Washington's last-minute scramble to step back from a recession-inducing "fiscal cliff" shifted to the Republican-controlled House of Representatives today after the Senate approved a bipartisan deal to avoid steep tax hikes and spending cuts.
In a rare late-night show of unity, the Senate voted 89 to 8 to raise some taxes on the wealthy while keeping income taxes low on more moderate income voters.
The Bill's prospects were less certain in the House, where a vote had not yet been scheduled. Many conservative Republicans have rejected tax increases on any Americans, no matter how wealthy. Some liberal Democrats were also upset with a complex deal that they thought gave away too much.
Lingering uncertainty over US tax and spending policy has unnerved investors and depressed business activity for months, and lawmakers had hoped to reach a deal before today, when a broad range of automatic tax increases and spending cuts would begin to punch a $600 billion (€455 billion) hole in the economy.
Financial markets have avoided a steep plunge on the assumption that Washington would ultimately avoid pushing the country off the fiscal cliff into a recession.
With financial markets closed for the New Year's Day holiday, lawmakers have one more day to close the deal.
"My district cannot afford to wait a few days and have the stock market go down 300 points tomorrow if we don't get together and do something," Representative Steve Cohen, a Democrat from Tennessee, said on the House floor.
The Bill passed by the Senate at about 2am EST (0700 GMT) today would raise income taxes on families earning more than $450,000 per year. Low temporary rates that have been in place for less affluent taxpayers for the past decade would be made permanent, along with a range of targeted tax breaks put in place by President Barack Obama in the depths of the 2009 recession.
However, workers would see up to $2,000 more taken out of their pay as a temporary payroll tax cut was set to expire.
The Bill would also delay an across-the-board 8 per cent spending cut to domestic and military programmes for two months, and extend jobless benefits for 2 million people who otherwise would see them run out.
In a statement yesterday Mr Obama urged the House to vote. "There's more work to do to reduce our deficits, and I'm willing to do it," he said.
Republicans had hoped to include significant spending cuts in the deal to narrow trillion-dollar budget deficits. Conservatives were already looking forward to the next battle over the debt ceiling, in late February, to extract deficit reduction measures from the Democratic president.
Vice-president Joe Biden, who was instrumental in pushing through the Senate measure, was scheduled to address a closed-door meeting of House Democrats. Their support likely will be needed to pass the Bill.
Republican members were to meet to discuss "a path forward", a senior aide said.
The meeting could help Republicans leaders to decide when to begin consideration of the White House-backed measure. A vote could come later in the day, but was not yet scheduled.
The conservative Club for Growth urged a "no" vote on the Senate measure, saying it would be on its "congressional scorecard" used to challenge members of Congress.
Liberal groups also have urged Democrats to reject the deal.
Richard Trumka, head of the AFL-CIO labour union, wrote on Twitter that the deal does not raise taxes enough on the wealthy and "sets the stage for more hostage-taking" by Republicans in future budget confrontations.
Republican representative Tom Cole said his House colleagues should pass the Senate Bill rather than try to change it.
"We ought to take this deal right now, and we'll live to fight another day," Mr Cole said on MSNBC. "Putting to bed this thing before the markets open [tomorrw] is really a pretty important thing to do."
Reuters