The US fiscal cliff has been successfully averted in the nick of the moment as the House of Representatives voted to approve a bill which avoids tax increases for the middle classes. The decision came after a day of discussions and debate among Republicans, who were forced to allow a compromise which most members of the party resented.
The fiscal cliff deal, which was negotiated by Vice President Joe Biden and Senate Republican Leader Mitch McConnell, had passed the Senate with 257 votes to 157, with 151 Republicans voting against and 85 in favour. 172 Democrats also supported the bill. In order to avert fiscal cliff, the bill blocked income tax hikes for almost 99% of households, but allowed tax hikes for those with incomes above $400,000 (£245,080) for individuals and $450,000 (£275,716) for couples.
The fiscal cliff bill also renewed tax credits aimed at low-income households and college students, extended unemployment benefits, delayed automatic spending cuts in defence and other government programs for two months and resolved several other issues that Congress had postponed.
A few Republicans who opposed the fiscal cliff bill objected to the economic stimulus provisions in the bill — primarily the low-income tax breaks, which were a priority for President Obama and House Democrats. They also opined that the bill would raise far more in tax revenues than it would trim in federal spending, which they worried set a bad precedent for future budget negotiations with the president.
The bill marks a political triumph for Barack Obama, who successfully tackled the fiscal cliff issue in less than two months of being re-elected to The White House. President Obama had even cut short his vacation to deal with the fiscal cliff last week. On the night of December 31, 2012, when the world was preparing to celebrate the New Year’s Eve the historic George Bush-era tax cuts expired and the new bill was introduced.