Here's What's In the Fiscal Cliff Deal

The Slatest
Your News Companion by Ben Mathis-Lilley
Jan. 1 2013 10:57 AM

What's in the Fiscal Cliff Deal? Here's a Rundown.

Debbie Stabenow fiscal cliff
US Senator Debbie Stabenow talks to reporters on the fiscal cliff in the hallways of the US Senate at Capitol Hill in Washington late on Dec. 31, 2012.

Photo by Paul J. Richards/AFP/Getty Images

President Obama is casting the fiscal cliff deal as a fulfillment of his campaign pledge to ask for more in taxes from the wealthiest 2 percent, while Mitch McConnell is boasting that 99 percent of his constituents won’t be hit with tax increases. How can that be? As with so much in the fiscal cliff—er, fiscal crisis—negotiations, it’s a matter of semantics. The top income tax rate will rise only on households earning $450,000 or more, but those earning more than $250,000 will see some loopholes phased out, so they’ll end up paying more as well.

Will Oremus Will Oremus

Will Oremus is Slate's senior technology writer.

To simplify matters a bit, here is a rundown of some of the agreement’s key specifics, as reported by the Washington Post and others:

Advertisement

Taxes

  • For couples earning more than $450,000 (or individuals earning more than $400,000), Bush-era tax cuts will expire, and the top income tax rate will rise from 35 percent to 39.6 percent
  • For couples earning less than $250,000 (or individuals earning less than $200,000), Bush-era tax cuts will be made permanent
  • For households earning between those two figures, some exemptions and deductions will expire
  • Investment taxes and estate taxes will rise, though with big exemptions
  • Stimulus tax credits for college tuition and the working poor will be extended for five years
  • Benefits for the long-term unemployed will be extended for one year
  • The alternative minimum tax will not go into effect for some 30 million taxpayers, but the payroll tax cut will expire, hitting most taxpayers
  • Some stimulus tax credits for businesses, including in the renewable energy sector, will be extended for one year

Revenues

  • The deal will raise about $600 billion over the next decade compared to a pre-fiscal cliff baseline, less than the $1.6 trillion* Obama first sought
  • Compared to a post-fiscal cliff baseline, meanwhile, the deal is a huge tax cut that will slash revenue by some $3.7 trillion

Spending cuts

  • Sequestered cuts to defense and other budgets will be delayed two months, with a plan to replace them with equal measures of targeted cuts and revenue increases

Miscellaneous

  • Doctors who provide Medicare won’t face scheduled pay cuts
  • A nine-month farm bill fix will avoid the “dairy cliff
  • Congress will have its pay frozen again

So: You say 2 percent, I say 1 percent. You say tax hike, I say tax cut. But let’s not call the whole thing off.

Note: This post was adapted from a previous Slatest post, available here.

*Correction: This post originally misstated the amount of the revenue increase Obama had initially sought. It was $1.6 trillion, not $1.6 billion.

TODAY IN SLATE

Technocracy

Forget Oculus Rift

This $25 cardboard box turns your phone into an incredibly fun virtual reality experience.

The Congressional Republican Digging Through Scientists’ Grant Proposals

Renée Zellweger’s New Face Is Too Real

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Whole Foods Is Desperate for Customers to Feel Warm and Fuzzy Again

The XX Factor

I’m 25. I Have $250.03.

My doctors want me to freeze my eggs.

The XX Factor
Oct. 20 2014 6:17 PM I’m 25. I Have $250.03. My doctors want me to freeze my eggs.
Politics

Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

George Tiller’s Murderer Threatens Another Abortion Provider, Claims Free Speech

These Companies in Japan Are More Than 1,000 Years Old

  News & Politics
The World
Oct. 21 2014 3:13 PM Why Countries Make Human Rights Pledges They Have No Intention of Honoring
  Business
Moneybox
Oct. 21 2014 5:57 PM Soda and Fries Have Lost Their Charm for Both Consumers and Investors
  Life
The Vault
Oct. 21 2014 2:23 PM A Data-Packed Map of American Immigration in 1903
  Double X
The XX Factor
Oct. 21 2014 3:03 PM Renée Zellweger’s New Face Is Too Real
  Slate Plus
Behind the Scenes
Oct. 21 2014 1:02 PM Where Are Slate Plus Members From? This Weird Cartogram Explains. A weird-looking cartogram of Slate Plus memberships by state.
  Arts
Brow Beat
Oct. 21 2014 1:47 PM The Best Way to Fry an Egg
  Technology
Technology
Oct. 21 2014 5:38 PM Justified Paranoia Citizenfour offers a look into the mind of Edward Snowden.
  Health & Science
Climate Desk
Oct. 21 2014 11:53 AM Taking Research for Granted Texas Republican Lamar Smith continues his crusade against independence in science.
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.