US Congress finally averts fiscal cliff

US: After bitter New Year brinksmanship, the US Congress finally backed a deal to avert a "fiscal cliff" of tax hikes and massive spending cuts that had threatened to unleash economic calamity.

The House of Representatives late Tuesday passed a deal between the White House and Republicans to raise taxes on the rich and put off automatic $109 billion budget cuts for two months, lifting the clouds of immediate crisis.

The deal's fate had hung in the balance for hours as House conservatives sought to add spending reductions to a version passed by the Senate in the early hours of 2013 that would likely have killed the compromise.

In the end, the House voted 257 votes to 167 to pass the original bill with minority Democrats joining a smaller band of majority Republicans to pass the legislation after a fiercely contested and unusual session on New Year's Day.

President Barack Obama, who campaigned for re-election on a platform of building a more equitable economic system, declared the deal was a promise kept, despite falling short of earlier hopes for a grand deficit bargain.

"I will sign a law that raises taxes on the wealthiest two percent of Americans while preventing a middle class tax hike that could have sent the economy back into recession," Obama told reporters after the vote.

"The deficit needs to be reduced in way that's balanced. Everyone pays their fair share. Everyone does their part," Obama said, before heading to Air Force One to resume his interrupted annual vacation in his native Hawaii.

Had the deal splintered, all Americans would have been hit by tax increases and the spending cuts would have kicked in across the government, in a combined $500 billion shock that could have rocked the fragile recovery.

The House vote took place after a conservative rebellion fizzled when it became clear there were not sufficient votes in the restive Republican caucus to send an amended version of the bill cuts back to the Senate.

AFP