Email List

ABC 15 Streaming LiveLive In The StudioCurrent Road ConditionsPump PatrolRaw NewsSchool Closings
WICD NewsChannel 15 :: News - Top Stories - House Passes Fiscal Cliff Bill
Tuesday, January 1 2013, 11:17 PM CST
House Passes Fiscal Cliff Bill
WASHINGTON (AP) -- Lawmakers managed to avoid driving the United States over the so-called fiscal cliff with a late-night vote Tuesday. But higher taxes and brinksmanship in Washington are likely to sap strength from the fragile economy well into 2013.

The House of Representatives passed emergency legislation to prevent deep spending cuts and even bigger tax hikes from taking effect.

The bill will raise taxes on individual incomes over $400,000 and household incomes over $450,000, on investment profits and dividends, and on the portion of estates that exceeds $5 million.

Those higher taxes on the wealthy -- which will deliver some $600 billion in revenue over 10 years -- are likely slow the economy a little bit. But a bigger drag on the economy will come from a tax hike Democrats and Republicans didn't even bothering to fight over: the end of a two-year Social Security tax cut.

The so-called payroll tax is scheduled to bounce back up to 6.2 percent this year from 4.2 percent in 2011 and 2012, amounting to a $1,000 tax increase for someone earning $50,000 a year.

"It's a huge hit," says Joel Naroff, president of Naroff Economic Advisors. "It hits people whether they're making $10,000 or they're making $2 million. It doesn't matter who you are ... The lower your income, the more of your income you're (spending). So if you're taxes go up, it's going to come out of your spending." And that is bad news for an economy that is 70 percent consumer spending.

Mark Zandi, chief economist at Moody's Analytics, calculates that the higher payroll tax will reduce economic growth by 0.6 percentage points in 2013. The other possible tax increases -- including higher taxes on household incomes above $450,000 a year -- will slice just 0.15 percentage points off annual growth, Zandi said.

The economy doesn't have much growth to give. Mark Vitner, senior economist at Wells Fargo, predicts it will expand just 1.5 percent in 2013, down from a lackluster 2.2 percent in 2012. Unemployment stands at 7.7 percent.

A months-long political standoff over fiscal policy has already taken its toll, adding uncertainty that has discouraged consumers from spending and businesses from hiring and investing.

The squabbling seems sure to persist.

Lawmakers postponed tough decisions on government spending, giving themselves a reprieve from cuts that were scheduled to begin taking effect automatically Jan. 1. That just sets the stage for more hard-bargaining later. Spending cuts, when they come, could crimp growth even more.

And another standoff is likely to arrive as early as February when Congress will need to raise the $16.4 trillion federal borrowing limit so the government can keep paying its bills. House Republicans probably won't agree to raise the debt limit without offsetting spending cuts that Democrats are sure to resist.

Obama warned Republicans late Tuesday that "if Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic, far worse than the impact of a fiscal cliff."

Ethan Harris, co-head of global economics at Bank of America Merrill Lynch, asked: "What induces the two sides to stop fighting and start compromising?"

The fiscal cliff itself was created to force Democrats and Republicans to compromise, and it succeeded -- barely.

To end a 2011 standoff over raising the federal debt limit, they agreed to a Jan. 1, 2013 deadline to reach a deal over taxes and spending. If they didn't, more than $500 billion in tax increases would hit the economy in 2013 alone, along with $109 billion in cuts from the military and domestic spending programs. The sharp tax hikes and spending cut would threaten to send the economy over the cliff and back into recession.

But negotiations to avert catastrophe have highlighted once again how far apart the two parties are on taxes (Republicans don't want to raise them) and spending (Democrats are reluctant to cut government programs).

"We're learning about how deep the impasse is," Harris says. "Both sides have decided that they were willing to go to the last minute."

Political gridlock has been rattling financial markets and shaking consumer and business confidence the past two years.

