U.S. President Barack Obama is expected to sign into law a bill passed by Congress to avert America’s “fiscal cliff” of tax increases and spending cuts.
The bill was approved late on January 1 in the Republican Party-controlled House of Representatives, on a vote of 257-167.
The measure, approved earlier by the Democratically-controlled Senate, has been sent to Obama, who was expected to promptly sign it into law.
The legislation staves off the so-called "fiscal cliff" of more than $600 billion in automatic spending cuts and tax increases that came into effect at the start of the year because of America’s massive deficit.
Economists had warned the measures could stunt U.S. growth and impact the global economy.
The legislation extends tax cuts for most Americans and delays automatic spending cuts for at least two months.
It is projected to raise $620 billion over 10 years through a series of tax increases on wealthier Americans.
It extends tax cuts enacted in 2001 for incomes below $400,000 per individual or $450,000 per family. Income above that level would be taxed at 39.6 percent, up from the current top rate of 35 percent.
However, another standoff between the Democrats and Republicans is possible as early as February, when Congress will need to raise the $16.4 trillion federal borrowing limit so the government can continue paying its bills.
After the vote, Obama said the deal had made the U.S. tax system fairer.
"A central premise of my campaign for president was to change the tax code, that was too skewed toward the wealthy, at the expense of working middle-class Americans," he said. "Tonight, we've done that. Thanks to the votes of Democrats and Republicans in Congress, I will sign a law that raises taxes on the wealthiest 2 percent of Americans while preventing a middle-class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America."
Obama acknowledged the legislation is only part of the ongoing effort to reduce the deficit.
Obama’s Democrats and the Republicans have found it difficult to agree on a deficit-reduction strategy. Republicans generally reject Democratic calls for higher taxes, while Democrats reject many of the cuts on government programs proposed by Republicans.
"I think we all recognize this law is just one step in the broader effort to strengthen our economy and broaden opportunity for everybody," Obama said. "The fact is, the deficit is still too high and we're still investing too little in the things we need for the economy to grow as fast as it should."
Reflecting tensions over the struggle to negotiate the legislation at the last minute, Obama appealed for less partisanship in future negotiations.
"The one thing that, I think, hopefully, in the new year we'll focus on is seeing if we can put a package like this together with a little bit less drama, a little less brinksmanship, not scare the heck out of folks quite as much," he said. "We can come together as Democrats and Republicans to cut spending and raise revenue in a way that reduces our deficit, protects our middle class, and provides the ladders into the middle class for everybody who's willing to work hard."
Asian stock prices and the price of oil have risen in reaction to approval of the legislation.
With reporting by Reuters, AP, and AFP