Why U.S. lives under the shadow of 'W'

Julian Zelizer says former President George W. Bush's key tax and homeland security policies survive in the age of Obama

STORY HIGHLIGHTS

• Julian Zelizer: For all the criticism Bush got, two key policies have survived


• He says fiscal cliff pact perpetuates nearly all of Bush's tax cuts


• Obama administration has largely followed Bush's homeland security policy, he says


• Zelizer: By squeezing revenues, Bush tax cuts will put pressure on spending

Editor's note: Julian Zelizer is a professor of history and public affairs at Princeton University. He is the author of "Jimmy Carter" and of "Governing America."

Princeton, New Jersey (CNN) -- Somewhere in Texas, former President George W. Bush is smiling.

Although some Democrats are pleased that taxes will now go up on the wealthiest Americans, the recent deal to avert the fiscal cliff entrenches, rather than dismantles, one of Bush's signature legacies -- income tax cuts. Ninety-nine percent of American households were protected from tax increases, aside from the expiration of the reduced rate for the payroll tax.

Julian Zelizer

In the final deal, Congress and President Barack Obama agreed to preserve most of the Bush tax cuts, including exemptions on the estate tax.

When Bush started his term in 2001, many of his critics dismissed him as a lightweight, the son of a former president who won office as result of his family's political fortune and a controversial decision by the Supreme Court on the 2000 election.

But what has become clear in hindsight, regardless of what one thinks of Bush and his politics, is that his administration left behind a record that has had a huge impact on American politics, a record that will not easily be dismantled by future presidents.

The twin pillars of Bush's record were counterterrorism policies and tax cuts. During his first term, it became clear that Obama would not dismantle most of the homeland security apparatus put into place by his predecessor. Despite a campaign in 2008 that focused on flaws with the nation's response to 9/11, Obama has kept most of the counterterrorism program intact.

Opinion: The real issue is runaway spending

In some cases, the administration continues to aggressively use tactics his supporters once decried, such as relying on renditions to detain terrorist suspects who are overseas, as The Washington Post reported this week. In other areas, the administration has expanded the war on terrorism, including the broader use of drone strikes to kill terrorists.

Now come taxes and spending.

With regard to the Bush tax cuts, Obama had promised to overturn a policy that he saw as regressive. Although he always said that he would protect the middle class from tax increases, Obama criticized Bush for pushing through Congress policies that bled the federal government of needed revenue and benefited the wealthy.

In 2010, Obama agreed to temporarily extend all the tax cuts. Though many Democrats were furious, Obama concluded that he had little political chance to overturn them and he seemed to agree with Republicans that reversing them would hurt an economy limping along after a terrible recession.

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With the fiscal cliff deal, Obama could certainly claim more victories than in 2010. Taxes for the wealthiest Americans will go up. Congress also agreed to extend unemployment compensation and continue higher payments to Medicare providers.

But beneath all the sound and fury is the fact that the 2001 and 2003 tax cuts, for most Americans, are now a permanent part of the legislative landscape. (In addition, middle class Americans will breathe a sigh of relief that Congress has permanently fixed the Alternative Minimum Tax, which would have hit many of them with a provision once designed to make sure that the wealthy paid their fair share.)

As Michigan Republican Rep. Dave Camp remarked, "After more than a decade of criticizing these tax cuts, Democrats are finally joining Republicans in making them permanent." Indeed, the Congressional Budget Office estimates that the new legislation will increase the deficit by $4 trillion over the next 10 years.

The tax cuts have significant consequences on all of American policy.

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Most important, the fact that a Democratic president has now legitimated the moves of a Republican administration gives a bipartisan imprimatur to the legitimacy of the current tax rates.

Although some Republicans signed on to raising taxes for the first time in two decades, the fact is that Democrats have agreed to tax rates which, compared to much of the 20th century, are extraordinarily low. Public perception of a new status quo makes it harder for presidents to ever raise taxes on most Americans to satisfy the revenue needs for the federal government.

At the same time, the continuation of reduced taxes keeps the federal government in a fiscal straitjacket. As a result, politicians are left to focus on finding the money to pay for existing programs or making cuts wherever possible.

New innovations in federal policy that require substantial revenue are just about impossible. To be sure, there have been significant exceptions, such as the Affordable Care Act. But overall, bold policy departures that require significant amounts of general revenue are harder to come by than in the 1930s or 1960s.

