Congress managed to pass legislation on the tax increases that were part of the fiscal cliff and addressed the Medicare physician pay cut. However, it failed to address federal spending cuts, setting up the next battle.
The fiscal cliff was the news story of the last two months of 2012, and while it looked as if Democrats and Republicans would never come to an agreement, Congress managed to pass a legislation on Jan. 1, 2013. Included in the fiscal cliff package was a decision on the Medicare physician pay cut.
The Senate passed the bill averting income tax increases for most Americans early in the morning on Tuesday and sent the legislation to the House of Representatives.
The bill makes the Bush tax cuts permanent for most Americans; however, those making more than $400,000 a year will see an increase in taxes. That income level was hotly debated as liberals wanted to increase taxes on those making over $250,000 a year ($450,000 for households) and the GOP wanted to extend the Bush tax cuts for all Americans.
With the crisis averted, the stock market surged on the first day of trading in 2013.
What did get included in the bill was an increase in capital gains and dividends taxes; increased taxes on estates with more than $5 million; extended unemployment benefits; and stimulus tax credits.
In order to pass the legislation, some House Republicans dropped the issue of spending cuts. The bill delays those spending cuts by two months, when the issue will have to be addressed along with raising the debt ceiling.
The legislation also prevented the 26.5% physician pay cut in Medicare reimbursement. Since the bill prevented the automatic spending cuts, the 2% Medicare sequestration is also delayed.
“This patch temporarily alleviates the problem, but Congress’ work is not complete; it has simply delayed this massive, unsustainable cut for one year,” Jeremy A. Lazarus, MD, president of the American Medical Association, said in a statement. “Over the next months, it must act to eliminate this ongoing problem once and for all.”