Business | Economy

Obama signs ‘fiscal cliff’ bill into law

Raising taxes on household earning above $450,000, delaying spending decisions for two months

  • AFP
  • Published: 18:38 January 3, 2013
  • Gulf News

  • Image Credit: AP
  • President Barack Obama walks down the stairs from Air Force One upon his arrival at Joint Base Pearl Harbor-Hickam, Honolulu, Hawaii, Wednesday, Jan. 2, 2013. The president is back in Hawaii for vacation after a tense, end-of-the-new-year standoff with Congress over the fiscal cliff.

Washington: President Barack Obama has signed into law a contentious compromise bill hammered out in Congress that narrowly averted the US ‘fiscal cliff of tax hikes and drastic, immediate cuts in spending, the White House said early Thursday.

In a statement, the White House said that Obama late on Wednesday signed the “American Taxpayer Relief Act of 2012,” raising taxes on households earning above $450,000 and delaying spending decisions for two months.

Officials said the US president, who is on vacation in Hawaii, signed the measure electronically by autopen.

The “fiscal cliff” crisis was finally averted on Tuesday as the House of Representatives, by a vote of 257 to 167, approved a stop-gap agreement passed one day earlier by the US Senate.

The measure dodged across-the-board tax hikes and automatic spending cuts that had threatened to unleash economic turmoil and perhaps drive America back into recession.

The hard-fought agreement, seen as a political victory for Obama, raised taxes on the very rich and delayed the threat of $109 billion in automatic spending cuts for two months.

The respite will prove temporary, however: The Democratic administration and the Republican-controlled House of Representatives face several clashes in the coming months on spending cuts and raising the government debt ceiling.

Had the deal fallen apart, all Americans would have been hit by tax increases and spending cuts would have kicked in across government — a combined $500 billion shock that could have rocked the fragile recovery.

Relief was felt internationally and markets surged, although China’s official news agency Xinhua warned: “People, or governments, can overspend for some time, but they simply cannot live on borrowed prosperity forever.”

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