As revelers in Times Square and cities and towns across the country wait for the ball to drop to ring in the new year, politicians in Washington have announced that a ball is not likely to drop on the average taxpayer. Negotiators have come to an agreement on the so-called "fiscal cliff" - and with less than three hours to spare, CBS News has confirmed.
Vice President Joe Biden traveled to Capitol Hill to brief Senate Democrats on the details of the deal; both Senate Majority Leader Harry Reid, D-Nev., and House Minority Leader Nancy Pelosi, D-Calif., have signed off on the agreement, White House and congressional sources told CBS News' Chief White House Correspondent Major Garrett.
Now that lawmakers have settled on a deal, it's unclear when the Senate will vote but it's expected that if it passes, the House will vote tomorrow at the earliest.
What this means is that although the country will technically go over the "cliff" at midnight, the agreement - if passed by both houses of Congress - guarantees any detrimental impact from the "cliff" will be avoided, even if a vote happens after midnight, as language will likely be added to the final legislation that would make the changes retroactive.
Here are the known details of the deal:
- Tax rates: current tax rates will be extended for all wage earners making below $400,000 and couples making below $450,000.
- This was a key concession for both Republicans and Democrats. Democrats wanted the threshold for tax increases to rest at $250,000 and Republicans didn't want marginal tax rates to increase for anyone.
- The automatic spending cuts under the sequester will be delayed for two months. The cost of continuing current federal spending levels will be offset by revenue increases and some spending cuts. The spending cuts will come half from defense and half non-defense accounts.
- The two-month window is to allow Congress and the White House to come up with a larger deal on spending cuts, leading to another (though smaller) "fiscal cliff." Democrats see this deal as a victory because Republicans had objected to using any new tax revenue to offset the loss of sequester spending cuts, reports Garrett.
- The estate tax: it was set to increase from rom 35 percent to 55 percent in 2013. Instead, the compromise sets the new rate at 40 percent with the first $5 million worth of property exempt from being taxed.
- Capital gains tax: Capital gains and dividend tax rates will increase from 15 to 20 percent.
- Alternative Minimum Tax: a permanent fix to the tax that would hit middle class families
- "Doc Fix": doctors will be shielded from a massive reimbursement gap for treating Medicare patients.
- Unemployment benefits: unemployed workers will receive their benefits which expired over the weekend.
- Renewable energy tax credit: the tax credit for renewable energy companies will be extended for another year.