Republicans thus succeed with what some have called the "starve the beast" strategy of cutting government by taking away its resources. Since the long-term deficit only becomes worse, Republicans will continue to have ample opportunity to pressure Democrats into accepting spending cuts and keep them on the defense with regards to new government programs.

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With his income tax cuts enshrined, Bush can rest comfortably that much of the policy world he designed will remain intact and continue to define American politics. Obama has struggled to work within the world that Bush created, and with this legislation, even with his victories, he has demonstrated that the possibilities for change have been much more limited than he imagined when he ran in 2008 or even in 2012.

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The opinions expressed in this commentary are solely those of Julian Zelizer.

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Football: AC Milan storm off pitch after racist chants

ROME: AC Milan striker Kevin-Prince Boateng stormed off the pitch on Thursday forcing the suspension of a friendly match against fourth-tier Pro Patria after racist chants from a group of fans for the opposing team.

"Pulling out was the right choice with something like this," Milan trainer Massimiliano Allegri said after the match was stopped in the 26th minute.

"We have to stop it with these uncouth acts. Italy as a country has to improve and become more civilised and intelligent," he told reporters.

Squad captain Massimo Ambrosini said: "That was intolerable, it was only a friendly! We couldn't have gone on like that, we had to give a signal."

Boateng picked up the ball, kicked it towards the Pro Patria stands and walked off the pitch of Pro Patria's home town of Busto Arsizio.

His teammates joined him despite Pro Patria players begging them to stay and whistles from many of the Pro Patria fans against the racists.

The 25-year-old Boateng, who has Ghanaian citizenship and played for Ghana at the 2010 World Cup, was previously at Tottenham, Borussia Dortmund and Portsmouth.

- AFP/jc

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For new Congress, bar couldn't be lower

STORY HIGHLIGHTS

• The fiscal cliff was averted, but issues like the the sequester and debt ceiling await


• The new Congress will vote on $60 billion in aid to Superstorm Sandy victims


• House Speaker John Boehner canceled the vote on the aid in light of the fiscal cliff vote


• Democrats gain seats in both chambers, but Republicans keep control of the House

(CNN) -- A new Congress takes office Thursday, and many of the same difficult issues that snagged the last one will fall into its lap.

President Barack Obama has signed into law a bill to avert the fiscal cliff, a deal worked out after lengthy, grinding friction between Democrats and Republicans. The political theatrics kept Americans and people around the world on pins and needles over how the outcome would affect the shaky global economy.

But the sequester -- a set of automatic spending cuts of up to 10% to the budgets of most agencies and programs -- lies ahead. It has been pushed back to the end of February.

At about the same time, a decision on the debt ceiling that the last Congress postponed will be due.

As an early order of business, the new Congress will address the massive aid package for Superstorm Sandy victims. House Speaker John Boehner scrapped a vote to approve the $60 billion measure late Tuesday in the wake of the vote on the fiscal cliff bill, triggering irate reactions from politicians in both parties from New York and New Jersey.

Republican Gov. Chris Christie of New Jersey attacked his own party members in Washington, blasting "the toxic internal politics of the House majority."

A vote on $9 billion for immediate aid is now set for Friday, with the balance of $51 billion due for consideration January 15.

Stocks start 2013 with broad gains

There have been subtle changes in the makeup of the lawmaking bodies.

Although Republicans retained control of the House after the 2012 elections, Democrats gained seats in that chamber. They also expanded their control of the Senate.

Republicans will fill 234 seats in the new House, down from 242. Democrats will take 201, up from 193.

In the Senate, voters handed two former GOP seats to Democrats for a new balance of 55-45. The 55 Democratic seats include two independents who caucus with the party.

The small shift in numbers could make a difference in votes across party lines.

How much more you'll pay under fiscal cliff deal

The House will vote on its speaker position, and their are questions about whether Boehner will receive the gavel again in light of recent tensions.

The House vote on a deal approved by the Senate also split the parties, but enough Republicans crossed party lines for the bill to pass handily with a 257-167 vote. On Tuesday night, 172 Democrats and 85 Republicans favored the bill; 16 Democrats and 151 Republicans opposed it.

Congress also passed a bill approving defense expenditures, which the president signed into law.

A number of moderates on both sides lost their seats in the House, which is likely to make the lawmaking body even more polarized.

Partisan banter and stern words form the president preceded the convening of the 113th Congress on 1/3/13.

Before leaving Washington for Hawaii on Tuesday night, Obama warned Congress that he will not tolerate another act of prolonged brinksmanship.

