OVERVIEW: The editor and the publisher of The Mountain Enterprise are in Washington D.C. reporting about the work of Congressman Kevin McCarthy, the House Majority Whip. This is a historic moment as the world watches how the U.S. government manages to meet the challenge posed by sequestration, popularly known as “the fiscal cliff.” Read from the bottom to see our postings over the last two days.

UPDATE—WASHINGTON, D.C. (Tuesday, Jan. 1, 2013 at 8:04 p.m. PST, 11:04 p.m. EST)— With 5 minutes left to vote, none of the House Republican Young Guns, including House Whip Kevin McCarthy, had voted on aligning with the U.S. Senate’s fiscal cliff bill. The vote is 153 to 97 with 4 minutes left to vote. With 2 minutes left to vote, McCarthy has still not stepped up. With time run out for the vote, Paul Ryan voted “yes” and Kevin McCarthy voted “no.” Eric Cantor also voted “no.” The final vote is  257 to 167. The measure has passed with bipartisan adoption by both houses of Congress. Watch the print issues of The Mountain Enterprise and The New Mountain Pioneer for the full story.

UPDATE—WASHINGTON, D.C. (Tuesday, Jan. 1, 2013 at 6:57 p.m. PST, 9:57 p.m. EST)— The House is back in session. There is hope among the press corps that Congress will defy prediction and get the job done before midnight.The House has reconvened to vote on a Rules Committee Resolution which sets the stage for the House to take up the Senate’s fiscal cliff bill. Barney Frank, Charlie Rangel and Dennis Kucinich are finally voting “yay” on the same item as conservative “Young Guns” Kevin McCarthy, Eric Cantor and Paul Ryan.  At 9:45 p.m. the rules resolution passes 407 to 10 in the House Chamber tonight. An hour of debate has been allocated for the final resolution.    —PH

UPDATE—WASHINGTON, D.C. (Tuesday, Jan. 1, 2013 at 5:31 p.m. PST, 8:31 p.m. EST)— Democrat Alcee Hastings of Florida, a handsome 76 with a no-nonesense humor and a member of the House Rules Committee, has just walked through the press gallery dropping information like raw meat into a pool of ravenous sharks.

“Are they going to vote on the amendment tonight?” he is asked. Hastings laughs. “They don’t have the votes…they won’t bring it to the floor. They [the Republican leadership of the House] are crazy…but they are not bat sh_t crazy….”

Hastings said he thinks that the Senate bill will finally be brought up for a straight up or down vote at about 9:30 p.m. tonight.

After his Rules Committee meeting breaks up, Hasting’s estimate is extended to about 10:30 p.m.

Then the Whip’s office leaks another estimate. The vote is projected to take place about 11:15 p.m. Then the journalists call in to their offices: “Vote at 11:45,” they say.  That is the way things are going around here on the fiscal cliff watch.  —PH

UPDATE—WASHINGTON, D.C. (Tuesday, Jan. 1, 2013 at 4:44 p.m. PST, 7:44 p.m. EST)—Sad-faced journalists were skulking in the halls and through the press gallery as afternoon faded into night on New Year’s day. They are mad about having to spend their New Years Eve and New Years Day and now the night in the cold halls of Congress, waiting for political theater to play out.

The House Republican caucus meets in the basement of the Capital building. Downstairs in the basement, there are over 100 news reporters on stake-out, some with paper pads, some with huge cameras and boom mics. CNN demistars surrounded by bright lights with discreet bugs in their ears talk into open space, arguing with unseen producers back at the truck, trying to explain the big picture of the strategizing going on in the basement caucus rooms. CNN’s Capital correspondent mentions that the stock market is opening back up tomorrow, after the holidays. The House Republicans will be blamed if there is a major crash on Wall Street because they failed to act to avert the fiscal cliff. There is serious concern that the nation might tumble back into recession if the sequestration cuts begin to hit.

