"Fiscal cliff" averted after deal clears House

President Obama delivers a statement at the White House, Jan. 1, 2013, as Vice President Joe Biden looks on.

Congress has started its climb back up the "fiscal cliff."

After House Republicans finally relented to the Senate's "far from perfect" plan (as many members put it), the House Tuesday night passed the bill 257-167 with GOP and Democratic support.

The bill received 85 Republican votes, after GOP lawmakers huddled for hours Tuesday, wringing their hands over the lack of spending cuts in the bill. House leaders considered holding a vote on an amendment to add a $323 billion package of spending cuts, but the Democratic-led Senate said it wouldn't accept an amended bill. Democrats, while also expressing concerns about the deal, largely supported the measure with just 16 voting against it.

"The American people told us in the election they wanted us to work together," House Democratic leader Nancy Pelosi said on the House floor this evening. "They have their differences, too; they understand disagreement. They also understand compromise. And that is what this legislation represents... While this bill doesn't do all that we need to do.. it is a good way for us to have a happy start to a new year."

After the House passed the bill, President Obama thanked all parties involved in the negotiations. The bill, he said from the White House briefing room, "raises taxes on the wealthiest 2 percent of Americans while preventing a middle class tax hike that could have sent the economy back into a recession." About a half hour after delivering his remarks, Mr. Obama left the White House to rejoin his family, still on vacation in Hawaii.

The deal came together after marathon talks between Vice President Joe Biden and Senate Minority Leader Mitch McConnell, R-Ky., over the weekend. The Senate passed the bill by a vote of 89-8 in the early morning hours of the new year.

The deal protects most Americans from an income tax hike and extends long-term unemployment insurance, among other things. The details of the bill are as follows:

  • Tax rates: Current tax rates will be extended for all wage earners making below $400,000 and couples making below $450,000.

    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.

  • The estate tax: It was set to increase from rom 35 percent to 55 percent in 2013. Instead, the compromise sets the new rate at 40 percent with the first $5 million worth of property exempt from being taxed.
  • Capital gains tax: Capital gains and dividend tax rates will increase from 15 to 20 percent.
  • Alternative Minimum Tax: A permanent fix to the tax that would hit middle class families
  • "Doc Fix": Doctors will be shielded from a massive reimbursement gap for treating Medicare patients.
  • Unemployment benefits: Unemployed workers will receive their benefits which expired over the weekend.
  • Renewable energy tax credit: The tax credit for renewable energy companies will be extended for another year.
  • "Milk cliff" avoided: Subsidies for milk are extended, averting looming price hikes.
  • Congressional pay freeze: a scheduled salary bump for members of Congress is halted.