"While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up through the laws that they've passed," he said.

Hours later Senate Minority Leader Mitch McConnell swiped back at the president in an op-ed piece he wrote for Yahoo News.

"I have news for him," McConnell wrote. "The moment that he and virtually every elected Democrat in Washington signed off on the terms of the current arrangement, it was the last word on taxes. That debate is over."

But to get through the debt ceiling, the self-imposed limit on how much the U.S. government may borrow, there will have to be debate over spending, he insisted.

The ceiling of $16.394 trillion has already been reached.

CNN's Josh Levs, Tom Watkins, Holly Yan, Robert Yoon and Ashley Killough contributed to this report

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Will GOP unite before next fiscal fight?

Anyone who thought Republicans were too focused on spending cuts in the "fiscal cliff" negotiations should brace themselves for what's next.

Tuesday's votes on the "fiscal cliff" deal divided the GOP: More than half of House Republicans voted against it, primarily complaining about its lack of spending cuts. Yet on the Senate side, all but three Republicans supported the measure.

A couple of the Senate's most conservative Republicans say they understand why their House counterparts opposed the bill -- it's littered with special-interest giveaways, was secretly drafted in the dead of night and extends spending on programs like unemployment insurance without paying for them. At the same time, those senators say, those House Republicans may have been too concerned about their outsider, tea party reputations to accept the overwhelming upside of the bill -- making the Bush-era tax rates permanent for nearly all Americans.

"This is not meant to reduce the deficit," Sen. Jim Inhofe, R-Okla., told CBSNews.com about the "fiscal cliff" deal. "This was meant to reduce taxes. The deficit is a different issue."

The nation's spending habit, however, is exactly the issue that will be on the table in a matter of weeks from now, when Congress will have to raise the debt limit, as well as reconsider the "sequester" spending cuts that were only put on hold for two months in the "fiscal cliff" bill.

Sen. Ron Johnson, R-Wis., another conservative who voted for the "fiscal cliff" deal, said voters can expect to see "a strongly united Republican party coming out of this."

"I think what the American public is going to see is President Obama's campaign pledge," he said. "He made the rich pay their fair share -- he got that. Now it's very legitimate for Republicans to demand and see what is the other part of his 'balanced approach'... His tax increase, at most, will close 5 percent of the deficit. What's the other 95 percent? What's his plan to save Social Security? To save Medicare?"

A few weeks ago, many hoped the "fiscal cliff" negotiations would result in a balanced, comprehensive approach to the nation's fiscal issues. Everything seemed to be on the table: entitlement reform, the debt limit, strategic spending cuts with which to replace the sequester, and new tax revenue.

Play Video

Repairing the Republican party

The ultimate deal, brokered by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, R-Ky., was much more limited. Still, some conservatives saw plenty to be pleased with.

Inhofe said he was "in shock" Congress managed to pass an extension of the farm bill, a permanent fix to the alternative minimum tax, the "doc fix" for Medicare reimbursement rates and an extension of the child tax credit, among other things. He also hailed the limited increases in the estate tax and the capital gains tax, which could have gone much higher. "The only bad thing in this thing from a conservative standpoint: they've expanded unemployment insurance too far," he said.

That didn't stop right-wing commentators from berating Republicans for giving up on spending cuts. "The Republican Establishment in Washington, DC should be burned to the ground and salt spread on the remains," RedState.com blogger Erick Erickson wrote. Columnist Charles Krauthammer called the bill "a complete surrender on everything."

Inhofe chalked up the angry punditry to "demagoguing," noting that he and others who supported the measure are regularly named some of the Senate's most conservative members.

On the House side, Inhofe said, "Most of the ones that would be categorized as tea partiers are those who got in [to office] being critical of the establishment and sincerely wanting less government, less taxes, less spending. We all feel that way, but they were a little afraid they'd be portrayed as insiders, thinking, 'The electorate back home elected me to do something the establishment is not doing.'"

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Senate Swears in Historic 20th Female Senator

Today the Senate will make history, swearing in a record-breaking 20 female senators -- four Republicans and 16 Democrats -- in office.

As the 113th Congress is sworn in today on Capitol Hill, ABC "World News" anchor Diane Sawyer has an exclusive joint interview with the historic class of female senators.

Diane Sawyer's complete interview will air on "World News" and "Nightline" tonight.

