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A full two hours after a midnight deadline, the Senate overwhelmingly passed a deal Tuesday to avert the feared fiscal cliff on an 89-8 vote.

The Senate package would put off budget cuts for two months and preserve Bush-era income tax cuts for individuals earning less than $400,000 or couples earning less than $450,000.

The measure now goes to the House where it faces an uncertain future in the Republican-controlled body.

“Glad it’s over,” said Senate Majority Leader Harry Reid, D-Nevada, after the vote. “We’ll see if the Republicans in the House can become functional instead of dysfunctional.”

What the package proposes

— Taxes would stay the same for most Americans. But it will rise for individuals making more than $400,000 and couples making more than $450,000. For them, it will go from the current 35% to the Clinton-era rate of 39.6%.

— Itemized deductions would be capped for those making $250,000 and for married couples making $300,000.

— Taxes on inherited estates will go up to 40% from 35%.

— Unemployment insurance would be extended for a year for 2 million people.

— The alternative minimum tax — a perennial issue — would be permanently adjusted for inflation.

— Child care, tuition and research and development tax credits would be renewed.

— The “Doc Fix” — reimbursements for doctors who take Medicare patients — will continue, but it won’t be paid for out of the Obama administration’s signature health care law.

— Prevents a spike in milk prices. Agriculture Secretary Tom Vilsack said milk prices would have doubled to $7 a gallon because a separate agriculture bill had expired.

What’s not addressed

While the package provides some short-term certainty, it leaves a range of big issues unaddressed.

It doesn’t mention the debt ceiling, and temporarily puts off for two months the so-called sequester — a series of automatic cuts in federal spending that would have taken effect Wednesday. It would have reduced the budgets of most agencies and programs by 8% to 10%.

This means that, come late February, Congress will have to tackle both those thorny issues.

“We’re going to have to deal with the sequester, that’s true,” said Sen. Max Baucus, D-Montana, “but look, this is better than nothing.”

Reid said the agreement was a win for average Americans.

“I’ve said all along that our most important priority was to protect the middle class families,” he said. “This legislation does that.”

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Source: CNN