The dog’s breakfast of a deal that “resolved” the fiscal cliff fell far short of expectations. In the hours after it passed, deficit hawks at the Committee for a Responsible Federal Budget and the tag team of former Senator Alan Simpson and former Clinton White House chief of Staff Erskine Bowles all expressed disappointment in a bargain that was anything but grand. Senate Republicans gritted their teeth to accept a small increase in taxes on America’s highest-earning households while Senate Democrats made permanent the bulk of the Bush-era tax cuts. A number of tax provisions that hark back to the 2009 fiscal stimulus law were extended, as were unemployment benefits, thus delivering a modest income boost to a large number of low-income households. But the Social Security payroll tax cut, a Republican-backed replacement for the more narrowly targeted Making Work Pay tax credit that was part of the stimulus law, which benefited a wide range of affluent households as well as families of more modest means, was allowed to lapse. Long-term spending levels, meanwhile, were left largely untouched, which is why rebellious House Republicans came close to scuttling the delicately constructed compromise.
House Speaker John Boehner has struggled for weeks to unite his fellow Republicans around a deal to avert the fiscal cliff. Having failed to find a package of tax increases and spending cuts acceptable to the Obama administration and the House GOP, he pivoted to a politically shrewd “Plan B” that would have extended all of the Bush-era tax cuts except for the high-income rate reductions that applied to income above a $1 million threshold. But as Boehner and his lieutenants worked to rally support, they found that they didn’t have the votes to pass “Plan B.” And so Boehner has suffered what is widely regarded as a humiliating defeat, one that has left many observers wondering whether he can survive for long as speaker.