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US House considers deal on fiscal cliff US House considers deal on fiscal cliff
(about 2 hours later)
A US Senate-backed deal to stave off a "fiscal cliff" of drastic taxation and spending measures has passed to the House of Representatives.A US Senate-backed deal to stave off a "fiscal cliff" of drastic taxation and spending measures has passed to the House of Representatives.
President Barack Obama has urged the House to pass the bill "without delay".President Barack Obama has urged the House to pass the bill "without delay".
However, several representatives have spoken out against it, with one calling it "bad for America". However, after holding a meeting, House Republicans expressed serious concerns, saying the mood was to amend the Senate bill to add more spending cuts.
Republicans and Democrats are meeting to discuss their strategy amid intense pressure for a vote before financial markets reopen on Wednesday. There is intense pressure for a vote in the House before financial markets reopen on Wednesday.
The speaker of the Republican-led House, John Boehner, has not endorsed the Senate deal but has pledged either a vote or the tabling of an alternative measure. But participants at the Republicans' meeting said the overwhelming sentiment was a desire to amend the bill and return it to the Senate.
Economists warn that if the full effects of the fiscal cliff are allowed to take hold, the resulting reduction in consumer spending could spark a new recession. A party aide told Reuters news agency that the members met again at 17:15 local time (22:15 GMT) to decide a strategy.
'Bipartisan support' 'Cannot wait'
The "fiscal cliff" measures cutting spending and increasing taxes came into effect at midnight when George W Bush-era tax cuts expired. The Republican majority leader, Eric Cantor, said after the meeting: "I do not support the bill."
Although few effects will be felt immediately as Tuesday is a public holiday, if the uncertainty is carried into Wednesday it could inflict damaging losses on the stock markets. Brendan Buck, a spokesman for the speaker of the Republican-led House, John Boehner, said: "The lack of spending cuts in the Senate bill was a universal concern amongst members in today's meeting."
Representative Spencer Bachus said: "I'd be shocked if this does not go back to the Senate."
After a meeting of the House Democrats, Minority Leader Nancy Pelosi urged Mr Boehner to allow the House to vote on the deal.
"That is what we expect. That is what the American people deserve," Ms Pelosi said.
Democrat representative Steve Cohen said: "My district cannot afford to wait a few days and have the stock market go down 300 points tomorrow if we don't get together and do something."
The current Congress is also scheduled to expire on Thursday. If the House rejects the bill, a new House would have to start all over again.
The "fiscal cliff" measures - cutting spending and increasing taxes dramatically - came into effect at midnight on Monday when George W Bush-era tax cuts expired.
The 1 January deadline triggered tax increases of about $536bn and spending cuts of $109bn from domestic and military programmes.
Few effects were felt immediately, as Tuesday is a public holiday. But economists warn that if the full effects of the fiscal cliff are allowed to take hold, the resulting reduction in consumer spending could spark a new recession.
The Senate-backed bill, which raises taxes for the wealthy, was passed in the early hours of Tuesday by 89 votes to eight after lengthy talks between Vice-President Joe Biden and Senate Republicans.The Senate-backed bill, which raises taxes for the wealthy, was passed in the early hours of Tuesday by 89 votes to eight after lengthy talks between Vice-President Joe Biden and Senate Republicans.
Spending cuts have been delayed for two months to allow a wider agreement.Spending cuts have been delayed for two months to allow a wider agreement.
In hailing the Senate vote, President Obama stressed the urgency of a House approval. In hailing the Senate vote, President Obama had stressed the urgency of a House approval.
He said in a statement: "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."He said in a statement: "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."
He said: "Leaders from both parties in the Senate came together to reach an agreement that passed with overwhelming bipartisan support that protects 98% of Americans and 97% of small business owners from a middle class tax hike."
Mr Boehner and other top Republican leaders said in their statement: "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 BBC's Zoe Conway in Washington says that, with some Republicans expressing their unhappiness with the tax increases, the passage of the Senate's bill is far from guaranteed.
However, Republican House member Tom Cole told MSNBC that the Senate deal should be accepted.
"We know the essential details and I think putting to bed this thing before the markets [open on Wednesday] is really a pretty important thing to do," he said.
As the House reconvened on Tuesday, a number of representatives from both parties expressed concerns about the deal.
The Virginia Democrat, Jim Moran Jr, said it was "a bad deal for America" that simply set up further fiscal cliffs to overcome in the coming months.
The current House can legislate until Wednesday, when it is replaced by a new chamber chosen during last November's election. The compromise Senate deal extends the tax cuts for Americans earning under $400,000 (£246,000) - up from the $250,000 level Democrats had originally sought.
The 1 January deadline triggers tax increases of about $536bn and spending cuts of $109bn from domestic and military programmes.
The compromise deal reached on Monday seeks to avoid this by extending the tax cuts for Americans earning under $400,000 (£246,000) - up from the $250,000 level Democrats had originally sought.
In addition to the income tax rates and spending cuts, the package includes:In addition to the income tax rates and spending cuts, the package includes:
  • Rises in inheritance taxes from 35% to 40% after the first $5m for an individual and $10m for a couple
  • Rises in capital taxes - affecting some investment income - of up to 20%, but less than the 39.6% that would prevail without a deal
  • One-year extension for unemployment benefits, affecting two million people
  • Five-year extension for tax credits that help poorer and middle-class families
  • Rises in inheritance taxes from 35% to 40% after the first $5m for an individual and $10m for a couple
  • Rises in capital taxes - affecting some investment income - of up to 20%, but less than the 39.6% that would prevail without a deal
  • One-year extension for unemployment benefits, affecting two million people
  • Five-year extension for tax credits that help poorer and middle-class families