Email List

ABC 15 Streaming LiveWeb WatchLive In The StudioMorning WebcastRaw NewsPump PatrolKnow Your Candidates
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

  • WICD :: Community - Illinois Central TV

    Illinois Central TV

    Every week "Illinois Central" brings you the stories about the people in Central Illinois, from area history to the arts, the great outdoors to health and fitness.
  • 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 - In The Loop

    In The Loop

    Receive Life Advice from Leadin Experts, Share Music, videos and much more!
  • 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

Holiday Hiring 2014

Alleged Vandals Scratch UI Alma Mater

Body Camera Use Concerns Illinois Police Officers

Rantoul Armed Robbery

Congressional Candidates Debate on Immigration Reform, ISIS

The Armory Celebrates 100 Years

Coach Wayne McClain, The Family Man

Gifford Students Learn about Emergency Preparedness

Ebola screenings begin at O'Hare International Airport today

Business Watch: New Apple I-Pad info leaked

October 17 Webcast

Energy Efficient Bulb Brings Job Growth to East Central Illinois

Jimmy John's Under Fire Over Contract

IL Elections Set to Break Spending Record

Ballot Question Addresses Toxic Water

October 16 Webcast

Champaign Snow Plan Modified for 2014

Right To Vote Ammendment

Illinois storm damage

October 15 Webcast

Midday - Quinn Rauner second debate tonight

U of I football staff member arrested for DUI,additional charge

October 14 Webcast

Midday Weather Update

Decatur Tornado

African American Student Enrollment Down at U of I

Alleged Rape & Sexual Assault On Campus

Midday Update: Possible severe weather

Ambulance Stolen Near Chicago Caught In Rantoul

Carle Teams Responds After a "Mock" Tornado Hits St. Joseph

Carle, Christie Report Flu Vaccine Shortage

Minorities: Group Most Effected By Recession

New Changes to HealthCare.Gov, Enrollment Dates

October 13 Webcast

Gubernatorial Debate

Champaign: Indecent Exposure

Food Pantry For U Of I Students

Domestic Violence Survivor

Slow Job Growth In Illinois

Heating LIHEAP Assistance

Deer Breaks Into Classroom, Surprises Everyone

Local Law Enforcement: Tasers Are Useful Tool


Voting Registration Deadline

Urbana City Council Approves Service Agencies Funding

Mother of Four Escapes Abusive Relationship

New School Security System

Home Repair Scam Targeting Seniors


Consumer Watch: GM claims deadline; New food at 7-eleven, B of A to payout in settlement

Midday Update: Chicago airports near "normal" operation

Midday Update: State Senator files resolution for school funding

Health Care Debt Collecting

Cans across the quad

U of I: Official U.S. Paralympic Training Site


Pink Surprise for Two Students Battling Cancer

Danville Man Charged In Shooting

Police: Suspect in Moore attack beheaded victim

Flights grounded after FAA fire, man found with self inflicted wound

Grease spill in Campustown

Danville Shooting Locks Down Schools, Leaves Man Injured

Danville, Other Cities Fail Online Audit

#LetsTalk: U Of I Student Leaders Push For Quinn/Rauner Debate

Surge In Campus Robberies

Champaign Shooting Sends Man to Hospital

"If I Was to Get Sick...This Was Over"

Urbana H.S. Freshman Given Medication By Mistake

Halloween Decoration Controversy

Parkland Recognized as a Military Friendly School

Voter Registration

Smart Meter: Free to Install, Fee to Refuse

US Dept of Education: More Homeless Students In Illinois

Unit 4 High School Tours

Senate Worries About Funding for New UI Med School

Medical Marijuana Deadline

September 24 Webcast

Hit and Run Driver Facing Charges

Champaign's DMV Reopens Tuesday

September 23 Webcast

Survey Reports Least Fair State Tax Systems

Food Health Inspection Resource

September 19 Webcast

Lawmakers Propose New Way to Raise Money for Police Body Cams

Gifford Rebuilding, Residents Waiting

Drive-Thru Flu Shots

September 18 Webcast

Expansion of Technical Courses for New Unit 4 High Schools

Brocton Man Convicted of Raping A Minor, Now Faces New Charges Against Another Child

Rauner Education Plan Drawing Criticism

Sexual Abuse Laws Preview

Consumer Watch: Starbucks tests smaller size coffee, UPS hiring 95,000 seasonal staff

