The U.S. House of Representatives late Tuesday passed a bill, 257-167, to avoid the "fiscal cliff." President Barack Obama said he will sign the bill into law.
The bill passed with a majority of Democrats, 172-16, and a minority of Republicans, 85-151. It was negotiated by Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden and easily passed the Senate, 89-8, early Tuesday morning.
House leaders had originally said they would not have enough time to review the bill and vote on it by Tuesday. If the bill had not been voted on by Thursday at noon, though, they would have had to pass a new bill with the new Congress that would then be in session.
The House Republican caucus met in a closed-door session much of Tuesday afternoon to decide what to do about the Senate bill. There was much talk about amending the bill with more spending cuts and sending it back to the Senate. In the end, though, they decided on an up or down vote on just the Senate's bill.
By passing the bill with a minority of Republican support, Republican leaders broke their long standing "Hastert rule," which says that bills will not be brought up for a vote without the support of a majority of the caucus.
Speakers do not normally vote on bills. Speaker of the House John Boehner (R-Ohio) broke that custom and voted in favor of the bill. The next two highest ranking Republicans, House Majority Leader Eric Cantor (R-Va.) and House Majority Whip Kevin McCarthy (R-Calif.) both voted against the bill. The split suggests there may be a challenge to Boehner's leadership when the House votes for a new speaker on Thursday.
The bill will make the Bush-era tax cuts permanent for taxable income below $450,000 for married couples and $400,000 for individuals, permanently fix the alternative minimum tax so that it will not increase taxes on the middle income brackets, extend unemployment benefits for a year, set the estate tax at 40 percent with a $5 million exemption that is indexed to inflation, set taxes on capital gains and dividends at 20 percent for the $450,000/$400,000 threshold and 15 percent for everyone else, cap personal exemptions for those making more than $250,000, and delay the automatic spending cuts, or sequester, for two months.
The bill does not extend the payroll tax cut. The Social Security payroll tax will go back to 6.2 percent, from 4.2 percent, as planned.
Obama delivered a statement to the press shortly after the vote in which he said he would sign the bill.
"This law is just one step in the process 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 that we need for the economy to grow as fast as it should."
The vote could have consequences for future elections. Sen. Marco Rubio (R-Fla.) and Rep. Paul Ryan (R-Wisc.) are both considered frontrunners for the 2016 presidential nomination. Rubio voted against the bill and Ryan voted in favor of the bill.