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Goodbye fiscal cliff, hello debt woes

Three cheers to Congress for passing last-minute legislation to keep the country from falling off the so-called fiscal cliff.

Wall Street celebrated Wednesday morning by sending the stock market soaring. Had Congress failed to act, you can bet the market would have been soaring the other direction.

It's a sign of the times that the nation was legitimately worried that Congress would not act -- something that economists said could have sent the nation spinning back into recession.

The compromise bill that passed the U.S. House early Wednesday morning had something for everyone to dislike: Conservatives were unhappy that it focused largely on preventing tax hikes and had few spending cuts.

Other than averting a new recession, which is huge in itself, the package did little to address the country's deficit spending and national debt problems.

Liberals were unhappy that it extended the definition of middle class up to income of $450,000 for a married couple and $400,000 for singles. Those whose incomes are higher than that will see their rates rise to the Clinton Administration levels -- about 4.5 percent higher than they are now.

And wealthy people will be able to leave more of their money to their heirs, since the estate tax now exempts the first $5 million of an estate.

Middle class and poor Americans have good reason to celebrate, since their current low income tax rate has been made permanent, and the earned income tax credit and child tax credit have been spared -- things that are of major importance to those with lower incomes.

On the down side, the payroll tax holiday is over -- meaning higher payroll taxes of about $1,000 a year on someone who earns $50,000 a year.

That tax hike will affect all workers.

A bigger downside is that the stage has been set for a new showdown in two months over raising the limit on the national debt. Republicans hope to use that to their advantage to force spending cuts. President Obama has said repeatedly he won't negotiate again for a higher debt ceiling.

The last time the two sides fought over the debt ceiling, a major credit agency downgraded the nation's credit rating.

If investors lose confidence that the United States will pay its debts, the interest rate the nation has to pay to borrow will rise like it has for Greece, Portugal, Spain and Italy.

That's a dangerous game for Congress to play, and it could end up costing taxpayers a lot of money.

It would be far better for Republicans and Democrats to reach some kind of grand bargain to get a handle on rising entitlement costs.

Leaders from both parties know it's a problem that needs to be fixed. They should come together and fix it, instead of trying to nickel and dime spending cuts every time the national debt reaches its ceiling.

In short, we're relieved Congress acted to keep the country from falling off the fiscal cliff -- but the real work is yet to be done. Let's hope the Obama Administration and the new Congress that is seated Thursday at noon are up to the task.