Deal is on – taxes for wealthy up, no spending cuts

Spending hassles to move to state houses

Washington – Eyeball to eyeball with liberal power brokers, the most conservative elements of American politics blinked.

The national economy appears to be about to take a sharp turn at the edge of the fiscal cliff following a landslide bipartisan vote in the U.S. Senate of 89 to 8 to skip spending cuts and raise taxes on the most wealthy earners in America.

A vote in the House of Representatives that would raise taxes on the most wealthy, but provide no government spending cuts to curb deficit profligacy could come as early as today.

Taxes on individuals who make more than $400,000 per year or couples who report income of $450,000 or more would rise from 35% to the pre-2001 rate of 39.6%; capital gains taxes would increase from 15% to 20% if Representatives concur.

The Bush-era tax cuts for middle-class earners would remain in place, thus avoiding a $300 billion per year windfall for the government that would have amounted to 2 percent of the annual GDP had Congressmen in both houses failed to reach an accord.

A pre-dawn New Year's day compromise agreement worked out between key conservative and liberal Senators appears to have stymied for the moment the most conservative voices in the lower chamber demanding deep spending cuts across the board.