President Obama and Senate leaders struck a bipartisan agreement late Monday to let income taxes rise sharply for the first time in two decades, fulfilling Obama's promise to raise taxes on the rich and avoiding the worst effects of the "fiscal cliff."
The agreement, brokered by Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.), primarily targets taxpayers who earn more than $450,000 per year, raising their rates for wages and investment profits. At the same time, the deal would protect more than 100 million households earning less than $250,000 a year from income tax increases that are scheduled to take effect this month.
The deal came together barely three hours before the midnight deadline, after negotiators cleared two final hurdles involving the estate tax and automatic spending cuts set to affect the Pentagon and other federal agencies this week.
Republicans gave in on the spending cuts, known as sequestration, by agreeing to a two-month delay in budget reductions that would be paid for in part with new tax revenue, a condition they had resisted. And the White House made a major concession on the estate tax, agreeing to terms that would permit estates worth as much as $15 million to escape taxation by the end of the decade, Democrats said.
As Biden rushed to the Capitol to brief Senate Democrats on the deal, Majority Leader Harry M. Reid (D-Nev.) laid plans for a vote just before midnight, when taxes were set to rise for virtually every American. Upon Senate passage, the measure would go to the House, where Speaker John A. Boehner (R-Ohio) has pledged to bring it to a vote in the coming days.
Senior aides predicted the measure would pass the House with the support of many lawmakers from both parties. But Boehner's decision to delay the vote meant the nation would tumble at least briefly over the fiscal cliff before the House meets.
As Biden emerged from a nearly two-hour meeting with Senate Democrats, he expressed optimism about the pending vote. "I feel really very, very good about how things are going to go," the vice president told reporters. "I think we'll get a very good vote tonight. But Happy New Year and I'll see you all maybe tomorrow."
Senate Democrats leaving the meeting also prediced the deal will pass the Senate tonight. Senate Majority Leader Harry M. Reid (D-Nev.) said the Senate would vote after the Congressional Budget Office completed scoring the measure.
Sen. Joseph I. Lieberman (I-Conn.) said the deal "looks great."
"I think there were some questions, but there is very strong support in the Democratic caucus for this agreement. The vice president was given a tough assignment and he handled it brilliantly,'' Lieberman said.
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SOURCE: The Washington Post
Lori Montgomery and Paul Kane