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Mainers Greet 'Fiscal Cliff' Deal with Lukewarm Praise
01/02/2013   Reported By: Jay Field

Members of Maine's Congressional delegation and key state business leaders are offering only lukewarm praise for the deal in Washington to avert the fiscal cliff. Democratic Reps. Chellie Pingree and Mike Michaud joined Republican U.S. Senators Olympia Snowe and Susan Collins in supporting the compromise when it passed the U.S. House late last night. The measure heads off across-the-board tax hikes for millions of Americans, extends unemployment benefits and prevents the price of milk from going up. But as Jay Field reports, it also ends the payroll tax holiday and delays tough decisions on spending cuts to lower the deficit.

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Even before last night's vote, the next two months were all but guaranteed to feature more of the political brinksmanship that's become routine in Washington, and left individuals and businesses across the country unsettled.

Congress already faced a late February deadline to raise the debt ceiling or risk throwing the U.S. government into default on its obligations. Now, thanks to the deal averting the fiscal cliff, the White House and Congress have until early March to reduce spending enough to avoid sequestration - deep, automatic cuts to domestic and military programs that will hit Maine hard.

"Bath Iron Works, the Portsmouth Naval Shipward, the Pratt and Whitney Plant in North Berwick, the Maine Military Authority in Limestone, all of those play critical roles in helping us meet our defense needs," says Maine U.S. Sen. Susan Collins. "And yet they would be subjected to a disproportionate share of the sequestration cuts."

These cuts would have kicked in immediately, if Congress had not moved to pass the last-minute compromise to head off the fiscal cliff. Collins, who joined Olympia Snowe in supporting the measure in the Senate, says the tortured compromise averted a crisis, but came at a cost.

"I can't tell you how many employers in Maine had told me, during the past six months, that they were putting hiring plans and investment plans on hold until Congress and the president got their act together in Washington, so that they had a better sense of what the economy was going to be for this year," Collins says.

Business leaders in Maine say companies will, in all likelihood, remain on the sidelines and not make any dramatic moves towards growth until the spring. Dana Connors heads the Maine State Chamber of Commerce.

"Questions surrounding the spending remains to be determined, and until it is, there will still be a certain apprehension, even though there has been some relief by knowing that action has been taken," Connors says.

Some of actions taken in the fiscal cliff compromise are not insignificant. The deal raises income tax rates on individuals and couples earning more than $400,000 and $450,000 a year, respectively. Chellie Pingree was one of 172 Democratic members of the House to vote for the measure.

"This did have some important moves forward," the 1st District congresswoman says. "We extended unemployment for those people who are still struggling. We preserved the tax cuts for the middle class."

Pingree says no one in Congress, in either party, got everything they wanted out of the deal. Maine's other representative, Mike Michaud, voted for the bill, but was unhappy with a provision that gives a $5 million, permanent estate tax exemption to individuals, and $10 million immunity to couples. He says those thresholds are too high.

"By having a five and ten (million), that adds more to the deficit and to trying to solve that problem," Michaud says. "I think the problem the president has is he has not had a very good working relationship with Congress. And I'm not talking just about Republicans - on the Democratic side either.

It's a dynamic that will likely continue to be problematic, as the president and Congress try to work out agreements on the debt ceiling and spending cuts in the coming months.



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