After a fight over raising the debt limit last year, the credit rating agency Standard & Poor's yanked the U.S. government's blue-chip AAA bond rating because it feared that America's dysfunctional political system couldn't deliver a credible plan to reduce the federal government's debt. S&P cited an overabundance of "political brinksmanship" and warned that "the differences between political parties have proven to be extraordinarily difficult to bridge."

The Dow Jones industrials dropped 635 points in panicked selling the first day of trading after the S&P announcement.

Outside Washington the economy has been getting some good news. Europe's financial crisis appears to have eased, reducing the threat of a renewed financial crisis. And the U.S. real estate market finally appears to be recovering from the housing bust.

But the old worries have been replaced by new ones about political gridlock, says Joseph LaVorgna, an economist at Deutsche Bank.

The partisan divide has left businesses and consumers wondering what's going to happen to their taxes and to federal contracts.

Companies have plenty of cash. But they reduced spending on industrial equipment, computers and software from July to September, the first quarterly drop since mid-2009 when the economy was still in recession. And hiring has been stuck at a modest level of about 150,000 new jobs per month this year.

"What we see is fear," says Darin Harris, chief operating for Primrose Schools, an Atlanta company with 250 franchised preschools in 17 states. He says franchise owners have been wary about investing in a second or third school until they know what tax rates are going to be and where government spending is headed. "All those things make our small business owners reluctant to reinvest."

Consumer confidence fell in December for the second straight month, according to a survey by the Conference Board, which blamed the drop on worries about the fiscal cliff. The uncertainty is also believed to have dinged holiday shopping, which grew at the slowest pace this year since 2008.

"Every kind of brinksmanship moment is a reminder to people to not trust the economy," Harris says.

Many economists are disappointed that Congress and the White House couldn't reach agreement on a broader deal that significantly reduces the deficit over the next 10 years. That could have boosted business and consumer confidence and accelerated growth.

No progress has been made on reforming the government's big entitlement programs, mainly Medicare and Social Security.

"Nothing really has been fixed," Lavorgna says. "There are much bigger philosophical issues that we aren't even addressing yet."House Passes Fiscal Cliff Bill

[an error occurred while processing this directive]

Related Stories

  • Regional News
  • National News
  • International News
  • WICD :: Community - Sounds Of the Season

    Sounds Of the Season

  • WICD :: Community - Automotive


    Find valuable information about buying your next car, including price quotes and your latest automotive news.
  • WICD :: Community - Health and Beauty

    Health and Beauty

  • WICD :: Community - See It Shoot It Send It

    See It Shoot It Send It

    Did you catch that incredible sunset? Do you have a photo for your adorable child or pet? Did you snap a picture of breaking news?
  • WICD :: Community - Hey! It's Half Off

    Hey! It's Half Off

    Hey! It's Half Off has 1/2 off deals for businesses where you live. Find deals for area restaurants, spas, stores, and more!

  • WICD :: Community - School Closings

    School Closings

    Get the latest information on delays and closings for your school here!





  • WICD :: Community - Community Calendar

    Community Calendar

    Find all of the information you need on the local events, concerts, festivals and just about anything else going on in your community!

NewsChannel 15 Top Stories

Discussion on Willard Airport

SRO Numbers Released: Most Incidents at Central High School

Mahomet School Demolition

Schools of Choice Info Session

Midday Business Watch: China lifts ban on some U.S. apples; Debt continues to drop for U.S.

Farewell Chief Chism

Midday Update: Winter weather back to normal and a weekend preview

Volunteers Needed: One Winter Night

Urbana Will Vote On Taser Ordinance

Villa Grove Updates Website

Ammons Appointed as Alderman of 3rd Ward

Phases of the Moon Leaving Vermilion County

Champaign County Sheriff Deputies With Body Cams

Demolition Begins On Historic Mahomet Building

Saying Goodbye to Rusty

Identity Theft Protection

Midday Update: Expect small amount of snow; Drone lands on White House lawn, Amtrak study for possible expansion

Cyber Bullying Law Concerning Illinois Parents

Fake $100 Pop Up at McDonalds, Urbana Police Investigate

Parkland Facing Budget Issues, Could Raise Tuition

Midday Business Watch: Markets up after European Stimulus announced this week

Midday Friday Weather Update

Business Watch: Google could make wireless market more competitive and cheaper

Cristian Zamora Missing For Almost A Month.

