Fiscal Cliff Averted? Tentative Deal Reached

WASHINGTON — Tonight, last-minute negotiations between the White House, represented by Vice-President Joe Biden, and the Senate Republican leadership, secured a tentative agreement to avert going over the fiscal cliff. The measure will not pass in time for Congress to meet its Dec. 31 deadline.

The Senate, in a pre-dawn vote just two hours after the deadline passed to avert automatic tax increases, overwhelmingly approved legislation Tuesday morning at 2:42 a.m. that would allow tax rates to rise only on affluent Americans while temporarily suspending sweeping, across-the-board spending cuts. The vote was 89-8. Congress is expected to vote today.

Under the agreement, tax rates would jump to 39.6 percent from 35 percent for individual incomes over $400,000 and couples over $450,000, while tax deductions and credits would start phasing out on incomes as low as $250,000, a clear win for President Obama, who campaigned on higher taxes for the wealthy.

Just last month and for months, Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans. Mr. Obama won re-election on the promise that he would raise those rates and raise them permanently.

Democrats also secured a full year’s extension of unemployment insurance without strings attached and without offsetting spending cuts, a $30 billion cost.

In an effort to win over other Democrats uneasy with the proposal, Vice President Joe Biden who bargained directly with Republican leaders, traveled to the Capitol tonight for a 90-minute meeting with his former Senate colleagues. As negotiators ended, officials said that the two top Democrats on Capitol Hill — Senator Harry Reid of Nevada and Representative Nancy Pelosi of California — had signed off on the agreement.

Negotiators agreed to put off $110 billion in across-the-board cuts to military and domestic programs for two months while broader deficit reduction talks continue. Those cuts begin to go into force on Wednesday, and that deadline, too, might be missed before Congress approves the legislation.

The nature of the deal ensured that the war between the White House and Congressional Republicans on taxes and spending will continue at least until the spring.

There appears to be something for everyone to hate in this bill but most agreements generally contain sour grapes for both sides.

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