction in Medicare compensation paid to doctors and other health care givers. Hawaii doctors and hospital officials had warned that this would create financial pressures.

The federal renewable energy tax credit was extended for one more year - an important development for Hawaii as the state considers closing a loophole that effectively doubled the state credit for solar power systems - and the "dairy cliff" jump in milk prices was prevented by extension of dairy subsidies.

Both houses canceled their own pay raises.

The bill avoided the draconian spending cuts that would otherwise have been triggered by the fiscal cliff legislation Congress earlier enacted, but it did not solve partisan disagreements over how much to cut and where. Thus the bill does not reduce the deficit at all, and indeed the Congressional Budget Office estimated that it would increase the deficit by $329 billion in 2013 alone if Congress does not follow up with spending reductions. It also extrapolated that out for years, but lawmakers made it plain they were delaying spending cuts for only a short time.

This means federal spending in Hawaii and other states, from military staffing to national parks to Coast Guard operations to environmental protection will all be reviewed, with fiscal pressure to find ways to cut back, in coming months.

The deal also did not address the even more immediate issue of the federal debt ceiling, and Treasury Secretary Tim Geithner told Congress just before Christmas that the government will run out of borrowing authority in about two months even if shuffles accounts. The exclusion of this matter from the fiscal cliff deal was seen as a victory for Republicans, who can continue to oppose raising the debt ceiling to gain leverage in calls for entitlement cuts.

President Obama mentioned that in White House remarks Tuesday night. "While I will negotiate over many things," he said, "I will not have another debate with this Congress about whether or not they should pay the bills they have already racked up."

The new Congress convenes Thursday.

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