Man Sentenced 52 Years For Killing Ex-Girlfriend

Lower Cost For Expungements

New Director in Charge of Danville Election Commission

Urbana Mayor Appoints Ammons For 3rd Ward

Selma Screening For Local Students

The Future of Champaign County

Orpheum Children's Science Museum

Business Watch: BP wants to pay lower fee for oil spill; Netflix gains more viewers

Midday Weather Update

Midday News Update

Food Stamp Usage Increase In Illinois

Champaign Sexting Case Puts 3 Teens "Under Evaluation"

Study: Illinois Childcare Costs Higher Than College Tuition

Safety On Campus For The Spring Semester

Champaign Police Chief on being Black and Officer

MLK, Jr. Event Awards Scholarships to Ten Teens

Monday Business Watch: Google's possible deal with softcard; earnings reports expected soon

Residents Concerned With Villa Grove Alert System

Man Killed In Urbana Fire

IL Mother Drugs Kids, Charged with Attempted Murder

Ammons Files for Vacant 3rd Ward Seat

Salvation Army Red Kettle Donations

U of I Tuition & Housing Costs...

Feed Parking Meter By Phone On Its Way...

Vote Postponed On Mckinley Pools Future

Jan. National Mentoring Month

Family: Arcola Man Killed By Police Was Depressed, Suicidal

Pit Bull to be "put down" After Attack Sheriff's Deputy

Ammons Get Sworn in as 103rd District Rep

Urbana Considering Taser Policy

Road Rage On I-57 Highway

Update On Holly Cassano Murder

Champaign Pastor Speaks At Gov. Rauner's Inaugural Service

Referendum Cuts Costs But Keeps New Central High School Location the Same

Governor Rauner reverses 178 of Quinn's appointments

Tuesday Business Watch: Fico score information

Unit 4 Votes Yes On Revised Referendum

Arcola Man Killed By Police

Icy Roads Cause Multiple Accidents Throughout Champaign Co.

Business Watch: Gas prices low, electric car predicted for 2017

Midday Weather Outlook and Inauguration Day

Local Reaction To Paris Attack

Man Charged After Videotaping Women Without Permission

Bus Drivers Taking Extra Precautions...

"I'm Ready To Go Back,"Says Champaign County Deputy

Cold Weather, Big Business For Tow Companies

School Closures Inconvenience Parents--

2 Dead After Danville Shooting

Deputy Recovering From Pit bull Attack

Cold Weather Demonstration

Car Tips For The Cold Weather

Financial Success 2015

Local Shelter Asking for Volunteers

Police Chief Speaks On Spike In Murders

St. Joe High Schoolers Take On The Dangerous Cold

Rise In Champaign City Shootings

Help For Seniors During Frigid Temps...

Viscofan Fire Damage Estimated at $500,000

Illinois Community College Presidents to Visit Cuba

Animal Welfare in the Cold

Savoy Rec Offers Snow Day Child Care

Update: Stories of Giving for Amber's Christmas Wish

Winter Weather Advisory

Winter Safety Tips

Snow Preps...

