The legislation raises tax rates on incomes over $400,000 for individuals and $450,000 for couples, which is higher than the $200,000 and $250,000 threshold that Obama campaigned on. It also extends unemployment benefits for an approximate 2 million unemployed people for another year and blocks a 27 percent cut in fees for doctors who treat Medicare patients and a spike in milk prices. It extends the Child Tax Credit; Earned Income Tax Credit; and the American Opportunity Tax Credit, which helps families pay for college tuition.
The bill does not, however, extend the payroll tax holiday, so Americans will still see a 2 percent increase this month in their Social Security tax. It does, however, delay for two months automatic spending cuts to discretionary domestic programs and the Defense Department's budget that were set to take place.
Obama, who left Washington to rejoin his family in Hawaii after the bill passed in the House, put a positive spin on the last-minute deal. In a statement delivered late Tuesday night, he said it shows "a path forward" and prevents the economy from going back into recession.
"Under this law, more than 98 percent of Americans and 97 percent of small businesses will not see their income taxes go up. Millions of families will continue to receive tax credits to help raise their kids and send them to college. Companies will continue to receive tax credits for the research that they do, the investments they make, and the clean energy jobs that they create," Obama said.
"And two million Americans who are out of work but out there looking, pounding the pavement every day, are going to continue to receive unemployment benefits as long as they’re actively looking for a job."
The president also reiterated that the bill is just "one step forward" and his call for a balanced approach to reducing the deficit that ensures "we are growing even as we get a handle on our spending."
In addition, he said that while he's "open to compromise" in future talks, he would not have another debate over the federal debt ceiling, a battle still looming over Capitol Hill.
The Congressional Black Caucus "reluctantly" supported the legislation.
"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," CBC Chairman Emanuel Cleaver said in a statement after the late Tuesday-night vote.
"The two-month extension does nothing to assuage our concerns about these dangerous and detrimental cuts. The Congressional Black Caucus remains committed to serving as the 'Conscience of the Congress' and protecting the most vulnerable Americans."
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(Photo: AP Photo/Jacquelyn Martin)