WASHINGTON: After
fervent New Year brinkmanship, the US Congress on Wednesday finally backed
a deal to avert a "fiscal cliff" of tax hikes and slashing
spending cuts that had threatened to unleash economic calamity.
As global stock
markets made their 2013 debut, the House of Representatives passed a deal
between the White House and Senate Republicans to raise taxes on the rich
and put off automatic $109 billion budget cuts for two months.
The deal passed the
Senate early on Tuesday, but its fate hung in the balance for hours as
House conservatives sought to amend it to include big spending cuts, which
would likely have killed it.
In the end, the
House voted 257 votes to 167 to pass the original bill with minority
Democrats joining a smaller number of majority Republicans to pass the
legislation after a bitterly contested and unusual session on New Year's
Day.
President Barack
Obama planned to make brief remarks at the White House within minutes of
passage of the deal, which relieved investors who feared that continued
logjam could have sent global stock markets spinning.
Had the deal
splintered, all Americans would have been hit by tax increases and the
spending cuts would have kicked in across the government, in a combined
$500 billion shock that could have rocked the fragile recovery.
The House vote took
place after a conservative rebellion fizzled when it became clear there
were not sufficient votes in the restive Republican caucus to send an
amended version of the bill with spending cuts back to the Senate.
Republican party
leaders ultimately feared they would carry the can if the deal collapsed,
leaving Americans enraged by higher taxes and the prospect that an economy
slowly recovering from crisis could be plunged back into recession.
The angry political
feuding which spanned the Christmas and New Year holidays reflected the
near impossibility in forging compromise in Washington, where power is
divided between a Democratic president and Republican House.
It also was a signal
that Obama, despite a thumping re-election win in November, may find tough
sailing for his major second term legislative goals, including immigration
reform, clean energy legislation and gun control.
The truce in
Washington's dysfunctional, divided Congress is likely to be brief, given
the fight that will ensue over the spending cuts that now looms at the end
of February as well as over regular budget bill extensions.
Those fights will be
paralleled by one over Obama's request for Congress to lift the country's
$16 trillion borrowing limit. Republicans are demanding concessions on
expenditures while Obama has warned he will not bargain.
Democratic
congressman Jim Moran warned that Tuesday's deal would simply "set up
three more fiscal cliffs."
"We're going to
look back on this night and regret it."
Earlier, House
Speaker John Boehner's coalition vented fury that the deal had not
contained significant spending cuts to eat into national debt.
"We have to in
some way address spending," Republican congressman Spencer Bachus
said.
The powerful number
two Republican in the chamber Eric Cantor had injected momentum into the
rebellion after he told a high-stakes meeting of the party caucus that he
was opposed to the bill.
The deal to avert
the fiscal cliff agreed on Monday raised income taxes only on households
earning $450,000 a year and exempted anyone else.
The vote represented
a win for Obama as it raises taxes on the richest Americans in line with a
re-election campaign promise -- albeit above an income threshold higher
than he and other Democrats had wanted.
The deal also
includes an end to a temporary two percent cut to payroll taxes for Social
Security retirement savings -- meaning all Americans will pay a little more
-- and changes to inheritance and investment taxes.
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