The US fiscal cliff agreement, which passed through Congress on the first day of the year, showed most US politicians in a bad light. Only at the very last minute before significant tax increases and spending cuts would have taken effect, did all participants agree to (i) a deferral of these measures for two months, (ii) a 4.6% tax increase on all incomes over $450,000, and (iii) a 2% payroll tax increase on all incomes up to $107,000. Obama got the tax increase for the top 1% of earners that he had campaigned for, which will raise about $60bn a year, and the Republicans demanded no further extension of the payroll tax cut, which will raise about $125bn a year. Together these measures will reduce US consumer incomes by a little over 1% of GDP in 2013.