Members of the U.S. Senate stayed up late last night to pass their version of a fiscal cliff deal. The vote, which happend at around 2 a.m., was 89 to 8.
The House is expected to convene later today -- and there are already signs of discontent with last night's deal, which was brokered on the other side of the Capitol.
The Senate agreement permanently raises income taxes for individuals making more than $400,000 a year and couples making over $450,000. It delays -- for just two months -- most of those automatic spending cuts that were set to kick in.
It includes a number of other provisions to stave off the most pressing aspects of the fiscal cliff. The estate tax would go up from 35 to 40 percent on those estates worth over $5 million; the alternative minimum tax would be permanently indexed for inflation; and a number of tax credits for business owners and parents would be extended.
But the deal still doesn't address one big issue: the deficit.
"It'll raise $600 billion in new revenue in the next decade," adds Marketplace's David Gura, reporting from Washington. "That's far less than what the White House had been shooting for."
The shaky, not-yet-confirmed deal does have some positive aspects, though, according to Karen Petrou, managing partner at Federal Financial Analytics. "It's a patch-up piece of tax reform," she says. "It's constructive in my view, and it gets us off the edge of the cliff -- which is critical."
Randy Kroszner is a former member of George W. Bush's council of economic advisors, former Fed governor, and is now an economist at the Booth School of Business at the University of Chicago.
"It shows that at least there may be some ability to negotiate some of these important issues, but it's just really the beginning -- it's by no means the end," he says.
He points out the biggest problem: that no action has been taken on the spending side. "You can't deal with the challenges that we have in the fiscal arena without dealing with spending," Kroszner argues.
Alice Rivlin agrees that this deal has its pros and cons. She was director of the Office of Management and Budget under President Clinton and is now an economist with the Brookings Institution and a member of President Obama's debt commission.
"This was a stop-gap deal, but it was a good one to do," she says. "We were in danger of -- as they say -- going over the fiscal cliff, which could have meant that everybody's income tax rates would have gone up."
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