An hour ago the House reconvened to possibly take up an amendment to the Senate bill finalized at 2 a.m. this morning in an unprecedented 89-8 bipartisan vote. After two hours of camping outside the doors, the crowd of journalists were rewarded by congress members finally heading out of caucus. Representative John Fleming of Louisiana stopped for an interview. He confirmed that a decision was made in the House Republicans’ afternoon caucus to seek an amendment with $300 billion in spending cuts to send back to the Senate. If they could not gather enough votes, they would take up the Senate bill as an up or down vote, he said.

As members drift back into the House chambers, Senate Majority Whip Kevin McCarthy (R-District 22, a Bakersfield native) watched his team informally tally the votes on the chamber floor for the House Republicans’ cost-cutting amendment. They pigeon-holed other Republicans while noncontroversial House business about “safe dry wall” went up for vote behind them. McCarthy talked closely with several colleagues, then leaned back in a leather seat with his arms behind his head, watching the process of the informal count for the amendment.

The Whip’s count didn’t come back looking good. They need 217 votes to pass the amendment and send it back to the Senate. So they broke to caucus again downstairs.

Two days away from the beginning of the 113th Congress, and a day past the fiscal cliff deadline, the House Republicans of the 112th Congress have headed for their second major caucus of the day in the basement of the capital building. Ten minutes ago the headlines around me in the Capital press room read “Fiscal Cliff Deal May Fall Apart in Lame Duck House.”  —Reported by Patric Hedlund

UPDATE—WASHINGTON, D.C. (Tuesday, Jan. 1, 2013 at 11:41 a.m. PST, 2:41 p.m. EST)—At 2 a.m. this morning, the Senate cast a bipartisan 89-8 vote in favor of compromise fiscal cliff legislation to avoid sequestration, then sent the bill over to the House for a vote.

The Congressional Budget Office released an analysis on Tuesday at about 2:20 p.m.Tuesday that says SR 8 adds $4 trillion to the deficit over 9 years and adds $330 billion in new spending.

House Democrat Rep. Xavier Becerra (D-Califonria, incoming Democratic Caucus Chairman) said there had been a 2-hour “standing room only” caucus to explain the SR8 measure and the process that led to a bipartisan vote in favor of the measure. Minority leader Nancy Pelosi called for an “up or down vote” by the House.

Meanwhile, House Republican leader Eric Cantor announced that he is against the senate’s measure because it does not address spending cuts.

It appears to analysts that the House Republicans are pushing to go over the fiscal cliff, triggering the sequestration cuts and raising the taxes on all income levels. The new congress will take their seats on Thursday.

Details of the Senate measure include:

• Higher taxes on individuals earning $400,000 or more and families making $450,000 or more. That would make the Bush-era tax cuts permanent for all but the wealthiest households. The Democrats’ initial proposal was to raise taxes on Americans making $250,000 or more. The Republicans’ proposal was to raise taxes on households making $1 million or more.

• Tax rates on capital gains and dividends would rise for wealthier households. Taxes on capital gains and dividends would be held at the current 15 percent for individuals making less than $400,000 and households with income of less than $450,000. They would rise to 20% for taxpayers and households above those thresholds.

• Automatic “sequester” spending cuts will be delayed for two months, delaying deep cuts to domestic and defense programs, for two months.

• One-year extension to unemployment insurance. Emergency unemployment benefits would be extended for a year. The National Journal reports that extension “was a priority for President Obama and congressional Democrats.”

• A one-year delay in cuts to physician payments under Medicare.

• A measure to extend for nine-months some parts of the farm bill through September, including a measure to avert milk price increases.

• Exemptions on personal taxes will be phased out for personal returns over $250,000. Itemized deductions will be limited for taxpayers making over $250,000 and families earning more than $300,000.

• The estate tax would rise to 40 percent from its current 35 percent level, with the first $5 million exempted. National Journal reports that, “Democrats had earlier sought a higher increase to 45 percent and a lower exemption of $3.5 million.”

• The alternative minimum tax would be permanently indexed for inflation.