"I can't tell you the joy that I feel in my heart to look at these 20 gifted and talented women from two different parties, different zip codes to fill this room," Sen. Barbara Mikulksi, D-Md., said while surrounded by the group of women senators. "In all of American history only 16 women had served. Now there are 20 of us."

Senator-elect Deb Fischer, R-Neb., today becomes the first women to be elected as a senator in Nebraska.

"It was an historic election," Fischer said, "But what was really fun about it were the number of mothers and fathers who brought their daughters up to me during the campaign and said, "Can we get a picture? Can we get a picture?' Because people realize it and -- things do change, things do change."

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The women senators all agree that women will be getting things done in this new Congress, a sign of optimism felt for the new Congress, after the bruising battles of the 112th Congress.

"We're in force and we're in leadership positions, but it's not just the position that we hold. I can tell you this is a can-do crowd," Mikulski said of both Democrats and Republican senators in the room. "We are today ready to be a force in American politics."

And while the number of women in the Senate today makes history, many of the women agreed that they want to keep fighting to boost those numbers.

Sen. Barbara Boxer, D-Calif., said that women are still "underrepresented" in the Senate.

"I think that until we get to 50, we still have to fight because it's still a problem," Boxer said. "I think this class as you look around, Republicans and Democrats. ... I think that because of this new class and the caliber of the people coming and the quality of the people coming, I think that hopefully in my lifetime -- and I really do hope and pray this is the case -- we will see 50 percent. "

No Sorority Here, Even With the Will to Work Together

The cooperation does not make them a "sorority," Sen. Dianne Feinstein, D-Calif., says. There are real differences in ideology and personality and they don't want their gender to define them as senators.

But the women also admit that they believe having more women in the room would help in fierce negotiations, compromise and legislating on Capitol Hill, traits they say do not come as naturally to their male colleagues in the Senate. That sentiment enjoys bipartisan support among the women of the Senate.

"What I find is with all due deference to our male colleagues, that women's styles tend to be more collaborative," Sen. Susan Collins, R-Maine, said.

Sen. Claire McCaskill, D-Mo., said by nature women are "less confrontational." Sen-elect Mazie Hirono, D-Hawaii, says that women are "problem solvers."

Sen. Amy Klobuchar, D-Minn., says that women have a camaraderie which helps in relationships that are key to negotiations on Capitol Hill, something she says comes natural to women more than men.

"I think there's just a lot of collaboration between the women senators and... advice and really standing up for each other that you don't always see with the men," she said.

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Time to rebrand in Lincoln's image?

Wade Henderson thinks the modern Republican Party should look to Abraham Lincoln for some inspiration.

STORY HIGHLIGHTS

• Wade Henderson: January 1 is 150th anniversary of the Emancipation Proclamation


• He says GOP should look to Lincoln, a canny politician who led moral fight on civil rights


• He says GOP has history of civil rights support that it has largely abandoned in recent years


• Henderson: In 2012, election minority voters unimpressed; GOP should return to roots

Editor's note: Wade Henderson is the president and CEO of The Leadership Conference on Civil and Human Rights and The Leadership Conference Education Fund.

(CNN) -- On January 1, the nation will commemorate the 150th anniversary of the Emancipation Proclamation, which legally freed slaves in the secessionist Southern states. Meanwhile, thousands of theaters will still be presenting the film "Lincoln," portraying the soon-to-be-martyred president's efforts in January 1865 to persuade the House of Representatives to pass the 13th Amendment, outlawing slavery throughout the nation.

Coming at a time when many Republicans are seeking to rebrand their party, these commemorations of the first Republican president raise this question: Why not refashion the Grand Old Party in the image of the Great Emancipator?

Steven Spielberg's historical drama, as well as the biography upon which it is based, Doris Kearns Goodwin's "Team of Rivals: The Political Genius of Abraham Lincoln," both remind today's Americans that Lincoln was not only a moral leader but also a practical politician. The political identity that Lincoln forged for the fledgling Republican Party -- uniting the nation while defending individual rights -- was a winning formula for half a century, with the GOP winning 11 of 13 presidential elections from 1860 through 1908.

Wade Henderson

Moreover, support for civil rights persisted in the party throughout the last century. Among the Republican presidents of the 20th century, Theodore Roosevelt famously hosted Booker T. Washington at the White House. Dwight Eisenhower ordered federal troops to Little Rock, Arkansas, to enforce school desegregation. Richard Nixon expanded affirmative action. And George H. W. Bush signed the Americans with Disabilities Act into law.

