WASHINGTON, D.C. - After months of debate and fears of another recession, the U.S. Senate passed a bill which would retroactively keep spending cuts and tax hikes from kicking in.
They reached the deal in the early morning hours of New Year’s Day.
It’s somewhat of a solution to keep Americans from falling off the so-called fiscal cliff.
Senators voted 89 to 8 to avoid tax hikes for 99-percent of all Americans.
Sen. Mitch McConnell (R-Minority Leader) said, “This shouldn’t be the model for how we do things around here, but I can say we’ve done some good for the country.”
If the bill eventually becomes law, the Bush era tax cuts will be permanently extended for everyone making less than $400,000 a year, and families making less than $450,000 a year.
It will also keep the alternative minimum tax for the wealthy from hitting millions of middle class families.
And the estate tax will go up from 35% to 40%. But, the first five million dollars of inheritance will be permanenty exempt from taxation.
Sen. Harry Reid (D-Majority Leader) said, “Middle class families will wake up today to the assurance that their taxes won’t go up $2,200 each.”
The agreement delays $110-billion in spending cuts that were due to kick in January 1st for another two months. But because the bill doesn’t address spending, getting it passed in the U.S. House of Representatives could be much tougher.
Rep. Steve Latourette (R-Ohio) said, “The fact that the president won’t challenge his party on spending cuts is disgusting. The fact that we’re not where we need to be on revenues is disgusting. It’s just disgusting.”
President Obama said he wanted a grand bargain that dealt with taxes and spending cuts at the same time.
“But with this Congress, that was obviously a little too much to hope for at this time,” said Obama.
House Speaker John Boehner has not yet publicly endorsed the deal.
The White House issued a statement Tuesday morning saying that “…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.”
It is important to note that the payroll tax holiday expired, meaning all paychecks will have an extra 2% taken out, up to the first $110,000.