Hours past a self-imposed deadline for action, the Senate passed
legislation early New Year's Day to neutralize a fiscal cliff
combination of across-the-board tax increases and spending cuts that
kicked in at midnight. The pre-dawn vote was 89-8.
Senate passage set the stage for a final showdown in the House, where a vote was expected later Tuesday or perhaps Wednesday.
the deal, taxes would remain steady for the middle class and rise at
incomes over $400,000 for individuals and $450,000 for couples - levels
higher than President Obama had campaigned for in his successful drive
for a second term in office.
Spending cuts totaling $24 billion
over two months aimed at the Pentagon and domestic programs would be
deferred. That would allow the White House and lawmakers time to regroup
before plunging very quickly into a new round of budget brinkmanship
certain to revolve around Republican calls to rein in the cost of
Medicare and other government benefit programs.
Shortly after the
Senate vote, President Obama said, "While neither Democrats nor
Republicans got everything they wanted, this agreement is the right
thing to do for our country and the House should pass it without delay."
also said the bill takes a balanced approach to shrinking the U.S.
deficit by "investing in (the) middle class" while "asking the wealthy
to pay a little more."
set of taxes is set to go up in 2013: The deal does not address the end
of the payroll tax holiday on Tuesday. That tax will rise by 2%, back
to its 2010 level.
The deal also stops scheduled pay increases for
Congress set for spring 2013 and includes a nine-month extension of the
farm bill, which had been delayed for months because of differences
between the House and Senate versions of the legislation that sets U.S.
agricultural policy every five years.
The agreement also does not
address any increase in the nation's debt ceiling, which -- combined
with the delay of automatic spending cuts -- sets up the distinct
possibility of another cliff-like budget battle in February.
omission of the debt ceiling dismayed some liberal Democrats, including
Sens. Tom Harkin of Iowa and Sherrod Brown of Ohio. Their criticism
prompted Biden's visit to Capitol Hill late Monday.
"He's here to hear members' concerns and respond to them," said Reid spokesman Adam Jentleson.
argument is that this is the best that can be done on a bipartisan
basis," said Sen. Dianne Feinstein, D-Calif., when asked about the case
the vice president had delivered behind closed doors.
a critical role, Feinstein said. "I think it was very important," she
said, noting that McConnell and Biden "have a long prior experience"
working together. "That's the reason this is bipartisan."
Sen. Charles Schumer, D-N.Y., said he would put pressure on the House to pass the measure.
Democratic Leader Nancy Pelosi, D-Calif, did not exactly endorse the
deal either, saying in a statement: "When a final agreement is reached
and passed by the Senate, I will present it to the House Democratic
The final details came together hours after President
Obama said Congress was making progress on a short-term deal to avert
the fiscal cliff.
As the day dragged on, negotiations narrowed to a
Democratic offer to pay for the spending cuts for two months, estimated
to cost $24 billion, a McConnell spokesman said. Republicans wanted
additional cuts to make up for supplanting those cuts and sent Democrats
a list outlining $130 billion of suggested cuts for Democrats to
At his White House event earlier in the day, Obama told
an audience of cheering supporters that a proposal would help reduce the
nation's $16 trillion-plus debt through higher taxes on the wealthy. He
also said it would also extend unemployment insurance and preserve tax
credits for such middle class items as child care and education.
campaign-style event chafed some congressional Republicans. Obama's
2008 presidential rival Sen. John McCain, R-Ariz., criticized it as "a
cheer-leading, ridiculing-of-Republicans exercise."
Down the line,
Obama said he will continue to insist that debt reduction be balanced
with revenues as well as spending cuts, foreshadowing a second term
defined by budgetary clashes with Republicans.
"It's going to have to be a matter of shared sacrifice, at least as
long as I'm president," Obama said. "And I'm going to be president for
the next four years, I hope."
Obama also cracked a joke about
lawmakers: "And one thing we can count on with respect to this Congress
is that if there is even one second left before you have to do what
you're supposed to do, they will use that last second."
earlier Monday, negotiations pivoted on how and whether to turn off the
impending $110 billion in spending cuts scheduled for 2013. They are
part of the automatic $1.2 trillion in cuts over 10 years that Congress
approved in the summer of 2011 when they failed to come up with deficit
reduction on their own.
Republicans object to using new revenue to
pay for the cuts because it negates the overarching goal of deficit
reduction. "Everybody in this body knows that we've done
nothing-nothing-to reduce a penny of debt in this country," said Sen.
Bob Corker, R-Tenn. Any proposal to use revenue to pay for spending
without additional cuts will likely face significant opposition among
Republicans, particularly in the GOP-controlled House.
In a joint
statement from House Speaker John Boehner of Ohio and other GOP leaders,
they announced the House will "honor its commitment" to take up the
Senate bill. They also left open the possibility that the House could
seek to amend the deal until their members were given an opportunity to
review the deal.
It was unclear how much support the package will
have in the House, but McConnell spokesman Don Stewart was optimistic
the chamber could approve the package. "(McConnell) has spoken to the
speaker throughout the entire process," said Stewart.
proven a late but potentially crucial player in the budget negotiations.
Frustrated by his failure to make progress with Senate Majority Leader
Harry Reid, D-Nev., over the weekend, McConnell called on Biden to step
in and help move the talks forward. The two have remained in constant
contact since then, McConnell said. "I'm happy to report the effort has
been a successful one," he said.
administration's willingness to raise the threshold for higher tax
rates above the president's campaign pledge for earners above $250,000
was met with resistance by liberals. "This is one Democrat that doesn't
agree with that at all," Harkin said. "I think that's grossly unfair."
Harkin said that most Americans earn between $25,000-$60,000. "And
they're the ones getting hammered right now," he said.
labor union, a major supporter of the Democratic Party, also raised
objections to reported details of a possible agreement. In a tweet,
AFL-CIO President Richard Trumka said the proposal gives Republicans the
chance of "further destabilizing hostage taking" in the weeks ahead
over raising the debt ceiling.
If Congress had failed to act,
Obama had asked Reid to bring to the floor a stripped-down plan that
would include a renewal of unemployment insurance and an extension of
the Bush tax cuts for middle-class Americans who make less than $250,000
"Republicans will have to decide if they're going to
block it, which will mean that middle-class taxes do go up," Obama said
on Sunday on NBC's Meet the Press.
conflicts have been a recurring theme in the 112th Congress, which ends
Thursday at noon when nearly 100 new House and Senate lawmakers will be
sworn in to office.
The Democratic president and divided Congress
first clashed in spring 2011 over a near-government shutdown. Tensions
continued that summer during the fight over raising the national debt
Such tensions are likely to happen again in 2013. Congress
must approve in mid-February an increase in the $16.4 trillion debt
ceiling, the nation's borrowing authority, and in late March when the
current federal funding runs out and another government shutdown threat
looms if the partisan gridlock continues.
"When the president said
(Monday) that round two is the debt ceiling, he is right," said Sen.
Lindsey Graham, R-S.C. Republicans will fight for spending cuts,
particularly in entitlement programs like Medicare, in exchange for the
required congressional approval to raise the debt ceiling. "If that's
too much to ask, so be it," he said.