The U.S. Senate overwhelmingly passed a deal early this morning to cut taxes to Bush-era rates for all income categories below $450,000 per household ($400,000 for individuals). The Senate vote came too late to avert the midnight “fiscal cliff” deadline, and the deal must still pass the House of Representatives later today. The deal will also delay the deep spending cuts in the “sequester,” including defense cuts,” by two months.

The fact that the vote happened after midnight may have helped assist its passage, since Senators were no longer voting for a tax hike on the wealthiest earners but rather on a tax cut for everyone else. Five Republicans opposed the deal–including Sen. Marco Rubio (FL), Sen. Rand Paul (KY), and Sen. Mike Lee (UT), three Tea Party favorites. Three Democrats, including Tom Harkin (IA), who had signaled his opposition, also voted no.

Other provisions of the deal include an extension of unemployment benefits, without corresponding spending cuts elsewhere. The payroll tax relief that wage earners have enjoyed for two years was not extended and will expire, meaning that many working Americans will still feel a bigger dent in their first paychecks of 2013, while those out of work may experience a lower incentive to seek new job opportunities, as federal deficits rise.

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