HELENA — The New Year’s Day action by Congress to avoid the “fiscal cliff” of steep tax increases and budget cuts is a good first step toward solving the nation’s financial and economic woes, Montana’s two U.S. senators said Wednesday.
But they said more work needs to be done, in a bipartisan fashion, to address the nation’s federal debt and budget deficits.
“In the short term, it does create some economic growth,” said Sen. Jon Tester, D-Mont. “But over the long term, this is not a deficit-reduction package.”
Tester and Sen. Max Baucus, D-Mont., who voted for the bill early Tuesday, said it has many provisions of special importance to Montana, such as extending a tax credit benefiting the wind power industry, estate tax exemptions for most Montana farms, ranches and other businesses, various tax benefits for families, and tax credits for businesses that hire veterans.
The bill makes permanent current income tax rates for all but the most wealthy of taxpayers, who will pay higher rates on their regular income over $400,000 for singles and $450,000 for families, and higher rates on investment income.
It also postponed for two months severe budget cuts scheduled to take effect Tuesday, extended emergency unemployment benefits for another year and blocked a cut in Medicare payments to physicians.
The U.S. House approved the measure Tuesday night on a 257-167 vote, sending it to President Barack Obama for his signature.
U.S. Rep. Denny Rehberg, Montana’s only House member, was among the 151 Republicans voting against it. He issued no statement on his vote — one of his last as a congressman.
Rehberg lost a bid to unseat Tester in last year’s U.S. Senate race in Montana. Republican Steve Daines, who won Rehberg’s open seat, will be sworn in Thursday as Montana’s next congressman.
Baucus said the measure provides some needed tax certainty for renewable-power producers and family farms, ranches and businesses who could be affected by the federal estate tax.
A production tax credit paid to wind power and other renewable-power producers is extended through 2014, and the estate tax exemption is permanent, he noted. The bill exempts estates up to $10 million from any federal inheritance tax for couples and indexes that amount to inflation.
“There are a lot of farmers and ranchers in Montana" affected by this, Baucus said. “Basically, it’s family businesses that are affected.”
Tester also lauded the certainty in tax rates that the bill brings but said he hopes the next Congress will get to work on a “big, bipartisan deal” that cuts the deficit over the long term and “really does get us on a sound fiscal path for the future.”
Everything should be on the table for possible reductions, but Congress should ensure that social-safety-net programs, like Medicare, are not harmed, he said.
“If Democrats or Republicans try to do it alone … there is so much political hay that can be brought forth that nobody can stand it,” Tester said.
Baucus echoed Tester’s wish for bipartisan work on the daunting task of whittling down the nation’s debt.
“We have to get rid of this partisanship that goes on in Washington,” he said. “Our job is not to win partisan fights but to serve the people. … You have to reach out to people, talk to people and build up trust.”
Baucus said the Senate Finance Committee, which he chairs, sat down last fall and hashed out a package of tax credit extensions that made it into the final version of the fiscal-cliff bill.