Midday Weather Update - Wednesday, Sept 17th

Driver in court for hit-and-run today

Motorcycle Hit-and-Run

September 17 Webcast

First Steps in Possible UI Medical School

Spanking Kids, Generational & Cultural Issue

Salt & Light Winner of Make My Non Profit Run Better Contest

Police Looking for Bank Robbery Suspect

September 16 Webcast

Rantoul Board OK's Land for Medical Marijuana Site

Success: Phases Of The Moon

Midday Weather Update: More rain and cooler temperatures

Mattoon Shooting Investigation

State, Local Republicans Make Stop in Champaign for Bus Tour

Campus Fire Safety at the University of Illinois

September 15 Webcast

Long Line Into "Phases Of The Moon"

Professor Salaita Rejected By U Of I

Midday Update: Weather outlook

U of I Votes on Hiring Salaita

Plea Returned: Maggio May Go to Trial for Brother's Murder

Medical Marijuana Information

CUMTD $15 Million Grant to Repair Champaign Urbana Roads

September 12 Webcast

Remember 9-11 in central Illinois

Free GED Courses Available

Wind Ordinace Back on the Table

September 11 Webcast

Midday Update: Family wants investigation for dead family member

Bamboo Ban

September 10 Webcast

Sketches of New Central H.S. & Renovated Centennial H.S.

Salaita Speaks Out with Student Support

Police Search for Missing Toddler

Midday Update: More rain in the afternoon and traffic accident delays

U.S. Marine Band Concert At Urbana School

Health Officials: Lung Virus May Be In East Central Illinois

Possible Missing Toddler

Midday Update: Weather Outlook and headlines

September 9 Webcast

Group Campaigns to End Panhandling

Every Step Counts, Walking to Fight MS

Live, Love, Be: CU Pride Festival & Parade

New State Push For Students to Learn More Languages

Strawberry Crops Hit by Hail

Thousands Start Applying for Medical Marijuana ID Cards

September 8 Webcast

Mayor: Incentives Bring Diversity to Champaign

Tuscola Homeowners Waiting On Roof Repair

30 Days to Stop a Coal Mine

More & More Geese Around

Quinn in Champaign Pushing Minimum Wage Increase

Champaign Parking Meter Fine Increase

Heroes & Helping Hands Awards

Drug Use Increasing at U of I

U of I Police Goal to Decrease Pedestrian Accidents

Patients Can Now Apply for Medical Marijuana Program

September 3 Webcast

Man Hit by Car

Labor Day Parade

Holiday Weekend Ride Along With State Police

Touch Screen Voting Machines Available in Vermilion County

Danville Mayor, Officals Accept Ice Bucket Challenge

"Vaping" a Way to Quit Smoking

September 2 Webcast

Champaign Police search for missing teen

Midday Update: Labor Day Weather Outlook and Traffic Updates

Labor Day Weekend Gas Prices

New Policy For Rantoul High School Football Players

New Rules for DUI Driving Permit

Tripping seniors on purpose to stop future falls

Carle Hospital Expansion

Girl, 9, Kills Gun Instructor in Arizona

School Responds to Accusations of Harsh Punishment

Local Businesses Concerned Over Videogaming Cafes

Midday Update: Wednesday, May 27th

August 29 Webcast

Data Breach Reaches More than 1000 Businesses

August 27 Webcast

The CU Canteen Run

US Senator Kirk Says Technology Will Boost Central Illinois Economy

Savoy Man Speaks Out on Lottery Scam

Plan for Homeless Veterans Project Stalled

Danville Hospital Celebrates Renovation

Update: Police get Tips Online about Danville Robbery

Restaurant Inspections

US Senator Keeps Promise to Pen Pal; Tells How to Spot Stroke

SWAT and Bomb Squad Responds to Rantoul Standoff

August 26 Webcast

Another Harsh Winter: Farmers' Almanac Prediction

Impact of Early Dismissal on Class Schedule

MIDDAY: Weather Update and Early Dismissal

MIDDAY: Granite City Explosion

Tornado Sirens in White Heath

August 25 Webcast

Danville's Finest v. Bravest Raise Money for Veteran Memorial

Urbana's Sweet Corn Festival Underway

State Farm Construction Slowing Traffic on Kirby This Weekend

Students to Voters: Say "Yes" to New Central Site in November

More than 30 Cars Vandalized in Farmer City, Police Investigate

Midday Update: Weather Outlook

New on Midday: Harvey Hostage incident update

New on Midday: Simon helps with book drive

New on Midday: Unemployment Numbers

Familes Say Goodbye for Now to U of I Students

Midday Update: Possibility for severe weather and move in day

U of I Move In

Bottenfield Redevelopment

New on Midday: Hostages in Harvey released

Jobs in Illinois

Mayor Don Gerard Takes ALS Ice Bucket Challenge

Midday Update: Health officials say first West Nile virus case of the year reported

