FRENZIED eleventh-hour talks are believed to have secured the passage of the fiscal cliff deal through the Senate at 2.07am yesterday morning, with three figures at the forefront.
The deal was worked out through long New Year’s Eve negotiations between Vice President Joe Biden and Mitch McConnell, who leads the minority Republican faction in the upper house.
But the compromise package – which would roll back tax hikes and spending cuts that have already officially kicked in – pleased neither party’s members, and Biden had to talk to senators from his own party, led in the Senate by Harry Reid, to bring about the 89-8 victory.
He told reporters that he persuaded Democrats by saying: “This is Joe Biden and I’m your buddy.”
This came after comments President Obama made at a campaign-style event in the White House threatened to derail the deal. Obama appeared to be mocking Republicans for going back on the pledge many of them made never to hike taxes.
“Keep in mind that just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans,” the President said, even before the deal had passed the Senate. “Obviously, the agreement that’s currently being discussed would raise those rates and raise them permanently.”
His former rival in the 2008 campaign for President, Senator John McCain attacked the comments as “not the way presidents should lead.”
But many Democrats were just as displeased with the deal as Tea Party Republicans, and formed the majority of the eight voting against the deal.
“Maybe now we are believers of trickle-down economics. Not I,” declared Senator Tom Harkin of Iowa, a Democrat, saying the deal showered benefits on the best-off at the expense of those at the bottom who could ill-afford it.
Q and A: What is the fiscal cliff row all about?
Q What is the fiscal cliff?
A The fiscal cliff is a package of automatic tax hikes and spending cuts together worth $607bn (£373.6bn). The US technically went over the cliff as soon as 2013 started.
Q Since the US has a deficit totalling over $1.1 trillion, isn’t this a good thing?
A Though going over the fiscal cliff would, according to the Congressional Budget Office (CBO) – the official fiscal watchdog – put the US on a sounder long-term fiscal footing, it also thinks it would push the US economy back into recession.
Q How much of the fiscal cliff would be avoided by the Senate’s proposals?
A The CBO estimates that the package will take about $277.4bn off the total deficit, or about 46 per cent of the total cliff – so it has been reduced to more of a hill than a cliff.
Q What are the key measures in the package agreed by the Senate?
A Income tax rates are permanently raised to 39.6 per cent on income over $400,000 per year for individuals and $450,000 for couples. Rates for lower income earners are kept at their Bush-era levels. The deal also delays $110bn of cuts that would have started in early January, but this means there will be a new fiscal cliff in two months.