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Obama praises House vote on “fiscal cliff” deal
House Speaker John Boehner and other Republican House leaders stayed silent during the debate on the House floor, an unusual move for a major vote.
The deal shatters two decades of Republican anti-tax orthodoxy by raising rates on the wealthiest even as it makes cuts for everybody else permanent.
Lawmakers had struggled to find a way to head off across-the-board tax hikes and spending cuts worth US$600 billion that began to take effect at midnight on January 1, a legacy of earlier failed budget deals that is known as the fiscal cliff.
Strictly speaking, the United States went over the cliff in the first minutes of the New Year because Congress failed to act on time. But the bill passed on Tuesday will be backdated.
While many Republicans were uneasy with the tax hikes and wanted more spending cuts, they seemed to realize that the fiscal cliff would begin to damage the economy once financial markets and federal government offices returned to work on Wednesday. Opinion polls show the public would blame Republicans if a deal were to fall apart.
Income tax rates will now rise on families earning more than US$450,000 per year and the amount of deductions they can take to lower their tax bill will be limited.
Low temporary rates that have been in place for the past decade will be made permanent for less-affluent taxpayers, along with a range of targeted tax breaks put in place to fight the 2009 economic downturn.
