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By Scott Wong (
mailto:swong@politico.com
swong@politico.com or @scottwongDC)

THE CLIFF DEAL THAT ALMOST WASN'T - President Obama hasn't even signed the fiscal cliff bill into law yet, but POLITICO's John Bresnahan, Carrie Budoff Brown, Manu Raju and Jake Sherman already have a behind-the-scenes look at how close the nation came to an economic catastrophe. And they offer further proof Congress is really just one, big dysfunctional family: "House Speaker John Boehner couldn't hold back when he spotted Senate Majority Leader Harry Reid in the White House lobby last Friday. It was only a few days before the nation would go over the fiscal cliff, no bipartisan agreement was in sight, and Reid had just publicly accused Boehner of running a 'dictatorship' in the House and
caring more about holding onto his gavel than striking a deal. 'Go f- yourself,' Boehner sniped as he pointed his finger at Reid, according to multiple sources present. Reid, a bit startled, replied: 'What are you talking about?' Boehner repeated: 'Go f- yourself.'

-- "The harsh exchange just a few steps from the Oval Office - which Boehner later bragged about to fellow Republicans - was only one episode in nearly two months of high-stakes negotiations laced with distrust, miscommunication, false starts and yelling matches as Washington struggled to ward off $500 billion in tax hikes and spending cuts. ...

-- "It took a late intervention of two Senate veterans - Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden - to rescue the negotiations. ... But even those longtime Washington hands couldn't prevent a New Year's Day drama in the House. Boehner weathered a revolt against the bill, which played out during two meetings in the Capitol basement, where his fellow GOP lawmakers lashed out at having to accept the measure without spending cuts. After hours of uncertainty - even insults against 'sleep-deprived octogenarians' from the Senate who passed the bill in the dead of night - the House gave final approval to the deal, 257-167. It was carried by 172 Democrats and 85
Republicans. And it exposed another split: Boehner voted yes, but his top deputies Majority Leader Eric Cantor of Virginia and Majority Whip Kevin McCarthy of California voted no."
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HOW IT PLAYED: N.Y. Times: "Under pressure, House approves Senate tax deal." WSJ: "Congress Passes Cliff Deal." Washington Post: "'Cliff' solution heads to Obama." L.A. Times: "'Fiscal cliff' plan clears House with GOP divided." USA Today" "House averts 'fiscal cliff.'" N.Y. Post: "LEAP OF FAITH: GOP breaks ranks to pass bill."

GOOD WEDNESDAY MORNING, JANUARY 2, 2013. Happy New Year and welcome to the first 2013 edition of The Huddle, your play-by-play preview of the day's congressional news. Send tips, suggestions, comments, complaints and corrections to
mailto:swong@politico.com
swong@politico.com . If you don't already, please follow me on Twitter @scottwongDC.

My new followers include but are not limited to @RepRichHudson and @LisaMascaroinDC.

TODAY IN CONGRESS - The House is in at 10 a.m. and the Senate at noon though no votes are currently scheduled.

HOUSE REPUBLICANS A NEW BREED - Jonathan Weisman writes on A1 of the New York Times: "House Republican leaders struggled all day to quell a revolt among caucus members who threatened to blow up a hard-fought compromise that they could have easily framed as a victory. Many House Republicans seemed determined to put themselves in a position to be blamed for sending the nation's economy into a potential tailspin under the weight of automatic tax increases and spending cuts.

