The White House says a deal had been reached to avert the “fiscal cliff” and dispatched Vice President Joe Biden to Capitol Hill, an indication lawmakers were heading toward a possible late-night vote on the proposal to avert sweeping tax hikes and spending cuts.
The major outstanding issue – how to handle the automatic spending cuts that are due to begin on Wednesday – was resolved as the White House and Republicans agreed to a two-month delay, as well as a mix of additional revenues and spending cuts intended to offset the lost savings.
The agreement would give Congress time to try to find a permanent deficit reduction solution.
Biden, walking through the Capitol to meet with Democratic senators behind closed doors, declined to answer questions shouted by reporters, but, smiling broadly, he repeatedly said, “Happy New Year.”
The rare New Year’s Eve session of Congress has proceeded in fits and starts after the contours of a deal were first disclosed earlier in the day. Both parties found little to like in the deal, even though it would prevent a tax hike on most Americans.
Democrats have been particularly resistant to the agreement Biden made with Republicans to raise taxes on only the wealthiest households – those earning more than $450,000 a year.
President Obama urged Congress to reach a compromise, but as evening fell, prospects for meeting the midnight deadline began to slip. The current lower tax rates were due to expire on New Year’s eve. a missed deadline became more likely as the GOP-led House, under Speaker John A. Boehner (R-Ohio), indicated it would probably push votes on any deal off until Tuesday.
Republicans had appeared upbeat as the deal came into focus, even as conservatives fought party leaders over the prospect of raising taxes for the first time in a generation. Democrats, particularly from the liberal wing, did not embrace the White House approach, wanting to stick with Obama’s reelection promise to ask those earning more than $250,000 to pay more.
If the Senate votes late Monday, the House could return to session. Or Boehner could push the vote to New Year’s Day which, in a political twist that had been discussed for months, is advantageous for the GOP. It would allow the tax rates to rise for a few hours as lawmakers returned to vote not on tax hikes, but rather tax breaks, for most Americans.
Going off the cliff for the short time is not expected to severely impact the economy as experts had feared.