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January 01. 2013 10:17PM

'Fiscal cliff' bill passes House; Obama tells Congress to avoid future budget fights


Speaker of the House John Boehner (R-Ohio), left, walks with Rep. Dave Camp (R-Mich.) after a meeting with House Republicans about a "fiscal cliff" deal on Capitol Hill in Washington on Tuesday. (REUTERS/Joshua Roberts)
UPDATED, 11:44 p.m.:Speaking after winning a "fiscal cliff" victory, President Barack Obama vowed on Tuesday to avoid a repeat of last year's divisive fight with Congress over an extension of the nation's borrowing authority.

"While I will negotiate over many things, I will not have another debate with this Congress about whether or not they should pay the bills they have already racked up," Obama said in remarks in the White House.

He urged "a little less drama" in coming budget talks about cutting government spending.

Earlier stories follow.

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UPDATED, 11:30 p.m.: The New Hampshire Congressional contingent, both of whom will be leaving office, split their votes, with Charles Bass voting for the measure and Frank Guinta voting against it.

Click here to view the roll call vote on H.R. 8

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UPDATED, 11:20 p.m.:WASHINGTON - Congress approved a rare tax increase on Tuesday that will hit the nation's wealthiest households in a bipartisan budget deal that stops the world's largest economy from falling into a deep fiscal crisis and recession.

By a vote of 257 to 167, the Republican-controlled House of Representatives approved a bill that fulfills President Barack Obama's re-election promise to raise taxes on top earners.

The Senate passed the measure earlier in a rare New Year's Day session and Obama is expected to sign it into law shortly.

The United States will no longer go over a "fiscal cliff" of tax hikes and spending cuts that had been due to come into force on Tuesday, but other bruising budget battles lie ahead in the next two months.

It was a reversal for House Republicans, who were in disarray despite winning deep spending cuts in earlier budget fights. But they saw their leverage slip away this time when they were unable to unite behind any alternative to Obama's proposal.

House Speaker John Boehner and other Republican House leaders stayed silent during the debate on the House floor, an unusual move for a major vote.

The deal shatters two decades of Republican anti-tax orthodoxy by raising rates on the wealthiest even as it makes cuts for everybody else permanent.

Lawmakers had struggled to find a way to head off across-the-board tax hikes and spending cuts worth $600 billion that began to take effect at midnight on Jan. 1, a legacy of earlier failed budget deals that is known as the fiscal cliff.

Strictly speaking, the United States went over the cliff in the first minutes of the New Year because Congress failed to act on time. But the bill passed on Tuesday will be backdated.

While many Republicans were uneasy with the tax hikes and wanted more spending cuts, they seemed to realize that the fiscal cliff would begin to damage the economy once financial markets and federal government offices returned to work on Wednesday. Opinion polls show the public would blame Republicans if a deal were to fall apart.

Income tax rates will now rise on families earning more than $450,000 per year and the amount of deductions they can take to lower their tax bill will be limited.

Low temporary rates that have been in place for the past decade will be made permanent for less-affluent taxpayers, along with a range of targeted tax breaks put in place to fight the 2009 economic downturn.

However, workers will see up to $2,000 more taken out of their paychecks annually with the expiration of a temporary payroll tax cut.

The non-partisan Congressional Budget Office said the bill would increase budget deficits by nearly $4 trillion over the coming 10 years, compared to the budget savings that would occur if the extreme measures of the cliff were to kick in.

But the bill would actually save $650 billion during that time period when measured against the tax and spending policies that were in effect on Monday, according to the Committee for a Responsible Federal Budget, an independent group that has pushed for more aggressive deficit savings.

Earlier stories follow.

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UPDATED, 11:05 p.m.: By a vote of 257-167, the House of Representatives has passed the Senate's 'fiscal cliff' bill. The bill now heads to President Obama, who is expected to sign it into law promptly. The White House said the President would speak at 11:20 p.m.

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UPDATED, 10:58 p.m.: The House of Representatives has reached the 217 votes needed to pass the Senate's 'fiscal cliff' deal. The bill now heads to President Obama.

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UPDATED, 10:42 p.m.: The House of Representatives is now voting on the 'fiscal cliff' bill, almost 21 hours after the Senate overwhelmingly passed its version.

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WASHINGTON -- A months-long battle over the U.S. "fiscal cliff" headed to a close on Tuesday as the House of Representatives moved toward final approval of a bipartisan deal meant to prevent Washington from pushing the world's biggest economy into recession.

The Republican-controlled House was expected to back a tax hike on the top U.S. earners shortly before midnight on Tuesday, ending weeks of high-stakes budget brinkmanship that threatened to spook consumers and throw financial markets into turmoil.

Approval of the bill would be a victory for President Barack Obama, who campaigned for re-election last November on a promise to raise taxes on the wealthiest but faced stiff opposition from congressional Republicans.

Republicans had earlier considered adding hundreds of billions of dollars in spending cuts after the bill had already passed the Senate with strong bipartisan support. That would have triggered further partisan warfare and pushed the crisis well past a self-imposed Jan. 1 deadline.

But party leaders abandoned the effort after determining they lacked the votes.

"We've gone as far as we can go and I think people are ready to bring it to a conclusion," Republican Representative Jack Kingston of Georgia said. "We fought the fight."

Rules Committee Chairman David Dreier, a Republican, predicted the House would back the Senate bill, which also postpones for two months $109 billion in spending cuts on military and domestic programs set for 2013.

The bill easily cleared a procedural hurdle by a bipartisan vote of 408 to 10.

Lawmakers have struggled to find a way to head off across-the-board tax hikes and spending cuts that began to take effect at midnight, a legacy of earlier failed budget deals that is known as the fiscal cliff.

Strictly speaking, the United States went over the cliff in the first minutes of the New Year because Congress failed to produce legislation to halt $600 billion of tax hikes and spending cuts scheduled for this year.

Tax hikes for wealthiest

While many Republicans were uneasy with the tax hikes and wanted more spending cuts in the bill, they seemed to realize that the fiscal cliff would begin to damage the economy once financial markets and federal government offices returned to work on Wednesday. Opinion polls show the public would blame Republicans if a deal were to fall apart.

House Republicans had earlier considered adding $330 billion in spending cuts over 10 years to the Senate bill, which raises taxes on the wealthiest U.S. households by $620 billion over the same period.

But Senate Democrats refused to consider any changes to their bill, which passed 89 to 8 in a rare display of unity early Tuesday.

That measure, which passed the Senate at around 2 a.m., would raise income taxes on families earning more than $450,000 per year and limit the amount of deductions they can take to lower their tax bill.

Low temporary rates that have been in place for the past decade would be made permanent for less-affluent taxpayers, along with a range of targeted tax breaks put in place to fight the 2009 economic downturn.

However, workers would see up to $2,000 more taken out of their paychecks annually with the expiration of a temporary payroll tax cut.

The non-partisan Congressional Budget Office said the Senate bill would increase budget deficits by nearly $4 trillion over the coming 10 years, compared to the budget savings that would occur if the extreme measures of the cliff were to kick in.

But the bill would actually save $650 billion during that time period when measured against the tax and spending policies that were in effect on Monday, according to the Committee for a Responsible Federal Budget, an independent group that has pushed for more aggressive deficit savings.

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