• National Journal says the deal includes extensions of the American Opportunity Tax Credit, which can be claimed for college-related expenses; the Child Tax Credit; and the Earned Income Tax Credit, a refundable federal income tax credit for low-to-moderate income working Americans.

• Popular tax breaks for business will continue, including those for research and development. That package might now pass as part of the broader cliff deal.

• All members of Congress would see a pay freeze reinstated.

The National Journal notes that the bill left out:

• An agreement to raise the debt ceiling. As the National Journal reports: “The nation reached its borrowing limit on Monday and the Treasury Department has said it will use ‘extraordinary measures’ to avert default as long as it can—likely into February…After that Congress will take up raising the debt ceiling. Last time, the negotiations resulted in a downgrade of the U.S. credit rating and a whipsaw month in markets.”

• Payroll-tax cut extension. A temporary, two percentage point cut to the payroll tax expired at midnight and was not renewed in the Senate’s bill. If you make $50,000, that’s an extra $1,000 in taxes you might be paying this year.

• A grand bargain. Lawmakers didn’t address the country’s long-term fiscal issues in this bill, namely a complicated tax code and rising entitlement spending.

UPDATE—WASHINGTON, D.C. (Tuesday, Jan. 1, 2013 at 4:44 a.m. PST, 7:44 a.m. EST)—The Mountain Enterprise was cordially greeted by U.S. House of Representatives Majority Whip Kevin McCarthy and his staff on New Year’s Eve. While most of the nation got silly, preparing to celebrate the New Year, McCarthy’s office was waiting for a deal on the ‘fiscal cliff’ to be brought to the House from the U.S. Senate. The Bakersfield native’s staffers hunkered down behind their computers, planning to work into the evening as McCarthy went into a huddle with House Speaker John Boehner for an update at about 4:30 p.m.

During our discussion with McCarthy on New Year’s Eve, as the seconds ticked down to the deadline, we were reminded that a political transition is about to take place. The 113th Congress takes over from the 112th Congress on Thursday. What impact will that change have on the nature of the negotiations between the House and the Senate if a deal is not complete?

Some are already pointing to a cascade of “mini-cliffs” that will follow the patchwork deal which is being cobbled together this week. The national debt level is again coming up for renewal. That means that the “who blinks first?” game of chicken the nation watched in the summer of 2011 over the debt ceiling is likely ot take place again, at the very beginning of this new year.

Outside, in the gathering winter dusk, we were startled to see black-clad capital police holding semiautomatic rifles. During the day, tourists from around the United States and other countries flooded through the ornate halls of the capital building, their clothes, like ours, covered with a mosaic of adhesive stickers to show we had all passed through multiple security checks at every entrance and had talked with our representative’s office to get passes for the gallery seating above the House and Senate floors.

While members of both houses of Congress met in private conference rooms to negotiate about the fiscal cliff that could throw a slowly-reviving national economy back into recession, visitors passed through more checkpoints. We relinquished all electronic gear, including cell phones, to guards in order to go into the chambers of the U.S. Congress. One of the ‘new rules’ of the capital that was transformed by 9/11 is that not even paper and pencil notes can be taken in the gallery above the house and senate floors.

Rep. Kevin McCarthy’s staff facilitated access for The Mountain Enterprise to the press boxes in the House and Senate galleries today, so that we can take notes as the fiscal cliff compromise passes over from one chamber to the other today.

The question we are asking ourselves here is, “What might this mean for our local economy in the Mountain Communities?” The long-dormant real estate market is slowly beginning to stir in Frazier Park, Lake of the Woods, Lebec and Pine Mountain, but that fragile slow-motion recovery is vulnerable. Congressman McCarthy, our representative in D.C., said in yesterday’s interview, “there has never been more money accumulated in America, sitting dormant because of uncertainty….” He contends that not knowing the rates on capital gains and estate taxes inhibits investment. Meanwhile, social security deductions from local paychecks may be going up by as much as 6.5%.

