After a dramatic day of unexpected twists and turns, the U.S. House of Representatives has passed the Senate compromise bill to avert massive tax increases and severe cuts to government spending known as the fiscal cliff.
Earlier in the day, passage of the measure seemed in doubt, when House Republicans complained bitterly about the need for more cuts to government spending. President Obama welcomed the last minute reprieve from the cliff.
After almost two years of wrangling between Republicans and Democrats on the level of taxes Americans should pay and the size of cuts to government spending, the House and Senate have both passed a compromise agreement to pull the country back from the edge of the fiscal cliff.
Read President Obama's statement
President Obama welcomed the last minute action by Congress before financial markets re-open after the New Year's Day holiday.
"Thanks to the votes of Democrats and Republicans in Congress, I will sign a law that raises taxes on the wealthiest two percent of Americans, while preventing a middle-class tax hike that could have sent the economy back into recession," he said.
The president did warn Congress, however, that he was not prepared to engage in a similar brinksmanship battle over the debt ceiling, set to expire within the next several months.
Obama spoke just moments after the House, by a vote of 257-167, approved a compromise bill hammered out between Senate leaders and Vice President Joe Biden, following a day of fierce protest by House Republicans.
Democrats, who are in the minority in the House, voted in strong numbers to give the bill enough votes to pass. Democratic House Minority Whip Steny Hoyer said "With 37-and-a-half hours left to go in the 112th Congress, we will display to all of our constituents that yes, in the final analysis, we have the ability to come together - to act, not as Republicans, not as Democrats, but as Americans."
The top Republican leaders did not come to the floor to speak on the bill, but Republican Congressman Dave Camp said Democrats had finally agreed to support Bush-era tax cuts they had long opposed.
"Republicans and the American people are getting something really important, permanent tax relief," he said.
Earlier in the day, the entire fiscal cliff package seemed on the verge of collapse as House Republicans strongly objected to a lack of spending cuts in the Senate bill, and threatened to try to amend it, which would have likely thrown the whole process into chaos.
Late in the evening, House Republicans agreed to bring the Senate measure up for a vote. House Minority leader Nancy Pelosi conceded the bill does not contain everything everyone wanted.
"But this is a very, very strong first step as we go into the New Year," she said.
Taxpaying Americans and financial markets around the globe are also likely to welcome the passing and signing of the bill as a good start to the new year, even though it came at the last minute. On Thursday, the newly-elected 113th Congress will be sworn in, and lawmakers will have to start from the beginning on all legislation.