US Senate OKs Deal to Avert Fiscal Cliff, House Votes Next

Two hours after a midnight deadline, the US Senate passed a last-minute deal to avert the feared fiscal cliff with an overwhelming majority 89-8, CNN reported.

The measure now heads to the House for final approval.

The Senate package would put off budget cuts for two months and preserve Bush-era income tax cuts for individuals earning less than USD 400,000 or couples earning less than USD 450,000.

Senate Minority Leader Mitch McConnell, R-Kentucky, said it shouldn't have taken so long to get an agreement, but still praised the effort.

"We've done some good for the country," he said. "Now it's time to stop Washington's out-of-control spending."

The measure now goes to the House where it faces an uncertain future in the Republican-controlled body. A House vote could come as soon as Tuesday.

"The House will honor its commitment to consider the Senate agreement ..." said a statement from the House leadership, which includes Speaker John Boehner, Majority Leader Eric Cantor, Majority Whip Kevin McCarthy, and Republican Conference Chair Cathy McMorris Rodgers.

"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."

Under the Senate package, tax rates on income above USD 400,000 for individuals and USD 450,000 for couples would go back to the Clinton-era rate of 39.6%, up from the current 35%, and itemized deductions would be capped at USD 250,000 for individuals and USD 300,000 for couples. That would generate an estimated USD 600 B in additional revenue over 10 years.

Taxes on inherited estates will go up to 40% from 35%, but the exemption will be indexed to rise with inflation -- a provision the source said was added at the insistence of moderate Democrats.

Unemployment insurance would be extended for a year for 2 million people, and the alternative minimum tax -- a perennial issue -- would be permanently adjusted for inflation. Child care, tuition and research and development tax credits would be renewed. And the "Doc Fix" -- reimbursements for doctors who take Medicare patients -- will continue, but it won't be paid for out of the Obama administration's signature health care law.