By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — After a day of wrangling, the House of Representatives voted Tuesday night to pass a bipartisan deal undoing the fiscal cliff of austerity measures, which began going into effect at the start of the year.
The final vote tally was 257 to 167. A majority of Republican House members opposed the bill, with a total of 151 Republicans and 16 Democrats voting against it.
The passage came after the Senate approved the measure by a large bipartisan majority of 89-8 in the wee hours Tuesday morning, as lawmakers scrambled to avert much broader tax hikes and heavy spending cuts.
The bill now heads to the White House, where President Barack Obama is expected to sign it into law.
The deal raises tax rates on upper-level household incomes, extends unemployment benefits, and delays across-the-board spending cuts for two months, but it also lets a 2% payroll-tax cut lapse.
Tax rates will rise to 39.6% from 35% currently on individual incomes of more than $400,000 and on couples’ incomes over $450,000.
The deal does nothing to address the U.S. borrowing limit, which was officially reached Monday, forcing the Treasury to take special measures to delay insolvency for the U.S. government.
The agreement also delays automatic spending cuts — agreed to during the 2011 debt-limit debate — for two months.
Those cuts would eventually total some $1.2 trillion over a decade, divided between Pentagon spending and other federal outlays. Replacing them with other cost-cutting measures is likely to feature in the upcoming debate over extending the debt ceiling.
The deal to cancel out much of the fiscal cliff by extending the Bush tax cuts for middle- and lower-class Americans, along with other measures, was almost scuttled due to opposition in the House.
After reviewing the details of the Senate’s bill, many House Republicans said earlier in the day they couldn’t support it because it doesn’t include spending cuts, with House Majority Leader Eric Cantor voting against the deal.
The Republicans had talked openly about amending the deal and sending it back to the Senate, a move which could have doomed the agreement as reports said the Senate would likely reject an altered bill.
Republican leaders decided to poll their caucus members on two courses of action: One would amend the Senate bill and add spending cuts, but the second would be a vote on the clean version of the Senate plan.
However, Rep. Steven LaTourette, a Republican from Louisiana who opposes the deal, predicted in an interview on CNN that the House would ultimately vote on the clean bill.
“We’ve been beaten this fight. I am very sad there are no spending reductions in the bill,” LaTourette said.
Because the deal delays the fiscal cliff’s spending cuts, the Congressional Budget Office estimated that it would add $4 trillion to the federal deficit over the next decade.
While U.S. markets had yet to open, those in Asia extended their gains after news of the vote broke. Hong Kong’s Hang Seng Index /quotes/zigman/2622475 HK:HSI +1.91% traded 1.9% higher, while Australia’s S&P/ASX 200 /quotes/zigman/1653884 AU:XJO +1.27% gained 1.2%, with Japanese bourses still closed for holiday. Read: Asian stocks kick off 2013 in upbeat fashion.
The U.S. dollar /quotes/zigman/1652083 DXY -0.34% was solidly lower after the deal was approved, eventually falling to 79.393 after trading above 79.75 before the news the House would vote on the unamended bill broke. The dollar is often seen as safe-haven currency, rising in times of uncertainty but then falling as investors take on more risk.
Greg Robb is a senior reporter for MarketWatch in Washington. Follow him on Twitter @grobb2000.