Senate Passes 'Cliff' Deal, House to Vote

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By Jonathan Oh

WASHINGTON (ABC NEWS) -- Two hours after a midnight deadline for action, the Senate passed legislation early New Year's Day to avert the so-called fiscal cliff with an overwhelming vote of 89-8.

Senate passage set the stage for a final showdown in the House, where a vote could come as early as today.

"While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay," President Obama said in a statement shortly after the vote.

"There's more work to do to reduce our deficits, and I'm willing to do it. But tonight's agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans."

The bill extends Bush-era tax cuts permanently for individuals making less than $400,000 per year and couples making less than $450,000 but allows the top marginal tax rate on incomes above those levels to rise to 39.6 percent.

Capital gains taxes would rise to 20 percent from 15 percent.

The measure would raise the estate tax from 35 to 40 percent for estates larger than $5 million, prevent the alternative minimum tax from hammering millions of middle-class workers and extend unemployment benefits for one year.

The steep "sequester" budget cuts scheduled to go into effect with the New Year -- a $1.2 trillion hit to defense and domestic programs -- would be postponed for two months.

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