WASHINGTON : The White House and top Republicans struck a deal to avert huge New Year tax hikes and spending cuts known as the "fiscal cliff" that had threatened to send the US economy into recession.
The pact would raise taxes on the richest Americans - those earning over $450,000 a year - but exempt everyone else, and will put off $109 billion in budget cuts across the government for two months, top congressional aides said.Vice President Joe Biden, who negotiated the deal with Republican Senate Majority leader Mitch McConnell, was on Capitol Hill to sell it to Democratic senators, a White House source added.Tax hikes and spending cuts were due to come into force on Jan 1. But as global markets, sure to be rocked by a failure to head off the fiscal cliff, are closed for New Year's day, lawmakers have time to vote the deal into law.A Senate vote was expected overnight on Monday while the House of Representatives was expected to follow suit on Tuesday after a display of dramatic New Year's Eve brinkmanship.The deal would mean a return to Bill Clinton-era tax rates for top earners to 39.6 percent, starting at a threshold of annual household earnings of $450,000 and above.Obama had originally campaigned for tax hikes to kick in for those making $250,000 and above and his acceptance of a higher threshold has already angered liberals, though still represents a political victory.The president said it would extend tax credits for clean energy firms and also unemployment insurance for two million people due to expire later Monday.It was also expected to include an end to a temporary two percent cut to payroll taxes for Social Security retirement savings and Medicare health care programs for seniors and changes to inheritance and investment taxes.The president angered Republicans in remarks in which he warned -- in what is certain to be a bitter fight over cutting the deficit -- that he was not...
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