Congress, Fiscal Cliff | featured news

The budget battles rocking the capital have exposed a deepening fault line within an already fractured Republican Party: the divide between the GOP's solid Southern base and the rest of the country.

We used to have a ship of state, and now we have a ship of fools. To call what happened on Capitol Hill over the last few days Kabuki is to insult Kabuki. What actually happened was more like ancient farce, when actors used to come out and hit each other over the head with socks full of cow pies.

The fiscal pact Congress reached hours into the new year will delay $109 billion in automatic across-the-board spending cuts for two months. But it will make a down payment on those reductions that will affect federal operations this year and next.

While the tax package that Congress passed New Year's Day will protect 99 percent of Americans from an income tax increase, most of them will still end up paying more federal taxes in 2013.

Legislation to block the "fiscal cliff" is headed to the White House for President Barack Obama's signature. The bill will avoid, for now, the major tax increases and government spending cuts that had been scheduled to take effect with the new year.

House members were meeting to decide whether they would go along with the Senate's approval of a last-minute deal to pull the U.S. back from the so-called fiscal cliff.

A last-ditch tax deal in the Senate might let the U.S. economy will escape the worst of the so-called fiscal cliff and avoid going back into recession. But even if the House goes along, the tax increases likely coming in 2013 will dent economic growth anyway. In the early hours of the new year, the Senate voted to end a long stalemate and raise taxes on upper-income households, extend long-term unemployment benefits and postpone decisions over government spending cuts, officials said. But any deal needs approval from the House.

Agonizingly close to a New Year's Eve compromise, the White House and congressional Republicans agreed Monday to block across-the-board tax increases set for midnight, but held up a final deal as they haggled away the final hours of 2012

Democrats and Republicans say signs of progress are emerging in urgent negotiations to avert the looming `fiscal cliff' ahead of a midnight deadline.

Financial markets would be affected adversely if U.S. lawmakers fail to agree on a "fiscal cliff" deal before Tuesday, President Barack Obama said in an interview broadcast on Sunday, while urging Congress to act quickly to extend tax cuts for middle-class Americans.