1 January 2013 Last updated at 12:45 ET
US President Barack Obama has urged the House of Representatives to back a Senate-approved deal to prevent sweeping tax rises and spending cuts known as the “fiscal cliff”.
These came into effect at midnight when George W Bush-era tax cuts expired, although few effects will be felt immediately as Tuesday is a US holiday.
House Republicans were to meet at 13:00 (18:00 GMT) to discuss their strategy.
There is pressure for a vote before financial markets reopen on Wednesday.
However, the speaker of the Republican-led House, John Boehner, has not endorsed the Senate deal and there is expected to be some opposition from Republican representatives.
Mr Boehner has pledged either a vote or the tabling of an alternative measure. The House has now reconvened.
‘Without delay’
The Senate-backed bill, which raises taxes for the wealthy, was passed in the early hours of Tuesday by 89 votes to eight after lengthy talks between Vice-President Joe Biden and Senate Republicans.
What is the fiscal cliff?
- On 1 January 2013, tax rises and huge spending cuts come into force – the so-called fiscal cliff
- The deadline was put in place in 2011 to force the president and Congress to reach agreement on the budget over the next 10 years
- Date coincides with expiry of Bush-era tax cuts
- There are fear that raising taxes while massively cutting spending will have a huge impact on households and businesses
- The fiscal squeeze could also push the US into recession, and have a global impact
Spending cuts have been delayed for two months to allow a wider agreement.
In hailing the Senate vote, President Obama stressed the urgency of a House approval.
He said in a statement: “While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay.”
He said: “Leaders from both parties in the Senate came together to reach an agreement that passed with overwhelming bipartisan support that protects 98% of Americans and 97% of small business owners from a middle class tax hike.”
Mr Boehner and other top Republican leaders said in their statement: “Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members – and the American people – have been able to review the legislation.”
On Tuesday, one senior Republican aide told Reuters news agency that the party’s House members were meeting at 13:00 local time to discuss a “path forward”. Mr Biden is also meeting House Democrats.
Voters had mixed opinions about the Senate deal
The BBC’s Zoe Conway in Washington says that, with some Republicans expressing their unhappiness with the tax increases, the passage of the Senate’s bill is far from guaranteed.
Representative Tim Huelskamp told CNN he would be voting no, saying the legislation would damage small businesses.
However, fellow Republican House member Tom Cole told MSNBC that the Senate deal should be accepted.
“We know the essential details and I think putting to bed this thing before the markets [open on Wednesday] is really a pretty important thing to do,” he said.
As the House reconvened on Tuesday, a number of representatives from both parties expressed concerns about the deal.
The Virginia Democrat, Jim Moran Jr, said it was “a bad deal for America” that simply set up further fiscal cliffs to overcome in the coming months.
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American politicians certainly know how to take it to the wire – and just a little bit beyond”
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The current House can legislate until Wednesday, when it is replaced by a new chamber chosen during last November’s election.
Analysts warn that if the full effects of the fiscal cliff were allowed to take hold, the resulting reduction in consumer spending could spark a new recession.
The 1 January deadline triggers tax increases of about $ 536bn and spending cuts of $ 109bn from domestic and military programmes.
The compromise deal reached on Monday seeks to avoid this by extending the tax cuts for Americans earning under $ 400,000 (£246,000) – up from the $ 250,000 level Democrats had originally sought.
In addition to the income tax rates and spending cuts, the package includes:
- Rises in inheritance taxes from 35% to 40% after the first $ 5m for an individual and $ 10m for a couple
- Rises in capital taxes – affecting some investment income – of up to 20%, but less than the 39.6% that would prevail without a deal
- One-year extension for unemployment benefits, affecting two million people
- Five-year extension for tax credits that help poorer and middle-class families
BBC News – Business
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