Midday Business Watch: Prices at the pump could go up with new leadership

Midday Weather Update- Several inches of snow expected

Champaign City Council Members Share 2015 Resolutions

Foiled Robbery: Kamakura Restaurant

1 Arrested, 2 Officers on Leave After New Year's Day Shooting

Early Morning New Year's Day Shooting

Drink Responsibly: Champaign County Sheriff

Flu Causes 3 Hospitalizations, Positive Cases Increasing

Champaign Teens Charged As Adults in Armed Robbery

Quotas Illegal in Illinois in 2015

IL Income Tax Drop: Families Could Save $930

Analysts Explain the Drastic Drop in Gas Prices

121,000 Residents Sign up for Insurance

Free Tow Home: New Years

New Year's Resolution: Losing Weight

Local Police Attend Fallen NYPD Officer Funeral

Champaign Cty Dems Want "Superb" Candidate for Board Spot

Vermilion Cty Officer Arrested for Sneaking Pot into Jail

Urbana Man Arrested for Making Meth Across From School

State Troopers Raise Money for Needy Families

Senator Mike Frerichs Resigns to Take IL Treasurer Position

Theater Reacts To Online Release of Film

Illini battle at bowl game today

Midday Weather Update

ISHA Sanctions

Teen Abducted, Sexually Assaulted in LeRoy

Christmas Eve Travel

Frerichs Talks New Retirement Invesment

Gun PSA Causing Controversy

Consumer Update: More online purchases keep delivery services busy

Holiday Travel Advisory

Local Theaters Will Screen Controversial Film

Urbana High School Athletic Director Arrested on Domestic Battery Charges

IDOT Road Conditions Map

Treasurer-Elect Mike Frerichs Talks Plans for Office

Midday Consumer Update: Gas prices remain low; stock performance

Holiday Warning: Champaign County Sheriff's Office

Champaign County Search and Rescue Volunteers

Adult Literacy Program

1 Dead, 1 Injured in Early Champaign Shooting

In the Line of Duty

Champaign: Free Christmas Day Meals

Road Travel Safety Tips

Red Kettle Campaign

Danville New Superintendent

Gold Bar Into Salvation Army Kettle

Urbana Police Investigate Group Assault on Woman

U of I Creates Assault Task Force

UI Candlelight Vigil for Slain Students in Pakistan

Arcola Students Win National Reading Competition

Donations Needed for Danville Angel Tree

Marron Steps Down as Chair of Verm. Co. GOP

Polar Express Stops in Danville Schools

Midday Business Watch: Stocks make turn around, Blackberry is back, Starbucks card sales sore

