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US Senate passes key deal to avoid tax rises | US Senate passes key deal to avoid tax rises |
(35 minutes later) | |
The US Senate has approved a deal on avert a combination of tax hikes and spending cuts known the "fiscal cliff". | |
The bill, which raises taxes for the wealthy, came after lengthy talks between Vice-President Joe Biden and Senate Republicans. | |
The House is due to consider it later. Spending cuts have been delayed for two months to allow a wider agreement. | |
Congress missed the deadline to pass the legislation, but no effects will be felt as Tuesday is a US public holiday. | |
Tax cuts passed during the presidency of George W Bush formally expired at midnight (05:00 GMT). | Tax cuts passed during the presidency of George W Bush formally expired at midnight (05:00 GMT). |
But the deal reached on Monday extends the tax cuts for Americans earning under $400,000 (£246,000) - up from the $250,000 level Democrats had originally sought. | |
A huge spending cut that would see $1.2tn cut from the federal budget over 10 years has been deferred for two months, allowing Congress and the White House to reopen negotiations. | |
Analysts said if the full effects of the fiscal cliff were allowed to take hold, the resulting reduction in consumer spending could spark a new recession. |