US Senate passes Fiscal Cliff deal to avert crisis for now

The US Senate passed legislation just before the final timeline to neutralise the most discussed fiscal cliff situation in order to avoid recession for the US economy. The Fiscal Cliff includes across-the-board tax increases and steep spending cuts which can push back the US economy to another recession and increase the unemployment rate significantly. Senate Republican leader Mitch McConnell  has negotiated the agreement with Vice President Joe Biden to come up with the final deal.

Under the deal, taxes would remain steady for the middle class and rise at incomes over USD 400,000 for individuals and USD 450,000 for couples levels. Spending cuts of USD 24 billion over two months is aimed at the Defence Department and domestic programs would be deferred. For spending cuts, 50% would come from defense and 50% from non-defense areas.

Senate passage set the stage for a final showdown in the House of Representatives where a voting will be conducted to get the final approval. With this, the crisis can be averted for now and it will give some temporary relief to the worldwide financial market as well as world economy.