Midday Weather: Flurries begin, expect more clouds

Local Reaction To Controversial Film

VERMILION COUNTY: Final Public Hearing for Bulldog Mine

City to Increase Size of Police Department

Holiday Pet Hazards

City Approves Budget, Makes Cuts to Fire Department

Fugitive Caught At U of I library

Enterprise Zone Plan Approved

Sex Offender Allowed to Dress up as Santa Claus

Amber's Christmas Wish: Honoring a Cancer Victim's Legacy

New on Midday: Prison escapee caught on U of I campus

Protest Outside Urbana City Hall

Monday the Busiest Shipping Day of the Year

Virginia Theatre Shows Classic Christmas Movies

Election Board Rules in Favor of Mayor Gerard, Can Run for Re-election

Surprise For Military Family

Report: College Age Rape, Sexual Assaults

Local Veteran Receives a Christmas Surprise

Mckinley Pools May Close Soon

Can You Record? Explaining the New Eavesdropping Bill

Spalding Park Redevelopment

Bike Safety

Alzhiemers Research - SIU

Virtual Legal Clinic Provides Free Help to Domestic Violence Survivors

Therapy Dogs Help Stressed Students

Warning On Immigration Scams

Champaign: 5 More Years Until Bristol Park Plan Complete

Local Officials Meet On Emergency Response

Judy Baar Topinka: State Leaders Reflect

Van On Fire On Highway

Parent Charged after Threatening School Staff

Judy Baar Topinka: Trailblazing Independent

U of I Medical Student Protest

Tech Center Dedicated at DACC

Affordable Care Act: Last Minute Sign-Up

Carle Hospital Toy Fundraiser

Judy Baar Topinka Dies at 70

Protest At Central High School

Champaign Listed as 5th Most Dangerous City, Urbana Makes List

Illinois Schools Social Media Policy

UPDATE: County Approves Funding for Audit of Government Computers

Danville Study Group Explores Balanced Calendar Schedule

Hour of Code: Champaign Students Learn Computer Programming

Community Remarks On Centennial Protest At Unit 4 Meeting

Urbana Teacher's Aide Allegedy Assaults Student

Austim Assistance

School Bus Accident Near Fisher

Urbana Burglaries & Arson

University of Illinois Rehires Former SLA Radical James Kilgore

Vehicle Nearly Collides Into Student Protest

Student Protest At Centennial High School

Midday Consumer Watch: Markets up, Sriracha beer, vehicle recalls

Midday at 11: Weather and local news update

Mental Illness Treatment In Champaign County

Same-Day Voter Registration to Become Law

Minimum Wage Passes in State Senate

No Criminal Charges After Family Dies In Easter Crash

Ogletree Joins Legal Team Representing Michael Brown Family

Sensory Santa Event Helps Kids with Autism

Day of Giving! Helping to End Local Hunger

Habitat for Humanity Home for Vet

Pressure To Raise The Minimum Wage

Local Woman's Sentence Overturned

Rauner Fires Shots at Governor Quinn's Budget

Hayden Schaumburg In Therapy..Fighting Like A Champ!

CRIME STOPPERS: Death Investigation

A Day of Giving this Tuesday

Fiber Optic Service Coming to Urbana First

Unemployment Falls in Champaign-Urbana

OPEC meeting affects oil industry future; Microsoft sales performance; Cyber Monday

Midday Monday: Weather update; local officials sworn-in; World AIDS Day

Hayden Schaumburg, Watseka Warrior Recovering & Very Thankful

Shopping Safety Tips

UPDATE: County Committee Considers Second Audit of Former FIPHD Computers

Controversial Tweet Goes Viral

Local Rally Following Ferguson Decision

Champaign 4th Graders Penny Collection

Attorney General Releases Safe Shopping Guide for Holiday

Audio books for students with Dyslexia

Ferguson Reaction in Champaign

Ferguson Police Officer Not Indicted in Shooting Death of Michael Brown

Champaign County IHSA Bid

Ferguson Grand Jury Announcement Expected Monday

Locals React to Canceled Cosby Appearence

Restoration Urban Ministries Thanksgiving Box Giveaway

Rantoul Police Body Cams

Replacing Frerichs a Tall Order

Philo Woman Convicted of Reckless Homicide is Released on Bond

Champaign to Bid on IHSA Boys Basketball Finals

Bill Cosby Appearance Cancelled

Reaction to the President's Immigration Plan

Student Loan Debt in Illinois

Death Investigation In Champaign

Recount Predicted, Illinois State Treasurer Race

Champaign Preps For Riots Following Ferguson Decision

Gifford Strong: One Year Later

Awareness: Sexual Assaults On College Campus'

Cold Weather Advisory for Fighting Illini Game

Child Abuse Awareness

Day Care Provider Charged With Aggravated Battery

Paris Community Mourns Toddler's Death

Health Department Investigation: Audit Finds Pornography, Misuse of Money

Two Arrests Made in Paris Child Murder Case

Rules of the Road: Marijuana Use

SPECIAL REPORT: Militarization of Local Police, Champaign County MRAP

Toddler Killed, Apparent Signs of Abuse

[an error occurred while processing this directive]

Newsmax Headlines

Sponsored content

Entertainment News


LOS ANGELES (AP) -- An actress who claims she was racially profiled after being detained by police is seeing her case make its way through the courts.

Business News

Disappointing earnings, weaker outlooks highlight latest financial results

NEW YORK (AP) -- Several big-name companies have turned in disappointing earnings or weaker outlooks today.

