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Columns

January 1, 2013

COMMENTARY: Winners and Losers in the Fiscal-Cliff Deal

WASHINGTON — Senate Democrats and Republicans reached a deal to undo the majority of the so-called "fiscal cliff" by extending most of the Bush tax cuts while levying Clinton-era rates on households with more than $450,000 in income. The sequester cuts agreed to as part of the 2011 deal on the debt ceiling will be delayed for two months and perhaps ultimately replaced by some other package. But the details packed into this deal reveal the real winners and losers:

Winners

Rich people: Raising the threshold for higher taxes from $250,000 to $450,000 is a big tax cut for all kinds of rich people, not just those with adjusted gross incomes between the two figures. That's because taxes are assessed on marginal income, meaning that even if you make $600,000 or even $1 million a year you still have a very large share of your income that's taxed at a lower rate thanks to this deal.

Red State Democrats: Democrats currently hold a majority of seats in the Senate thanks to senators from such not-so-liberal states such as Louisiana, Arkansas, South Dakota, and West Virginia. If we went over the cliff, this is the group that would be caught in the Obama-Boehner crossfire. A deal lets them duck partisan controversy, which is right where they want to be.

Unemployed people: The deal includes funding for a one-year extension of supplemental unemployment insurance benefits. It's easy for liberals to dismiss this as a GOP concession on a temporary issue in exchange for permanent tax cuts, but it'll make a big difference in the lives of the unemployed.

Doctors: Neither Democrats nor Republicans favored implementing the large cuts in Medicare reimbursement rates for physicians that were scheduled by law, but there was a partisan dispute about how to orchestrate a so-called "doc fix" for 2013 and cliff diving might have at least temporarily hit doctors in their wallets. This deal completely punts on all kinds of substantive issues related to the reimbursement rate issue, but it guarantees that the money will keep flowing for now.

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