—Reported by Patric Hedlund, Editor

UPDATE—WASHINGTON, D.C. (Monday, Dec. 31, 2012 at 8:22 p.m. PST, 11:22 p.m. EST)—Staff at Congressman Kevin McCarthy’s office were still working late on New Year’s Eve as the nation watches to see whether the government will slide down the “fiscal cliff” into austerity cuts and tax hikes. Congressman McCarthy’s Chief of Staff, James Min (formerly of Bakersfield and Los Angeles), said their office had never worked past December 22 through the Christmas and New Year’s break before, but that they are willing to stand by to help as the U.S. House of Representatives is brought into the process of passing an agreement.

Over on the Senate side, where the deal is being shaped first, Vice President Joseph Biden and Senate Republican leader Mitch McConnell are said to have reached a compromise that is going to the Senate for a vote. It is expected to include an extension of the farm bill for a year (which expired at the end of September). But National Journal reports that Senator Kay Bailey Hutchinson (R-Texas, who is retiring within days) says that an extension of long-term unemployment insurance will not be part of the deal. “An extension of the Medicare doc-fix will be paid for,” she said.

It appears that “kicking the can down the road,” may be the best that the two houses will be able to do in this round, several analysts said. But what will that mean?

UPDATE—WASHINGTON, D.C. (Monday, Dec. 31, 2012 at 1:05 a.m. PST, 4:05 a.m. EST)—House Majority Whip Kevin McCarthy (R-California, Dist. 22), a Bakersfield native with relatives in Lebec, met with reporters for The Mountain Enterprise this afternoon while the U.S. Senate was finalizing a deal on the “fiscal cliff” sequestration to send to the U.S. House of Representatives.

McCarthy, who will begin his fourth term on Thursday, Jan. 3, said he believes that there will be work through tonight to bring a senate agreement to the House. He indicated Congress hopes to avoid “market uncertainty” tomorrow, but it is likely that the “fiscal cliff” deadline will pass without a final accord in place.

“This didn’t just happen,” McCarthy said, “It began 12 years ago.” He was referring to the sunset clause in the Bush era tax cuts. It now appears that the tax component of the current negotiation may have been basically agreed upon, “but there are other details still being discussed.”

McCarthy and his staff met with us as constituents and members of the press with cordial hospitality. We will file more updates this evening and tomorrow, when we will be reporting from House and Senate chambers.

Watch for upcoming issues of The Mountain Enterprise for full interviews and photos.

—Reported by Patric Hedlund with Gary Meyer

WASHINGTON, D.C. (Monday, Dec. 31, 2012 at 8:20 a.m. PST, 11:20 a.m. EST)—The editor and publisher of The Mountain Enterprise are in Washington D.C. today, reporting on the efforts of the U.S. House and Senate in regard to the “fiscal cliff” threats confronting the U.S.A. There is concern this morning that if this “congress made disaster” is not resolved today, the most vulnerable of our communities will be the first to feel the impact.

Checks for the longterm unemployed went out on Friday, Dec. 29. That will be the last check if a deal is not struck today, legislators warn. It is likely that the social security tax withholdings from middle class paychecks will be 4.2-6.5% higher, starting January 1, 2013. Investors worldwide are said to be “taking cover.” There is concern that another global recession could be triggered by the U.S. Congress failing to meet the deadline. Others here in Washington D.C. are saying that it is “more of a fiscal slope, rather than a fiscal cliff,” implying that negotiations may go beyond the Dec. 31 deadline.

So far it appears that there is a consensus developing in the Senate, with Vice President Joe Biden and Senate Minority Leader Mitch McConnell as the lead negotiators. Their points of negotiation are rumored to have covered maintaining middle class tax cuts. Republicans are asking the ‘cut off’ for middle class families to be designated as $450,000 to $500,000, after first asking that those making $1 million per year be protected from tax increases.

The Mountain Enterprise seeks to document activity at the office of Congressman Kevin McCarthy (CA-22) today. He holds the Majority Whip position, responsible for securing votes among Republican representatives for bills brought to the House floor for vote.

 

 

This is part of the December 28, 2012 online edition of The Mountain Enterprise.

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