Consumer Info

   WEST PALM BEACH, FL -- (Marketwired) -- 03/21/14 --
 Companies that pride themselves on being eco-friendly may have conflicted
 ideas between marketing with ad specialties and maintaining their green
 reputation. ...

Get This


PHOENIX (AP) -- A Super Bowl ticket for six bucks?

Science/Tech News


SEOUL, South Korea (AP) -- For many computer users, it was like one of those times when the power, water -- or even TV service -- goes out.

  • WICD :: News - Border Crisis

    Border Crisis

    Get the latest developments on the border control issue!
  • WICD :: News - Traffic


    Get the latest traffic reports from WICD ABC Newschannel 15!
  • WICD :: News - Ask the Expert

    Ask the Expert

    Do you need expert advice? Here's your chance to ask our experts!
  • WICD :: News - Live In The Studio

    Live In The Studio

    Local nonprofits and community leaders tell us about upcoming events in East Central Illinois.
  • WICD :: News - Pay It Forward

    Pay It Forward

    Pay It Forward... because sometimes people need a little extra help.
  • WICD :: News - Your Voice. Your Future.

    Your Voice. Your Future.

    As the country faces challenges from federal budget issues to jobs and national debt, your voice is critical to the future.
  • WICD :: News - Road Trippin

    Road Trippin

    Come Road Trippin' with us! Check out all the great attractions in your area!
  • WICD :: News - In The Kitchen

    In The Kitchen

    Some of the areas best chefs whip up their tastiest creations on Newschannel 15. Click here to see them in action and get their recipes to try at home.
  • WICD :: News - Be The Parent

    Be The Parent

    It's one of the hardest jobs in the world.  So let us help you.  Get parenting tips and see our latest video to help you be the parent.
  • WICD :: News - Cruisin' Illinois

    Cruisin' Illinois

    Get your motor running for the hottest motorcycle show in Central Illinois!
  • WICD :: News - On the Farm

    On the Farm

    Whether it's topical segments on what's happening on local farms to commodity prices, we have the world of central Illinois agriculture covered.
  • WICD :: News - Pet of the Week

    Pet of the Week

    The cutest video you'll see anywhere. Just one click and you won't be able to resist these adorable friends who need someone to love them.
  • WICD :: News - Washington Times

    Washington Times

    Politics, Breaking News, US and World News.
  • WICD :: News - Health Care Reform

    Health Care Reform

    The Supreme Court ruling to uphold the Affordable Care Act sparked a new battle. Check here daily for the latest developments, locally and across the country.
  • WICD :: News - Illinois Central

    Illinois Central

    Every week "Illinois Central" brings you the stories about the people in central Illinois. From our weekly "Cruisin' Illinois" segment " which features motorcycle culture " to the arts and everything ...
  • WICD :: News - Pump Patrol

    Pump Patrol

    Check out the NewsChannel 15 Pump Patrol to find the lowest prices, report low prices and get gas-saving tips.
  • WICD :: News - Raw News

    Raw News

    Watch extra news footage, full interviews, and extended stories that didn't make it on air.  "Raw News" may include content that is not suitable for children and is intended for mature ...

  • WICD :: News - Doug's Quick Takes

    Doug's Quick Takes

    Local organizations and community leaders tell you about events happening in the Central Illinois area.
  • WICD :: News - Waste Watch

    Waste Watch

    How are your tax dollars being spent? Waste Watch tracks whether local, state and federal governments or any groups are using your money wisely...or wasting it.

Tonight on WICD

5:00pm First News at Five
5:30pm ABC World News with David Muir
6:00pm News at Six
6:30pm Entertainment Tonight
7:00pm The Middle
7:30pm The Goldbergs
8:00pm Modern Family
8:30pm black-ish
9:00pm black-ish
9:30pm Modern Family
10:00pm Nightside News

Complete Schedule »

Buzzed Driving Prevention PSA
Phases of the Moon Festival
News Team
Sunrise Team