Congress passes fiscal cliff bill; President to sign into law
Overcoming Republican resistance, the US House of Representatives late Tuesday night passed the "fiscal cliff" bill by 257 to 167 votes, ending a dramatic New Year's Day showdown over income taxes and deep federal spending cuts.
The bill, which was passed by the Senate (89 to 8 votes) in the wee hours of the New Year, would now go to the White House for US President Barack Obama to sign into law, which would end months of anxious moments with regard to fiscal cliff.
Had not passed, fiscal cliff would have resulted in increased tax rates for more than 98 per cent of Americans.
The passage of the legislation by the Republican-majority House was not before some anxious moments during the day, when some of the Republican leaders were mulling bringing amendment to the bill passed by the Senate, but gave up as they were unable to muster enough support.
The Senate bill in itself was a result of the days of negotiations between the Democrats, Republicans and the White House and required the services of US Vice President Joe Biden.
"The House passage of the Senate's bipartisan legislation is a victory for the middle class," said House Minority Leader Nancy Pelosi.
"Our action permanently extends the middle class tax cut and promotes economic growth, while asking the wealthiest Americans to pay their fair share. It extends unemployment insurance for those who lost their jobs through no fault of their own," she said.
"With the passage of this measure, we strengthen the principle that we must have equal parts revenue and spending cuts as we work to reduce our deficit.
"We strengthen our economy through investments in innovation, tax credits for education, and tax breaks to spur the technologies of the future, including renewable energy," Pelosi said.
"Tonight's progress is not only a victory for the middle class but for the President and Vice President who campaigned on protecting the middle class – and kept their promise to the American people," Pelosi said in a statement.
The Democratic Congressional Campaign Committee Chairman Steve Israel in a statement said the bill protects the middle class from a huge tax increase.
"For the first time in more than 20 years, Congress has acted to protect tax cuts for the middle class while asking millionaires to pay their fair share," he said.
"The middle class deserves solutions instead of ideology. While President Obama, Vice-President Biden, Senate and House Democrats and even Senate Republicans were working to get to yes, the Tea Party Republicans seemed insistent on finding a way to no," he said.
The legislation as passed by the Congress besides permanently extending the Bush-era income tax rates on individual income up to USD 400,000 and family income up to USD 450,000, also sets permanently the estate tax rate at 40 per cent, up from 35 per cent, and exempts inheritances below USD 5 million.
In addition to an extension of unemployment benefits for one year, it extends 2009 stimulus provisions including the earned income tax credit, child tax credit and college tax credit for five years.
The bill postpones the automatic spending cuts known as the sequester for two months and offsets the USD 24 billion cost of the delay with a mix of spending cuts and new revenues.
Earlier the Congressional Budget Office (CBO), in a report, had warned that fiscal cliff could dampen economic growth by 0.5 per cent. That could tip the US economy into a recession and driving unemployment from its current 7.7 per cent back over nine per cent, the non-partisan CBO estimated.