Thanks to last minute negotiating over the last 48 hours, the much talked-about ‘fiscal cliff’ facing the U.S. government and economy has been averted…for now.
Democrats and Republicans agreed to a bill that will, for the most part, avoid major tax increases and government spending cuts that had been scheduled to take effect with the new year.
Final approval came in the House of Representatives on New Year’s night. The vote was 257 to 167. The Senate passed the bill less than 24 hours earlier.
The measure raises tax rates on incomes over $400,000 per year for individuals and $450,000 per year for couples.
It also extends expiring unemployment benefits for the long-term jobless, prevents a cut in fees for doctors who treat Medicare patients and cancels a $900 pay increase due to lawmakers in March.
Another provision is designed to prevent a spike in milk prices.
Despite the seemingly positive news out of Washington, many economists and analysts suspect the U.S. is still not out of the woods yet. The Congressional Budget Office estimated Tuesday that the approved deal to avert the fiscal cliff will add another $4 trillion to the federal deficit over the next decade, adding more strains to the government’s ability to repay its already enormous debt of more than $16 trillion.