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World / US and Canada

US Senate passes 'fiscal cliff' deal

(Xinhua) Updated: 2013-01-01 17:02

WASHINGTON - The US 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 cleared the Senate with a 89-8 vote. It came about two hours after the Dec 31 deadline had lapsed.

An agreement emerged at Monday night after a day of intensive negotiations as both parties made last-ditch efforts to bridge differences.

The plan would prevent tax rate rise on individuals with annual income below $400,000 and households making up to $450,000.

Meanwhile, the start of $1.2 trillion 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 which benefits about 2 million long-term unemployed people 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 would adjourn 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.

"We're going to still have more work to do. We still have deficits that have to be dealt with. We're still going to have to think about how to put our economy on a long-term trajectory of growth," US President Barack Obama said earlier on Monday.

The failure of a deal in the Congress by Tuesday meant that the United States technically fell off the "cliff" at least temporarily. But analysts said the lawmakers could take retroactive measures in the following days to reverse the situation.

 

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