Barack Obama has hailed a deal reached to stave off a “fiscal cliff” of drastic taxation and spending measures as “just one step in the broader effort to strengthen the economy”. The US president was speaking after the House of Representatives passed a Senate-backed bill by 257 votes to 167. It raises taxes for the wealthy and delays spending cuts for two months. There had been intense pressure for the vote to be passed before financial markets reopened on Wednesday. In Tuesday night’s house vote, 172 Democrats and 85 Republicans voted in favour of the bill. It had been passed in the Senate less than 24 hours earlier by 89 votes to eight after lengthy talks between Vice-President Joe Biden and Senate Republicans.
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Asian markets have responded positively to the move, with Hong Kong’s Hang Seng index up 2.1% on Wednesday morning, while South Korea’s Kospi added 1.7% and Australia’s ASX 200 rose 1.2%. Economists’ warnings Speaking before returning to Hawaii for his interrupted Christmas holiday, Mr Obama said that in signing the law he was fulfilling a campaign pledge. “I will sign a law that raises taxes on the wealthiest 2% of Americans… while preventing a middle-class tax hike,” he told a White House press conference. The US deficit was still too high, he said: While open to compromise on budgetary issues, he would not offer Congress spending cuts in return for lifting the government’s borrowing limit, known as the debt ceiling. CONTINUE READING