Fiscal cliff deal changed little, professor says

Jan. 05, 2013 @ 05:45 PM

The "fiscal cliff" dominated the news for the past few months. Legislators voted on a deal after their Dec. 31 deadline. 

Local representative Larry Kissell, D-8, voted for the bill and Sue Myrick, R-9, voted against the bill which averted the looming tax increases and budget cuts. Senators Kay Hagan, D-NC, and Richard Burr, R-NC, voted in favor of the Senate bill. 

The bill prevented middle class taxes from rising and raised taxes on individuals making more than $400,000 a year and families making more than $450,000 a year. It also prevented cuts to Medicare and extended unemployment insurance. While many tax deductions remained, the payroll tax holiday ended.

The bill delayed proposed government cuts for two months.

"Basically, there isn't a whole lot that has changed," Joseph Ellis, a political science professor at Wingate University, said. "In reality, in two months with the argument over the debt ceiling, we will face more discussion about things being cut or not cut or kept."

While income tax did not go up for the middle class, they will see an increase in the payroll tax. 

"That's something that a lot of people will see some small different in their paycheck. A small difference, (but) none the less," Ellis said. "Once again, it's a holiday."

The payroll tax was not the crux of the negotiations, Ellis said. 

"In reality, the deal didn't fundamentally change the problems that both sides are arguing about," Ellis said. "Both right and left in this country are not exceptionally happy...that tells me that neither side (got what they wanted)." 

Hagan and Burr's offices released statements about their votes.

"While I believe it is unacceptable that Washington has once again waited until the eleventh hour to find a solution, and though I would have preferred a comprehensive, balanced solution to avert the fiscal cliff and begin reducing the deficit, I voted for the plan put forth tonight so that we can stop a tax hike on middle class families in North Carolina. The average family in our state will see their taxes increase by $2,200 without this action," Hagan said in a statement.

She added that the cuts must still be resolved.  

"The challenges we face may be complex, but working together should not be this hard, and I will continue urging my colleagues on both sides of the aisle and both sides of the Capitol to come together to work on a commonsense solution," she said in a statement.

Burr's statement also pointed to the faults in the deal.

"While the deal we voted on tonight was far from perfect and not as comprehensive as I had hoped, I supported this proposal because it protects 99% of Americans from increased taxes, it provides permanent certainty on the estate tax and Alternative Minimum Tax, it provides one year of protection for the reimbursement of doctors, it extends unemployment insurance for one year, and the net result of the deal provides over $600 billion that should be used to pay down our national debt," Burr said in a statement.

Ellis said there needs to be a more fundamental change.

"At some point, there will be something fundamental to happen to the budget or perhaps even to income tax in this country and that's really what the big argument is about," Ellis said. 

He did not know if it would be in April or in five to 10 years, but "at some point there will be some fundamental change," Ellis said. 

In April, Congress will debate cuts to the federal budget along with raising the debt ceiling again.