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| Obama calls on House to follow Senate and back fiscal cliff deal | Obama calls on House to follow Senate and back fiscal cliff deal |
| (about 1 hour later) | |
| Barack Obama has called for the House of Representatives to follow the Senate's lead and pass the fiscal cliff deal "without delay" to extend tax cuts for middle-class Americans and raise tax rates on top earners. | Barack Obama has called for the House of Representatives to follow the Senate's lead and pass the fiscal cliff deal "without delay" to extend tax cuts for middle-class Americans and raise tax rates on top earners. |
| The Senate voted 89-8 early on Tuesday to pass legislation to block the impact of across-the-board tax increases and spending cuts scheduled to take effect at the beginning of the new year. The legislation would prevent middle-class taxes from rising, and raise rates on incomes over $400,000 (£246,0000) for individuals and $450,000 for couples. | The Senate voted 89-8 early on Tuesday to pass legislation to block the impact of across-the-board tax increases and spending cuts scheduled to take effect at the beginning of the new year. The legislation would prevent middle-class taxes from rising, and raise rates on incomes over $400,000 (£246,0000) for individuals and $450,000 for couples. |
| "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," Obama said in a statement after the Senate voted overwhelmingly to approve the legislation. | "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," Obama said in a statement after the Senate voted overwhelmingly to approve the legislation. |
| "There's more work to do to reduce our deficits, and I'm willing to do it. But tonight's agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans," he said. | "There's more work to do to reduce our deficits, and I'm willing to do it. But tonight's agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans," he said. |
| The House is expected to vote on the bill later on Tuesday or perhaps Wednesday. | The House is expected to vote on the bill later on Tuesday or perhaps Wednesday. |
| The White House and Congressional leaders reached a bipartisan compromise on Monday night to avert some but not all of the austerity measures due to take effect on Tuesday. | The White House and Congressional leaders reached a bipartisan compromise on Monday night to avert some but not all of the austerity measures due to take effect on Tuesday. |
| Without a deal every taxpayer in America faced imminent steep rises. These would be accompanied by deep cuts in federal spending programmes, ranging from defence to welfare, in particular unemployment benefits. | Without a deal every taxpayer in America faced imminent steep rises. These would be accompanied by deep cuts in federal spending programmes, ranging from defence to welfare, in particular unemployment benefits. |
| Technically the US has just gone over the cliff but if the House approves the agreement the economic damage could be fleeting and relatively minor. The goal will be to have full Congressional approval before Wall Street reopens on Wednesday. | Technically the US has just gone over the cliff but if the House approves the agreement the economic damage could be fleeting and relatively minor. The goal will be to have full Congressional approval before Wall Street reopens on Wednesday. |
| The Senate minority Leader Mitch McConnell, a Republican, and vice president Joe Biden, hammered out the accord after two months of talks between Obama and other Congressional leaders failed. | The Senate minority Leader Mitch McConnell, a Republican, and vice president Joe Biden, hammered out the accord after two months of talks between Obama and other Congressional leaders failed. |
| As well as the tax rises the deal also delays automatic federal spending cuts for two months. | As well as the tax rises the deal also delays automatic federal spending cuts for two months. |
| Tax deductions and credits would start phasing out on incomes as low as $250,000, a defeat for the Republicans who had resisted higher taxes for the wealthy. | Tax deductions and credits would start phasing out on incomes as low as $250,000, a defeat for the Republicans who had resisted higher taxes for the wealthy. |
| "Just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans," Obama said at a hastily arranged news briefing. "Obviously, the agreement that's currently being discussed would raise those rates and raise them permanently." | "Just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans," Obama said at a hastily arranged news briefing. "Obviously, the agreement that's currently being discussed would raise those rates and raise them permanently." |
| Going over the "cliff" makes a deal more palatable to Republicans. With taxes automatically going up at midnight, Republicans, ideologically opposed to tax rises, would in fact be voting to bring them down, at least for all but the top 2% of wealthiest taxpayers. | Going over the "cliff" makes a deal more palatable to Republicans. With taxes automatically going up at midnight, Republicans, ideologically opposed to tax rises, would in fact be voting to bring them down, at least for all but the top 2% of wealthiest taxpayers. |
| Earlier on Monday, surrounded by what the White House described as "ordinary Americans", Obama said they could not afford the tax rises – an average of about $2,000 for every US taxpayer – that would result if a deal was not reached. "The economy can't afford it," he added. | Earlier on Monday, surrounded by what the White House described as "ordinary Americans", Obama said they could not afford the tax rises – an average of about $2,000 for every US taxpayer – that would result if a deal was not reached. "The economy can't afford it," he added. |
| Obama said the framework of the deal was that tax would not go up for most Americans. Unemployment benefits, help with university tuition and tax credits for clean energy companies would all be protected. | Obama said the framework of the deal was that tax would not go up for most Americans. Unemployment benefits, help with university tuition and tax credits for clean energy companies would all be protected. |
| Tax rises would be imposed only on those earning $450,000 a year or more. The Democrats had been pushing for $250,000 while the Republicans had wanted the limit set at those earning $1m or more. | Tax rises would be imposed only on those earning $450,000 a year or more. The Democrats had been pushing for $250,000 while the Republicans had wanted the limit set at those earning $1m or more. |
| The Democrats appear to have secured protection for continued payments of unemployment benefits, which the Republicans had wanted cut. Democrats were pushing for the automatic cuts on spending across the board to be postponed for at least a few months. | The Democrats appear to have secured protection for continued payments of unemployment benefits, which the Republicans had wanted cut. Democrats were pushing for the automatic cuts on spending across the board to be postponed for at least a few months. |
| Obama said his preference would have for a "grand bargain" that would have dealt more broadly with America's economic problems, especially its huge deficit. But, showing his exasperation with Republicans who control the House, he said this was not possible with this Congress. | Obama said his preference would have for a "grand bargain" that would have dealt more broadly with America's economic problems, especially its huge deficit. But, showing his exasperation with Republicans who control the House, he said this was not possible with this Congress. |
| It is the first time Congress has met on New Year's Eve since 1995 when Washington was confronted by another Democratic-Republican economic showdown. | It is the first time Congress has met on New Year's Eve since 1995 when Washington was confronted by another Democratic-Republican economic showdown. |
| Obama, in spite of having won a second term, desperately needs this victory over the Republicans to prevent that second term being destroyed by repeated stand-offs with Republicans in Congress. | Obama, in spite of having won a second term, desperately needs this victory over the Republicans to prevent that second term being destroyed by repeated stand-offs with Republicans in Congress. |
| The danger for the Obama administration in the present showdown is that a combination of sudden tax rises and government spending cuts would have a negative impact on the country's sluggish rise out of recession. Countries that rely on trade with America could also potentially suffer. | The danger for the Obama administration in the present showdown is that a combination of sudden tax rises and government spending cuts would have a negative impact on the country's sluggish rise out of recession. Countries that rely on trade with America could also potentially suffer. |
| The Democrats had little problem getting a bill through the Senate where they have a majority but the House is much more difficult, given the size of the Republican majority. The Obama administration hopes that a combination of Democrats and moderate Republicans will see it pass. | The Democrats had little problem getting a bill through the Senate where they have a majority but the House is much more difficult, given the size of the Republican majority. The Obama administration hopes that a combination of Democrats and moderate Republicans will see it pass. |