WASHINGTON, January 1 (RIA Novosti) - The US Senate voted on Tuesday to approve tax rises for richer Americans, in a last-minute deal to avert a combination of wider tax rises and massive budget cuts known as the "fiscal cliff."
The Senate agreement, clinched in an 89-8 vote, was the result of overnight talks on Monday between Vice President Joe Biden and Republican Senate leader Mitch McConnell. The Republicans agreed to allow the tax rises for the wealthiest Americans, but senators put off a final decision on a range of budget cuts worth $110 billion.
The House of Representatives is yet to vote on the deal, which includes tax rises for individuals earning over $400,000 a year and families earning over $450,000, but a House vote could take place later on Tuesday.
Welcoming the Senate vote, President Obama said: "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," USA Today reported.
House Speaker John Boehner, anticipating the deal on Monday night, said the House "would honor its committment to consider the agreement if it is passed. Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members — and the American people — have been able to review the legislation.”
No immediate effects will be felt from the deal in the US as Tuesday is a public holiday, but if Congress also approves it as expected, automatic budget cuts will be averted as well as huge tax cuts for virtually all Americans.
The deal will have major longer-term implications for the wider world, as economists had feared the combination of budget cuts and tax hikes which were set to kick in if no deal was struck could plunge the United States into recession, dragging down other faltering economies.