No Fiscal Cliff Resolution in Sight; House Again Slashes Funding for Social Service Programs and Congress Recesses Until After Christmas

Less than two weeks remain before the federal government reaches the fiscal cliff and Congress and the President are still far from reaching a settlement.  Each side has inched closer to the other with respect to income taxes.  President Obama’s most recent proposal included an extension of the expiring income tax cuts for those making up to $400,000 (up from his prior stance of $250,000).  Meanwhile House Speaker John Boehner (R-OH) countered by suggesting they be extended for those making up to $1 million in his Plan B proposal.  Note that the Senate has already passed legislation this year that would extend the tax cuts for those making up to $250,000 year.  The Boehner offer, while rejected by the President, is significant in that it is the first time House Republican leadership has publicly supported allowing the tax cuts to expire for anyone.   Still, both sides remain far apart on income taxes as well as on whether to cut entitlements, what to do about sequestration, and how to deal with another increase to the debt ceiling due for early 2013.

Absent an agreement with the White House, Boehner attempted to bring his Plan B proposal up for a vote in the House along with an updated version of the sequestration replacement bill authored by Paul Ryan (R-WI) and passed by the House in May that would replace the pending across-the-board cuts to defense programs with further cuts to non-defense, domestic programs.  Lacking the votes to pass Boehner’s tax cut extension, that bill was pulled from the Floor late Thursday night.  The sequestration replacement bill, however, passed along party lines by a 215-209 margin.  That bill includes billions of dollars in cuts to SNAP (food stamps) and Medicaid while also eliminating the Social Services Block Grant, a critical funding source for child welfare programs.  President Obama has threatened a veto and the Senate has repeatedly refused to take it up, but it is disconcerting at this late juncture that the House is still targeting these important social service programs.

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