Senate approves fiscal cliff legislation

Photo: The Canadian Press. All rights reserved.

Vice President Joe Biden gives two thumbs up following a Senate Democratic caucus meeting about the fiscal cliff on Capitol Hill on Monday, Dec. 31, 2012 in Washington. (AP Photo/Alex Brandon)

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 a lopsided 89-8.

Senate passage set the stage for a final showdown in the House, where a vote was expected later Tuesday or perhaps Wednesday on the measure, which also raises tax rates on wealthy Americans.

Even by the recent dysfunctional standards of government-by-gridlock, the activity at both ends of historic Pennsylvania Avenue was remarkable as the administration and lawmakers spent the final hours of 2012 haggling over long-festering differences.

"It shouldn't have taken this long to come to an agreement, and this shouldn't be the model for how we do things around here," said Senate Republican leader Mitch McConnell, who negotiated the agreement with Vice-President Joe Biden.

Shortly after the Senate vote, President Barack 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."

Under 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 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.

Officials also decided at the last minute to use the measure to prevent a $900 pay raise for lawmakers due to take effect this spring.

"One thing we can count on with respect to this Congress is that if there's even one second left before you have to do what you're supposed to do, they will use that last second," the president said in a mid-afternoon status update on the talks. Yet when the roll was called nearly 12 hours later, only six Republicans and two Democrats opposed the measure.

As darkness fell on the last day of the year, Obama, Biden and their aides were at work in the White House, and lights burned in the House and Senate. Democrats complained that Obama had given away too much in agreeing to limit tax increases to incomes over $450,000, far above the $250,000 level he campaigned on. Yet some Republicans recoiled at the prospect of raising taxes at all.

Democratic senators said they expected a post-midnight vote on the measure. They spoke after a closed-door session with Vice-President Joseph Biden, who brokered the deal with Senate Republican leader Mitch McConnell.

"The 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.

Passage would send the measure to the House, where Speaker John Boehner, R-Ohio, refrained from endorsing a package as yet unseen by his famously rebellious rank-and-file. He said the House would not vote on any Senate-passed measure "until House members, and the American people, have been able to review" it.