The US Senate has approved a deal to allow taxes to rise only for wealthy Americans while temporarily suspending spending cuts in order to avoid the "fiscal cliff."
They passed the deal two hours after midnight, formally missing the deadline to avoid spending cuts and tax rises. However, because Jan. 1 is a federal holiday, if Congress passes the deal today, the United States can stave off the effects of the plunge.
The tentative deal preserves Bush-era tax cuts for couples making an income under $450,000 and for individuals making less than $400,000 and will also extend emergency unemployment insurance and will secure tax policies aimed at helping the middle class. However, the two percentage point cut to the payroll tax that was secured by Obama in 2010 will not be renewed.
According to the Huffington Post, the Senate voted for the plan 89 to 8, but the deal must also be passed by the House which will begin work at noon Tuesday.
If passed by the lower chamber, the deal would raise $715 billion over 10 years, which is much less than the $1.6 trillion that President Barack Obama had been hoping for. According to BBC News, the sequester-- a $1.2 trillion cut from the federal budget over 10 years would be deferred for two months, which would give Congress and the White House time to reopen negotiations on the deal.
Obama, speaking on Monday, said that he would have preferred a grand bargain that dealt with both long-term spending and tax issues.
Senate Minority leader Mitch McConnell said that a deal should be done quickly. "Let's pass the tax relief portion now," said Mr McConnell, who spent Sunday evening and Monday negotiating with Vice-President Joe Biden.
"Let's take what's been agreed to and get moving. We'll continue to work on finding smarter ways to cut spending."
Some lawmakers remained disgusted with the process and the proposed deal.
"I would say we're all disappointed we're at this point on New Year's Eve," said Sen. Debbie Stabenow (D-Mich.) before the vote, Huffington Post reported.
"This is disgusting, and everybody involved should be embarrassed," said Rep. Steve LaTourette (R-Ohio).
The deal, while not perfect, does give Obama some bragging rights.
It's the first time in two decades that tax rates have risen for the wealthier Americans, which is one of the key issues on Obama's successful reelection campaign, CNN reported.