Budget Deal Passes Senate, Heads to House

NEW YORK (TheStreet) -- The Senate managed to pass a budget deal averting the so-called fiscal cliff in the wee hours of the New Year. The legislation now heads to the House.

The bill prevents a slew of tax hikes and spending cuts from kicking in automatically, a combination that politicians and economists had warned could have knocked the still-fragile U.S. economy back into recession.

The legislation passed the Senate by an 89-8 vote, just hours after Vice President Joe Biden and Senate Republican Leader Mitch McConnell had forged an agreement, the Associated Press reported.

In a statement, President Obama urged prompt House passage of the legislation, saying it would prevent tax hikes for the vast majority of Americans.

"While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay," the statement said. "This agreement will also grow the economy and shrink our deficits in a balanced way -- by investing in our middle class, and by asking the wealthy to pay a little more."

The president said that more work lay ahead in reducing the nation's deficit but "tonight's agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans."

The deal received yes votes from some unexpected quarters, as tea party conservatives Pat Toomey (R., Pa.) and Ron Johnson (R., Wis.) supported it, according to the AP.

But House passage of the Senate legislation isn't a sure thing.

In a statement, House Speaker John Boehner (R., Ohio) and other Republican leaders refrained from endorsing the deal, the AP reported.

"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," the statement said.

The Senate deal would increase taxes for individuals with annual incomes of more than $400,000 and couples making more than $450,000 a year but prevent rates from rising on the middle class. Those levels are significantly higher than the $250,000 threshold Obama had insisted on.

The measure would also block spending cuts for two months, extend unemployment benefits for the long-term unemployed and stop a 27% cut in fees for doctors treating Medicare patients, the AP said.

RELATED STORIES:

>>Fiscal-Cliff Deal Gives Business Reason to Play in 2013

This article was written by a staff member of TheStreet.