Legislators Reach Deal to Temporarily Avoid Fiscal Cliff

Legislators Reach Deal to Temporarily Avoid Fiscal Cliff

January 03, 2013

After months of intense debate, Congress approved legislation on Tuesday night to delay sequestration “ planned mandatory spending cuts, of nearly $1.2 trillion, scheduled to begin on January 2, 2013 “ reports the Washington Post. The deal extends tax breaks to millions of families and postpones by two months automatic, across-the-board spending cuts that could devastate federal funds for student aid and university research.

The Senate approved the American Taxpayer Relief Act of 2012 by a vote of 89 to 8. The House passed the measure by a vote of 257 to 167.

The deal increases tax rates from 35 percent to 39.6 percent for individuals earning at least $400,000 and couples earning at least $450,000. It extends the American Opportunity Tax Credit, a partially refundable $2,500 tax credit for college tuition, for five years. The bill also makes permanent other tax provisions with implications for higher education, including the student loan interest deduction and tax preferences for Coverdell savings accounts, reports Inside Higher Ed.

Unless Congress reaches an agreement to cut $6 billion from the federal budget, sequestration will now go into effect on March 1, 2013. Under that process, most aspects of federal spending relating to higher education would face reductions of either 8.2 percent (for discretionary programs) or 7.6 percent (for mandatory programs), including appropriations to the federal work-study program, the Supplemental Educational Opportunity Grant, the National Institutes of Health and the National Science Foundation.

 

Related Links:

The Washington Post

http://www.washingtonpost.com/business/economy/house-members-meet-to-review-senate-passed-cliff-deal/2013/01/01/6e4373cc-5435-11e2-bf3e-76c0a789346f_story.html?wpisrc=nl_fedinsider

Inside Higher Ed

http://www.insidehighered.com/news/2013/01/02/fiscal-cliff-deal-averts-across-board-spending-cuts

The Chronicle of Higher Education

http://chronicle.com/article/Congress-OKs-Deal-to-Head-Off/136407/?cid=at&utm_source=at&utm_medium=en

Michelle Cormier Mott

Government Relations