Fiscal cliff-diving: US Senate approves last-minute deal

US President Barack Obama speaks before Speaker John Boehner (R-OH) Secretary of the Treasury Timothy Geithner (3rdR) and other cabinet members during a meeting.(AFP Photo / Toby Jorrin)

US President Barack Obama speaks before Speaker John Boehner (R-OH) Secretary of the Treasury Timothy Geithner (3rdR) and other cabinet members during a meeting.(AFP Photo / Toby Jorrin)

The deadline for the ‘fiscal cliff’ has passed in the US, with senators approving a bill to soften the impending tax hikes and spending cuts. Economists warn the austerity measures could send the US back into recession if lawmakers do not act.

The stopgap bill will now be presented to the House of Representatives, where it will face a crucial vote in the Republican-majority lower house.

Senators reached a deal on Monday after a weekend of political wrangling that saw Democrats and Republicans clashing over measures to avert the fiscal cliff. In an almost unanimous vote the Senate voted to approve the bill 89 to 8.

Obama praised the Senate for the new bill and called on the House of Representatives to follow suite and approve the legislation. He called the agreement “the right thing to do for our country” and said the House should pass it “without delay.”

“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,” Obama said.

A delay in the voting will likely have no impact on the US economy, as Tuesday is a bank holiday in the US.

A Senate source has said the new deal would postpone the government spending cuts for another two months and extend the Bush administration-era tax cuts for households making less than $450,000 annually, CNN reported. President Barack Obama previously proposed allowing the tax cuts to expire for households making more than $250,000.

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