US House to vote to avert fiscal cliff
After a day of twisting political drama, the US Congress was expected to finally endorse a deal to avert the "fiscal cliff" budget crisis that had threatened to unleash a new recession. Hours before many major global financial markets make their 2013 debut, the House of Representatives was to vote on a bid to raise taxes on the rich and put off a $109 billion dollar program of spending 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 its chance of passage. 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 was due to vote within hours on an up or down vote on the deal agreed between Senate Republicans and President Barack Obama's White House. A majority of 217 votes was seen as a certainty given that Obama's Democrats were certain to back the pact along with some of the Republican majority. The vote will take 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 of that an economy still slowly bouncing back from the worst crisis in decades could be plunged back into recession. "There's a growing sense that, you know... you do have to know when to hold them and when to fold them. We've been beaten in this fight," retiring Ohio Republican Congressman Steve LaTourette told CNN. Earlier, Boehner's coalition vented fury that the deal negotiated by the White House and top Senate Republicans had not contained significant spending cuts to eat into national debt that is worth more than $16 trillion. "We have to in some way address spending," Republican congressman Spencer Bachus said. Another House Republican, Tim Huelskamp, said that the powerful number two Republican in the chamber Eric Cantor told a high-stakes meeting of the party caucus that he was opposed to the bill. "The principal reason is there are no spending cuts," said Huelskamp. At the turn of the year, every American became liable to a tax hike with the expiry of rate cuts first passed under former president George W. Bush. 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. It put off the spending cuts -- known as the sequester -- for two months, setting up another bitter political cliffhanger at the end of February. If the legislation does pass the House unamended, it will represent 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. Obama issued a statement shortly after the 2:00 am (0700 GMT) Senate vote, urging House lawmakers to pass the bill "without delay." The White House said the tax agreement was "a victory for middle-class families and the economy," and laid out the raft of measures contained in the legislation. "For the first time in 20 years, Congress will have acted on a bipartisan basis to vote for significant new revenue," it said. 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.