Midday Update:County approves $2.6 million dollar settlement

Changes to to Temporary Liquor Licenses in Urbana

UI Bomb Squad Responds to I-74 Crash

Woman Dies After Colliding With Train

Report: Face Of Hunger

August 18 Webcast

Police Investigating Homeless Man's Death as a Homicide

Church Builds "Tiny House" to Help Refugees Around the World

Consumer Alert

AMBER ALERT - Waukegan, IL

Positive Point - Nursing Home Visit

Rithmio Motion Tracking in Action

Taste of C-U

Monticello School Board Approves Ballot Questions

School Zone Safety

August 13 Webcast

UPDATE: Pilot dies in helicopter crash

The New Arthur-Lovington-Atwood-Hammond High School

August 14 Webcast

Helicopter Crash Near Mansfield

Champaign Voters To Decide High School's Future

Midday Update: Homeless man found dead, possible murder; Cooler temperatures to end; Man charged in shooting

Concealed Carry Application Rush Slowing Down

August 12 Webcast

Unit 4 Approves $149M Proposal for November Ballot

Body Found at Tracks; Possible Murder

New Law: Keep Your Drivers License After Minor Traffic Stop

1 in 10 Incoming Freshman from China

Medical Marijuana Debate

Midday Update: Monday August 11th

Gov. Quinn Signs Law Excluding Driver's Licenses as Bail

U of I Asks for Security Cameras on City Property

Illinois Losing Residents -and Millions of Dollars- to Indiana

Concealed Carry Law Divide Banks

August 11 Webcast

Mahomet Bridge To Reopen

Campus Robbery Suspects Arrested

August 8 Webcast

Governor Quinn in Danville; Announces Palmer Arena Renovation Funds

Help For Champaign County Veterans

Big Yellow Ride Tandem Bikes

Fab Lab 3D Printing for Kids

5th person dies after Illinois highway crash

U of I Study Abroad Program Canceled in Sierra Leone

August 7 Webcast

Looking at How Champaign Prepares for Growth

Cyberbullying: New Law For Illinois Schools

Final Farewell To Firefighter Kenneth Walker

Lottery Scam

Several Neighborhoods Take Part in National Night Out

New Campus Safety Rules for U of I Students

Free Classes For Military Families

Medical Marijuana Facilities in Urbana

August 5 Webcast

Georgetown Mayor Admits Illegal Actions w/ City Workers

Savoy Firefighter Dies After Suspected Rare Illness

Eletroninks Circuit Scribe

Panhandling Gone Wrong

Midday Update: Man accused for putting needles in meat; reserve troops come home; Weather warm up

18 Illinois Air National Guardsmen to return

New Pedestrain Safety Plan

87 Projects to Make Champaign More Pedestrian Friendly

Infant's Memory Helps Raise Money for Cellular Research

State Trooper Honored for Saving UI Student's Life

8-Year-Old Happy & Dancing After Shooting

CSI Camp for Kids

More Bans for Clinton Landfill Dumping

Flooding a Persistent Threat to One Champaign Neighborhood

Joining Together to Stop Local Crime

A.C.T. Test Optional For Illinois Schools

Taiwan Explosion

Consumer Watch: Recalls and new consumer safety reports

Midday Update: More rules for Clinton landfill, weather warm up

Third Suspect Charged In Fatal Shooting

State Board of Education makes ACT test optional

Midday Update: Weather warm up and local news

Special Report: 9-1-1 Behind The Scenes

Shooting Suspect in Custody in Arkansas

Tolono Family Scares Burglar From Their Home

Urbana Woman Critical After Shooting

Ancient Bug Discovered

[an error occurred while processing this directive]

Newsmax Headlines

Sponsored content

Entertainment News


WASHINGTON (AP) -- He has told many a joke during his career.

Business News

Survey: Pay raises rarer despite strong US hiring

WASHINGTON (AP) -- A new business survey finds hiring is healthy but pay raises, not so much.

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


DENVER (AP) -- It was a game of keep-way -- with Peyton Manning's record-breaking football.

Science/Tech News


OVERLAND PARK, Kan. (AP) -- Sprint is cutting its payroll in an effort to save its market share.

  • WICD :: News - Tracking Ebola

    Tracking Ebola

  • 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 - 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 - Spotlight 15

    Spotlight 15

    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 Diane Sawyer
6:00pm News At Six
6:30pm Entertainment Tonight
7:00pm Dancing With the Stars
9:00pm Castle
10:00pm Nightside News

Complete Schedule »

Phases of the Moon Festival
News Team
Sunrise Team