What is exactly in 'fiscal cliff' plan?
US Senate votes 89-8 on a bill to stop the across-the-board tax increases and program budget cuts, now it goes to the House.PT1M31S http://www.dailylife.com.au/action/externalEmbeddedPlayer?id=d-2c4o3 620 349 January 2, 2013
Ending a climactic fiscal showdown, the US House of Representatives has passed legislation to avert big income tax increases on most Americans and prevent large cuts in spending for the Pentagon and other government programs.
The measure, brought to the House floor less than 24 hours after its passage in the Senate, passed 257-167, with 85 Republicans joining 172 Democrats in voting to allow income taxes to rise for the first time in two decades, in this case for Americans earning more than $US400,000 ($385,000) for individuals, or $US450,000 ($433,000) for couples.
US President Barack Obama ... happy a deal has gone through. Photo: AP
Voting no were 151 Republicans and 16 Democrats.
The bill is expected to be signed quickly by the President. Barack Obama, who won re-election on a promise to increase taxes on the wealthiest Americans to force them to pay a larger share of the government budget.
Mr Obama strode into the White House briefing room shortly after the vote to hail the end of the fiscal crisis but to lay out a marker for the next one.
Speaker John Boehner (centre) after a meeting where Republicans discussed the controversial bill. Photo: Getty
"The one thing that I think hopefully the new year will focus on is seeing if we can put a package like this together with a little bit less drama, a little less brinkmanship, and not scare the heck out of folks quite as much," he said.
The measure isn’t the grand bargain on deficit reduction the politicians wanted when they created the tax-and-spending deadlines over the past three years.
Instead, it averts most of the immediate pain and postpones Congress’s fiscal feud for two months - until a February fight over raising the $16.4 trillion debt limit.
Against the bill ... Eric Cantor. Photo: AP
Not a single leader among House Republicans came to the floor to speak in favor of the bill though the Speaker, John Boehner, who does not take part in every roll call, voted in favour.
Eric Cantor of Virginia, the Republican majority leader, and Kevin McCarthy of California, the No.3 Republican, voted no. Paul Ryan, the budget chairman who was the Republican vice-presidential candidate, supported the bill.
Mr Obama warned Republicans against trying to use a forthcoming vote on raising the debt ceiling to extract spending concessions.
‘‘While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills they’ve already racked up through the laws they have passed,’’ he said.
‘‘Let me repeat, we can’t not pay bills that we’ve already incurred.’’
In approving the measure after days of legislative intrigue, Congress concluded its final and most pitched fight over fiscal policy, the culmination of two years of battles over taxes, the federal debt, spending and what to do to slow the growth in popular social programs like Medicare.
The decision by the Republican leadership to allow the vote came despite widespread scorn among House Republicans for the bill — passed overwhelmingly by the Senate in the early hours of New Year’s Day — because it did not include significant spending cuts in health and other social programs. They say cuts are essential to any long-term solution to the nation’s debt.
Earlier, state and local government officials had said inaction would deal a setback to the economy, hammering revenue and undermining a newfound financial stability.
‘‘If we truly went over the fiscal cliff and we had a recession, that would be just devastating,’’ Donald Boyd, a fellow at the Nelson A. Rockefeller Institute of Government in Albany, New York who studies state finances, said ahead of the agreement.
‘‘Taking that off the table, it removes a massive worry.’’
Worked out by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, a Kentucky Republican, the Senate's bill makes permanent the income tax cuts for workers that earn less than $400,000, continues expanded unemployment benefits, and delays automatic spending cuts for two months.
It lets a 2 per cent payroll tax cut expire.
Earlier, Oklahoma Representative Tom Cole, a Republican, said he expected the House to pass the Senate’s plan unchanged with a "substantial" bipartisan vote.
"Let’s accept the wins that we have and live to fight another day," Cole said in an interview on Bloomberg Television.
What is the fiscal cliff?
The fiscal cliff was a political trip wire set in place by politicians.
It came into being last year, when the Republicans in Congress, many of whom were swept to power in the Tea Party revolution of 2010, refused to raise what is known as the debt ceiling – the amount of money Congress would allow the government to collect to pay its bills.
Unable to come up with a deal to curb the nation's spiralling debt and deficit, Congress instead 'kicked the can down the road'. The Republicans agreed to raise the debt ceiling only if both sides accepted a set of debt and deficit reduction measures so savage and arbitrary they would force the parties to agree on more sophisticated measures before they kicked in on January 1.
This set of tax increases and spending cuts became known as the fiscal cliff – a term first used by Ben Bernanke, the chairman of the US Federal Reserve.
The New York Times, with wires and Nick O'Malley