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Congress Averts the Cliff - What Does It Mean For Kids?

Unless you’re a hardcore policy wonk, you probably don’t care too much about the backroom dealings that led to Congress’ later-than-last-minute deal to avert the “fiscal cliff,” at least not as much as you care that a deal finally got done. (Either way, you can read a fascinating day-by-day breakdown of the negotiations - or lack thereof - here.)

Unless you’re a hardcore policy wonk, you probably don’t care too much about the backroom dealings that led to Congress’ later-than-last-minute deal to avert the “fiscal cliff,” at least not as much as you care that a deal finally got done. (Either way, you can read a fascinating day-by-day breakdown of the negotiations - or lack thereof - here.) The deal happened late on New Year’s Day, when the House passed a measure to stave off the cliff by a vote of 257-157 (172 Democrats and 85 Republicans voted for the bill). The bill – largely a product of negotiations between Vice President Biden and Senate Minority Leader Mitch McConnell - passed  the Senate on New Year’s Eve by a vote of 89-8 (five Democrats and three Republicans voted against it). President Obama has signed it into law.

The law, known as the American Taxpayer Relief Act of 2012, freezes individual income tax rates for families making less than $450,000. This was the most important (and most contentious) part of the bill for lawmakers – neither party wanted to be seen as raising taxes on lower- or middle-class families.

But besides staving off steep tax increases, what does the 154-page law do? Among many other things, it delays what is commonly called the “sequester,” a series of budget cuts totaling $1.2 trillion that were scheduled to go into effect on January 1. These cuts were primarily split between defense and domestic spending. Medicare, though not Medicaid, was also to be subject to automatic cuts. By passing the fiscal cliff bill, Congress delays sequestration for two months, giving them more time – and a new Congress – to work on the problem. This means the Children’s Hospital Graduate Medical Education program (CHGME) and other programs, like Medicare, will not be subject to any of the across-the-board spending cuts that could have happened had Congress not struck a deal, at least temporarily.

Not coincidentally, the sequester is delayed until March 1, right around the time Congress will be discussing whether or not to raise the debt ceiling. Thus, Washington pundits will talk not of the “fiscal cliff” but of “budgetary Armageddon” as Congress and the President will need to deal with the triple threat of raising the debt ceiling, sequestration cuts, and the expiration of federal spending authority.

The fiscal cliff bill also addresses a host of other tax provisions and prevents a scheduled reduction in Medicare physician payments (good news for doctors), and does not include any cuts to the Medicaid primary care payment increase for 2013 and 2014 (great news for kids).

The bad news: the fiscal cliff bill does not include reauthorization of CHGME.  Despite passage in the House and strong support in the Senate, it appears Congress will not finalize a deal. Though it’s disappointing, it’s not a surprise – the 112th Congress enacted fewer laws than any Congress since 1947 (and probably longer since 1947 was the first year Congress tracked the number of laws it passed). The program is still funded, but we’ll need to work harder than ever to get it reauthorized, as well as let the President know that he needs to support CHMGE in his proposed budget.

And we won’t have to wait long – the 113th Congress starts January 3.


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