The U.S. House passed a bill undoing income tax increases for more than 99 percent of households, giving a victory to President Barack Obama even as Republicans vowed to fight him in coming weeks for spending cuts in exchange for raising the debt ceiling.
The 257-167 vote just after 11 p.m. yesterday capped a tension-filled final push as Republicans balked at a bipartisan Senate bill. House Speaker John Boehner ordered a vote even though 151 of 236 Republicans, including Majority Leader Eric Cantor, ultimately voted no. Obama said he’d sign it into law.
“The deficit needs to be reduced in a way that’s balanced,” Obama said at the White House. He said top earners and corporations should pay even more and that Congress must raise the debt ceiling. “Everyone pays their fair share. Everyone does their part,” he said.
The final days of drama surrounding the so-called fiscal cliff of scheduled tax increases and spending cuts illustrated the partisan struggle that has made U.S. budget policy unpredictable and prone to crises as deadlines approach. Obama wielded the leverage he gained in his Nov. 6 re-election. Still, he fell short of reaching with Republicans a larger deficit- reduction grand bargain.
Republicans immediately turned to their next battle -- a bid to use the need to raise the nation’s $16.4 trillion debt ceiling to force Obama to accept cuts in entitlement programs such as Medicare. Congress must act as early as mid-February to prevent a default and the dispute may reprise a similar 2011 episode that led to a downgrade of the U.S. credit rating.
“Without meaningful reform of entitlements, real spending controls, and a fairer, cleaner tax code, our debt will continue to grow, and our economy will continue to stumble,” Boehner said in a statement after the vote.
Obama said he’s “very open to compromise.” Medicare spending can be reduced, he said, yet “we can’t simply cut our way to prosperity.”
Futures on the Standard & Poor’s 500 Index expiring in March added 1.6 percent to 1,442.4 at 7:23 a.m. in New York. The equity benchmark surged 1.7 percent on Dec. 31, the biggest rally on the final day of a year since 1974, as Republican and Democratic lawmakers made last-minute concessions to finalize the deal. Dow Jones Industrial Average futures soared 168 points, or 1.3 percent, to 13,200 at 7:23 a.m. The benchmark 10- year yield for Treasury bonds rose seven basis points, or 0.07 percentage points, to 1.83 percent at 7:33 a.m. in New York.