Update: Tuesday, Jan. 1: 11:59 p.m. EST: Before leaving for Hawaii, President Obama hailed the fiscal-cliff bill, which he plans to sign. With regard to future negotiations over the nation's budget, he said, "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 also said that he would not have another debate with lawmakers over the debt ceiling.
Update: Tuesday, Jan. 1, 11:05 p.m. EST: After hours of wrangling, the House has passed the Senate's fiscal-cliff bill, averting a host of automatic tax increases, loss of unemployment benefits and more, the Washington Post reports. The Congressional Black Caucus said it was "reluctantly" supporting the deal. "Although CBC members voted overwhelmingly in support of this measure, concerns remain regarding the impact of potential cuts on communities of color and other vulnerable populations in the ongoing negotiations on sequestration and the debt ceiling," the black lawmakers said in a released statement.
Update: Tuesday, Jan. 1, 10:44 a.m. EST: The Senate passed a last-minute fiscal deal on Tuesday morning to avert a fiscal cliff. Now the Republican-controlled House of Representatives must take up the vote, the Chicago Tribune reports.
In a rare New Year's session at around 2 a.m. EST (0700 GMT), senators voted 89-8 to raise some taxes on the wealthy while making permanent low tax rates on the middle class that have been in place for a decade.
But the measure did little to rein in huge annual budget deficits that have helped push the U.S. debt to $16.4 trillion.
The agreement came too late for Congress to meet its own deadline of New Year's Eve for passing laws to halt $600 billion in tax hikes and spending cuts which strictly speaking came into force on Tuesday.
But with the New Year's Day holiday, there was no real world impact and Congress still had time to draw up legislation, approve it and backdate it to avoid the harsh fiscal measures.
The Washington Post is reporting that President Barack Obama and Senate Republicans reached a sweeping deal late Monday that would let income taxes rise significantly for the first time in more than two decades, fulfilling the president's promise to raise taxes on the rich and averting the worst effects of the fiscal cliff.
Vice President Biden arrived at the Capitol just after 9 p.m. to explain the details of the pact he negotiated with Senate Minority Leader Mitch McConnell (R-Ky.). A Senate vote on the package could be held by 10:30 p.m., beating a midnight deadline, Democratic aides said. The Republican-controlled House will begin considering the bill on Tuesday, with a final vote expected in the next day or two.
The agreement came together after negotiators cleared two final hurdles involving the estate tax and automatic spending cuts set to hit the Pentagon and other federal agencies later this week. Republicans gave ground on the spending cuts, known as the sequester, by agreeing to a two-month delay paid for in part with fresh tax revenue, a condition they had resisted. White House officials yielded to GOP wishes on how to handle estate taxes, aides said.
The revelations about the pending deal came after Obama had said a pact was "within sight," and House Republican leaders announced they would hold no votes Monday night, making it appear that that the nation would go over the fiscal cliff for at least a day.