Vice President Joe Biden speaks following a Senate Democratic caucus meeting about the fiscal cliff on Capitol Hill, Dec. 31, 2012 in Washington. / AP
Updated at 2:44 a.m. Eastern
The ball in Times Square has dropped, 2013 is here and, technically, so is the "fiscal cliff", as Congress has yet to officially pass a plan to avert the scheduled spending cuts and tax hikes. But before panic sets in, although lawmakers failed to meet the midnight deadline, a deal is in place and the first step to making it official -- Senate passage -- is in the books.
The Senate voted 89-8 in favor of the bill in the wee hours of New Year's Day, sending the deal along to the House, which must pass the measure in order for the "cliff" to be averted.
The House is expected to vote on the deal as early as today, but given tepid signals from House Republican leaders, the vote there will be an interesting one to watch.
"The House will honor its commitment to consider the Senate agreement if it is passed," the leaders, which included House Speaker John Boehner, said in a statement after the agreement was announced last night. "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."
President Obama released a written statement early Tuesday morning, praising the Senate and urging the House to follow suit.
"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," said Mr. Obama.
Vice President Joe Biden, who traveled to Capitol Hill to brief Senate Democrats on the details of the deal, briefly spoke to reporters, warning that there's no predicting what the House will do.
"Being in the Senate as long as I have, there's two things you shouldn't do: you shouldn't predict how the Senate will vote - you won't make a lot of money - and number two, you surely shouldn't predict how the House is going to vote. I feel very, very good. I think we'll have a good vote tonight, but Happy New Year," said Biden.
As the deal was not signed into law before midnight, the country has technically gone over the "cliff". However, unless the deal fails to clear Congress, any detrimental economic impact will be avoided, as language will likely be added to the final legislation that would make the agreement retroactive to midnight Jan. 1.
Here are the known details of the deal:
This was a key concession for both Republicans and Democrats. Democrats wanted the threshold for tax increases to rest at $250,000 and Republicans didn't want marginal tax rates to increase for anyone.
While the extension of unemployment benefits and the Medicare "doc fix" cost money, and revenue will be lost due to a fix in the Alternative Minimum Tax, the package will still increase the federal government's receipts. The total package will add $600 billion to federal coffers.
Also included in the deal is an unrelated provision but one that would have impacted Americans' pocketbooks. According to Senate Agriculture Committee chairman Debbie Stabenow, D-Mich., negotiators agreed to a nine-month partial extension of the farm bill. The legislation, which dictates subsidies to crop and commodity growers, was also set to expire at midnight, and the impact was likely to cause milk prices to rise to $7 or $8 a gallon.
What has been left out of the "cliff" deal:
The two-month window is to allow Congress and the White House to come up with a larger deal on spending cuts, leading to another (though smaller) "fiscal cliff." Democrats see this deal as a victory because Republicans had objected to using any new tax revenue to offset the loss of sequester spending cuts.
Emphasizing the importance of deficit reduction to his fellow Republicans, Senate Minority Leader Mitch McConnell, R-Ky., the GOP's lead negotiator, urged his colleagues not to hold up a deal because budget cuts have not been addressed. Earlier in the day he called the tax portion of the "fiscal cliff" the most important component and said, "Let's take what's been agreed to and get moving."