WASHINGTON, Jan. 1 (Xinhua) -- The U.S. Senate passed a plan to avert the "fiscal cliff" at midnight Monday, which would extend current tax rates for most American households and postpone the automatic spending cuts that threaten a new recession.
The bill came too late for the Congress to meet its deadline of New Year's Eve for passing laws to halt a combination of tax increases and spending cuts totaling more than 600 billion dollars, which strictly speaking came into force on Tuesday.
The bill cleared the Senate with a 89-8 vote, while its fate in the House of Representatives is uncertain.
The agreement emerged at Monday night after a day of intensive negotiations as both parties made last-ditch efforts to bridge differences.
U.S. Vice President Joe Biden, who negotiated the deal with the Senate Republican leader Mitch McConnell, went to Capitol Hill Monday night to build support among senators.
The plan would prevent a tax rate rise on individuals with an annual income below 400,000 U.S. dollars and households making up to 450,000 dollars.
Meanwhile, the start of 1.2 trillion dollars in automatic spending cuts over 10 years, known as the "sequester," would be put off for two months. It had been scheduled to begin with the new year.
Under the deal, jobless insurance benefits for about 2 million long-term unemployed would be extended for a year.
The Republicans dropped their long-term resistance to higher tax rates and accepted a delay in spending cuts, while the Democrats compromised on the income threshold for tax rise and softened their stance on estate taxes.
The plan still needs approval from the House of Representatives that adjourns till Tuesday noon and a vote is expected on Tuesday at the earliest. It is uncertain whether it would get enough GOP support.
"The House will honor its commitment to consider the Senate agreement if it is passed. Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members -- and the American people -- have been able to review the legislation," House GOP leaders said in a joint statement.
"There's more work to do to reduce our deficit, and I'm willing to do it. But tonight's agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans," President Barack Obama said in a statement following the vote.
He argued that the agreement is the right thing to do for the country and that the House should pass it without delay.
The failure of a deal in the Congress by Tuesday meant that the United States technically fell off the "cliff" at least temporarily.
Analysts, however, said the lawmakers could take retroactive measures in the following days to reverse the situation. With the financial market closed on Tuesday, the impact of falling off the "fiscal cliff" for one day would be limited.
Experts cautioned that an approval from the House on Tuesday would not mark the end of the budget fights. The two-month suspension of spending cuts would set up another political showdown over the spending cuts in two months which would be perplexed by a possible fight over the debt ceiling.
The U.S. Treasury Department said last week the federal government would reach its debt limit of 16.4 trillion dollars on Dec. 31. The Treasury will take certain extraordinary measures to temporarily postpone the date, which is expected to help the federal government run for about two months.
The nonpartisan Congressional Budget Office warned that if the "fiscal cliff" is allowed to fully take hold, the American economy will be dragged into a recession in 2013.
WASHINGTON, Jan. 1 (Xinhua) -- The U.S. Senate passed a plan to avert the "fiscal cliff" at midnight Monday, which would extend current tax rates for most American households and postpone the automatic spending cuts that threaten a new recession. Full story
BEIJING, Jan. 1 (Xinhua) -- The American people were once better known for their ability to make tough choices on difficult issues.
So it was really frustrating for many people in this part of the world when they woke up on the first day of 2013 and found out U.S. politicians had once again failed to reach a deal to avoid the so-called "fiscal cliff". Full story
WASHINGTON, Dec. 31 (Xinhua)-- U.S. President Barack Obama said here on Monday that an agreement to avert the "fiscal cliff," particularly the impending tax hikes for middle-class Americans, was "within sight" but "not done" yet.
"Today it appears that an agreement to prevent this New Year's tax hike is within sight, but it is not done. There are still issues left to resolve, but we're hopeful that Congress can get it done," Obama said at the White House. Full story