-- "The latest internal party struggle on Capitol Hill surprised even Senate Republicans, who had voted overwhelmingly for a deal largely hashed out by their leader, Mitch McConnell of Kentucky. The bill passed the Senate, 89 to 8, at 2 a.m. on Tuesday, with only 5 of the chamber's 47 Republicans voting no. Twenty-one hours later, the same measure was opposed by 151 of the 236 Republicans voting in the House. It was further proof that House Republicans are a new breed, less enamored of tax cuts per se than they are driven to shrink government through steep spending cuts. Protecting nearly 99 percent of the nation's households from an income tax increase was not enough if taxes rose on some
and government spending was untouched."
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DEAL DOES LITTLE TO TAME ECONOMIC THREATS - "The deal to which the House gave final approval late Tuesday will head off the most severe effects of the 'fiscal cliff" by averting a dangerous dose of austerity but still leaves the economy vulnerable to both immediate and more distant threats," WaPo's Zachary Goldfarb writes on A1. "The agreement, which the Senate approved only hours after the government hit the limit on federal borrowing, fails to defuse the prospect of a catastrophic national default two months from now. The deal does not raise the debt ceiling, leaving the Treasury to use what it calls 'extraordinary measures' as long as it can to pay the government's bills. Nor does the
package do anything to address stubbornly high levels of unemployment, with 12 million Americans out of work. Instead, the deal could aggravate the problem. By allowing the payroll tax cut to expire, the deal takes money out of the hands of many Americans, sucking it out of the economy and slowing economic activity. And finally, the deal is too modest to fundamentally tame the government's soaring debt."
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EUROPEAN STOCKS RISE, U.S. DOLLAR FALLS - Michael Shanahan writes for Bloomberg: "European stocks, U.S. equity futures and commodities gained after lawmakers passed a bill averting spending cuts and tax gains threatening a recovery in the world's biggest economy. The dollar and yen weakened as yields on Treasury 10-year notes rose to a two week high."
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-- WSJ: "Lack of Grand Bargain Complicates Obama's Priorities," By Colleen McCain Nelson:
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OBAMA REACTS TO DEAL, WARNS ON DEBT CEILING FIGHT -- Then he hopped a flight to Hawaii to rejoin his family on vacation: "As I've demonstrated throughout the past several weeks, I am very open to compromise.I agree with Democrats and Republicans that the aging population and the rising cost of health care makes Medicare the biggest contributor to our deficit.I believe we've got to find ways to reform that program without hurting seniors who count on it to survive.And I believe that there's further unnecessary spending in government that we can eliminate. But we can't simply cut our way to prosperity....

-- "[W]hile I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up through the laws that they passed.Let me repeat:We can't not pay bills that we've already incurred.If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic -- far worse than the impact of a fiscal cliff. People will remember, back in 2011, the last time this course of action was threatened, our entire recovery was put at risk.Consumer confidence plunged.Business investment plunged. Growth dropped.We
can't go down that path again.

SIMPSON AND BOWLES: DEAL A 'MISSED OPPORTUNITY' - Former GOP Sen. Alan Simpson and Democrat Erskine Bowles write in a joint statement: "The deal approved today is truly a missed opportunity to do something big to reduce our long term fiscal problems, but it is a small step forward in our efforts to reduce the federal deficit.It follows on the $1 trillion reduction in spending that was done in last year's Budget Control Act. While both steps advance the efforts to put our fiscal house in order, neither one nor the combination of the two come close to solving our Nation's debt and deficit problems. Our leaders must now have the courage to reform our tax code and entitlement programs such
that we stabilize our debt and put it on a downward path as a percent of the economy."

COVERING THE CLIFF - POLITICO's Alexander Trowbridge shadows three Hill reporters - CNN's Dana Bash, and our own Jake Sherman and Manu Raju - as they cover the fiscal cliff story. Watch here:
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LaTOURETTE TAKES PARTING SHOT AT ISSA - Retiring Rep. Steve LaTourette (R-Ohio), a close ally of Speaker Boehner, took a dig at former high school classmate Rep. Darrell Issa (R-Calif.), who jokingly said the Senate must have been partying and drinking when they passed the fiscal cliff bill at 2 a.m. on New Year's Day. LaTourette said he "didn't see him a lot in class." BuzzFeed flags the CNN clip:
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PUBLIC NOTICE LAUNCHES "TALK IS CHEAP' CAMPAIGN -- Public Notice's Bankrupting America project is launching a month-long campaign aimed at holding the president and members of Congress accountable for their promises to cut spending. The campaign is titled 'Talk Is Cheap. Overspending Is Not' and will feature ads in Union Station Metro and Cap South as well as an online buy to support it. Check out the ads here:
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112TH CONGRESS' LEGACY: UNFINISHED BUSINESS - Jonathan Allen reports for the hometown paper: "The 112th Congress came in with a bang, but it is crawling out with the soft whimper of failure. For two years, President Barack Obama and Congress ignored virtually every other pressing matter to engage in an ideological war over the size of government and who should foot the bill for it. They racked up more processes than policies: a blue-ribbon White House commission, Vice President Joe Biden's working group, bilateral talks between Obama and Speaker John Boehner, a 'supercommittee,' a 'Gang of Six' that became a 'Gang of Eight' and, finally, Biden and Senate Minority Leader Mitch McConnell
(R-Ky.) coming to a deal that leaves open as many politically thorny issues as it solves. ...

