President Obama is expected to sign a bill to deter the brunt of tax hikes and spending cuts known as the “fiscal cliff” that took effect at midnight yesterday. A compromise bill passed by the House late Tuesday makes Bush tax cuts permanent for about 99 percent of households. It allows tax increases of about 5 percent only on incomes above $400,000 for individuals or $450,000 for couples. The deal also extends unemployment benefits, renews tax credits geared toward low-income families and delays automatic cuts for military and other spending for two months. President Obama compromised on the tax issue after initially backing increases on family incomes of more than $250,000. Speaking at the White House Tuesday, Obama claimed the deal as a victory.
President Obama: "A central premise of my campaign for president was to change the tax code that was too skewed towards the wealthy at the expense of working middle-class Americans. Tonight, we’ve done that. Thanks to the votes of Democrats and Republicans in Congress, I will sign a law that raises taxes on the wealthiest 2 percent of Americans, while preventing a middle-class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America."
House Republicans had initially condemned the compromise bill for not cutting deeply enough into social programs. Still, 85 Republicans backed the bill, bringing the final tally in the House to 257 in favor with 167 voting against it. The compromise followed several weeks of tense negotiations between Republican and Democratic leaders.