Financial markets were closed for the holiday, but lawmakers were keenly aware of the potential impact of failing to address the so-called cliff, which some experts warned could plunge the still-fragile economy into a new recession.
Vice President Joe Biden, who took the lead for Democrats in negotiating the deal over the weekend with Republican Senate Minority Leader Mitch McConnell, was scheduled to join House Democrats at a behind-closed-doors meeting at 12:15 p.m. Biden paid a similar call on Senate Democrats late Monday.
House Republicans were also slated to huddle behind the scenes to discuss what to do about the Senate-passed measure. The anti-tax Club for Growth warned lawmakers to oppose the compromise because ?this bill raises taxes immediately with the promise of cutting spending later.?
Under the compromise arrangement approved by the Senate, taxes would rise on income above $400,000 for? individuals and $450,000 for households, while exemptions and deductions the wealthiest Americans use to reduce their tax bill would face new limits. The accord would also raise the taxes paid on large inheritances from 35% to 40% for estates over $5 million. And it would extend by one year unemployment benefits for some two million Americans. It would also prevent cuts in payments to doctors who treat Medicare patients and spare tens of millions of Americans who otherwise would have been hit with the Alternative Minimum Tax.
The middle class will still see its taxes go up: The final deal did not include an extension of the payroll tax holiday. And the overall package will deepen the deficit by an estimated $3.9 trillion dollars by extending the overwhelming majority of the Bush tax cuts. Many Democrats had opposed those measures in 2001 and 2003. Obama agreed to extend them in 2010.
Efforts to modify the first installment of $1.2 trillion in cuts to domestic and defense programs over 10 years -- the other portion of the ?fiscal cliff,? known as sequestration -- had proved a sticking point late in the game. Democrats had sought a year-long freeze but ultimately caved to Republican pressure and signed on to just a two-month delay while broader deficit-reduction talks continue.
That would put the next major battle over spending cuts right around the time that the White House and its Republican foes are battling it out over whether to raise the country's debt limit. Republicans have vowed to push for more spending cuts, equivalent to the amount of new borrowing.
Obama has vowed not to negotiate as he did in 2011, when a bruising fight threatened the first-ever default on America's obligations and resulted in the first-ever downgrade of the country's credit rating. Biden sent that message to Democrats in Congress, two senators said.
?This agreement is the right thing to do for our country and the House should pass it without delay,? President Barack Obama said in a written statement shortly after the Senate vote.
There were signs that the 2016 presidential race shaped the outcome in the Senate. Republican Senator Marco Rubio, widely thought to have his eye on his party?s nomination, voted no. Republican Senator Rand Paul, who could take up the libertarian mantle of his father Ron Paul, did as well. Observers were watching to see how Republican Rep. Paul Ryan, the Budget Committee chairman and his party's failed vice presidential nominee in 2012, would vote Tuesday.
In remarks just before the Senate adopted the compromise, McConnell repeatedly called the agreement ?imperfect? but said it beat allowing income tax rates rise across the board.
?I know I can speak for my entire conference when I say we don?t think taxes should be going up on anyone, but we all knew that if we did nothing they?d be going up on everyone today,? he said. ?We weren?t going to let that happen.?
?Our most important priority was to protect middle-class families. This legislation does that,? Democratic Senate Majority Leader Harry Reid said. But Reid cautioned that ?passing this agreement does not mean negotiations halt. Far from it.?
The House?s Republican leaders, including Speaker John Boehner, hinted in an unusual joint statement that they might amend anything that clears the Senate ? a step that could kill the deal.
?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,? they said.
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