--"The deal isn't a pure punt: Obama got a scaled-back version of the tax hike he sought on the campaign trail, with the two sides agreeing to set $450,000 - rather than the $250,000 he wanted - as the income threshold at which tax rates would rise from 35 percent to 39.6 percent. Republicans won by locking in the vast majority of the Bush tax cuts in a 'permanent' fashion rarely seen on Capitol Hill. Moreover, they compromised on provisions that resolved for the long term the rates taxpayers will pay on capital gains, dividends, estates and alternative minimum taxes. But the measure took two steps back for each step forward. It forestalled the 'sequester' spending cuts that the president
and Congress agreed to in the summer of 2011. More glaring, the Joint Committee on Taxation estimates that the deal would add $3.9 trillion to the debt over the next decade because of lost revenue from locking in rates on individual income, estates and investment, as well as renewing tax breaks for individuals and corporations."
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POLL: MORE WORRY THAN HOPE FOR NEW YEAR - Susan Page relays the results of a new USA Today/Gallup poll: "Battered by an economy that is only slow recovering - and soured by the spectacle of Washington dysfunction in the 'fiscal cliff' debate - views of the nation's future and its fundamental promise have darkened in the four years since Barack Obama's first inauguration. ...By 50%-47%, respondents say the country's best years are behind us. Results from the nationwide poll and interviews in this Ohio River Valley city, which counts George Washington among its founders, underscore the rocky road Obama and other officials face in convincing Americans the nation can address its
most persistent problems - and that they can be trusted to lead the way. In the new poll, more than three of four Americans say the way politics works in Washington is causing serious harm to the country."
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HOUSE GOP DROPS SANDY AID - David Rogers has the latest on billions for hurricane relief: "House Republicans abruptly pulled the plug Tuesday night on their promise to take up this week an emergency supplemental disaster aid bill for Northeast states damaged by Hurricane Sandy. The decision is a stunning reversal since just hours before New Jersey lawmakers were preparing for floor debate Wednesday as outlined under a strategy promoted by no less than Majority Leader Eric Cantor (R-Va.). Indeed the Appropriations Committee had gone so far as to file a $27 billion bill Tuesday together with an amendment to be offered by Rep. Rodney Frelinghuysen (R-N.J.) seeking an additional $33 billion to
match the Senate passed package of last week. Absent a change of heart, the upshot now is that the Senate bill will die with this Congress on Thursday at noon. ...

-- "'I am stunned, stunned,' Rep. Rob Andrews (D-N.J.) told POLITICO. 'I assume there is as tactical consideration here, that the Republican leadership didn't want to be anywhere near a big spending bill after the fiasco of their handling the tax debate. I understand the tactics but there is a real human need here that is being ignored.'"
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FORGET BLUE OR RED, N.H. TURNS PINK - Katharine Q. Seelye writes for the NYT: "Most states are red or blue. A few are purple. After the November election, New Hampshire turned pink.Women won the state's two Congressional seats. Women already held the state's two Senate seats. When they are all sworn into office on Thursday, New Hampshire will become the first state in the nation's history to send an all-female delegation to Washington. And the matriarchy does not end there. New Hampshire's new governor is a woman. So are the speaker of the State House and the chief justice of the State Supreme Court.'Pink is the new power color in New Hampshire,' declared Ann McLane Kuster, one of the newly
elected representatives, at a recent forum at the New Hampshire Institute of Politics at St. Anselm College in Manchester, where the women's historic milestone was celebrated."
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HOUSE DEMS LEARN TO PLAY HARD BALL- Jonathan Strong writes for Roll Call: "House Democrats are finally playing hardball in their role as a minority party, putting the onus on Republicans to find the votes within their own conference to pass legislation. Their newfound edge forced the GOP's hand in the fiscal cliff showdown, helping bring down Speaker John A. Boehner's 'plan B' legislation as well as Tuesday's failed GOP effort to amend the Senate-passed fiscal cliff deal.The 112th Congress was full of instances where Democrats helped Republicans pass big-ticket items. On the debt ceiling deal, payroll tax holiday extension and other bills, dozens of Republicans defected, but the legislation
still passed.If House Democrats stay united in future battles, the dynamic could keep the focus on whether Boehner has control of his conference, which will shrink with the 113th Congress."
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TRIVIA IS BACK. Jim Brewer has today's question: Congress has rarely met after Christmas during a lame-duck session. Since 1935, when Congress was first required to start their new session on January 3 of each year, which Congress had the longest lame-duck session? You can provide the Congress or the year(s). First to correctly answer gets a mention in the next day's Huddle. Email me at
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