Brazile: A turning point for freedom in America, 150 years later

In the U.S. Senate, such prominent Republicans as Edward Brooke of Massachusetts (the first African-American senator since Reconstruction), Jacob Javits of New York and Everett Dirksen of Illinois were strong supporters of civil rights, as were governors such as Nelson Rockefeller in New York, George Romney in Massachusetts and William Scranton in Pennsylvania.

Former California Gov. Earl Warren served as chief justice when the Supreme Court issued its decision in Brown v. Board of Education, ordering the desegregation of the nation's schools. As recently as 1996, the Republican national ticket consisted of two strong civil rights advocates, former Kansas Sen. Bob Dole and former New York Rep. Jack Kemp.

Unfortunately, by 2012, the Republican Party had veered far from its heritage as the party of Lincoln. Prominent Republicans supported statewide voter suppression laws that hit hardest at vulnerable minorities or called for the "self-deportation" of immigrants and their families.

While some Republican senatorial nominees needlessly offended women, leading moderates such as Maine Sen. Olympia Snowe and Ohio Rep. Steven LaTourette opted for retirement. In what I hope was rock bottom, 38 Senate Republicans rebuffed their former presidential nominee Bob Dole -- a wheelchair-bound war hero -- to block an international civil and human rights treaty for people with disabilities.

Not surprisingly, the GOP in the presidential race lost the black vote by 87 points, the Asian-American vote by 47 points, the Latino vote by 44 points and the women's vote by 11 points, according to CNN exit polls. As Republicans reflect on their path forward with minority voters and persuadable whites, there are opportunities to advance civil rights.

While the GOP has increasingly promoted diverse candidates, it has not yet begun to reflect the values of our diverse nation. Fiscally conservative officeholders can fight for civil and human rights.

Just a few years ago, Alabama Sen. Jeff Sessions championed a reduction in the sentencing disparity between people charged with possession of crack and powder cocaine. These are two forms of the same drug, but crack cocaine is used more by minorities and carried much harsher punishments for possession. Working with Sessions, civil rights advocates pushed to reduce this disparity significantly -- among the greatest advances in criminal justice reform in decades.

Looking toward to the 113th Congress, several civil rights initiatives would fit conservative values. They need congressional champions. Conservative lobbyist Grover Norquist and conservative strategist Richard Viguerie have called for criminal justice reforms that would reduce the number of prisoners in U.S. prisons.

The U.S. Chamber of Commerce has joined the civil rights coalition's call for federal initiatives to narrow the educational achievement gap between minority and white students. And more Republicans are joining Jeb Bush's support for comprehensive immigration reform that provides a pathway to citizenship for long-term, law-abiding residents.

Most importantly, the GOP must embrace one of Lincoln's most enduring legacies, the 15th Amendment, which guaranteed the right to vote regardless of race. The GOP must stop trying to suppress voters and begin to champion electoral reform that shortens lines and helps more people to vote.

I don't expect another Abraham Lincoln or Frederick Douglass from the modern Republican Party -- I'll settle for a few more Jeff Sessions. When Republicans consider the consequences for their party's narrow appeal, they'll try to return to their roots.

I'm happy to help.

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The opinions expressed in this commentary are solely those of Wade Henderson.

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US manufacturing rebounds in December

WASHINGTON: US manufacturing activity expanded slightly in December after contracting the previous month, the ISM monthly survey showed on Monday.

The Institute for Supply Management's manufacturing sector index rose to 50.7 last month from 49.5 in November, with 50 the break-even line between growth and contraction.

The index has hovered around that line for the past six months, the ISM said, reflecting weakness in both US and global economic growth.

Only seven of 18 manufacturing industries covered in the ISM survey actually reported growth in the month, and overall production growth slowed.

But the employment sub-index rose to 52.7 from 48.4, showing the industry returned to hiring at a modest clip in December.

- AFP/de

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Fiscal cliff crises averted, but more fights loom

STORY HIGHLIGHTS

• NEW: It's the first time since 1993 that tax rates rise for any Americans, according to Tax Foundation


• The vote prevents tax increases for more than 98% of Americans


• It also wards off $110 billion in automatic cuts to domestic and military spending


• Reid accused Boehner of "dictatorship" Friday; Boehner responded with profanity

(CNN) -- After exhaustive negotiations that strained the country's patience, the House approved a bill to avert the dreaded fiscal cliff, staving off widespread tax increases and deep spending cuts.

In the 257-167 vote late Tuesday, 172 Democrats and 85 Republicans favored the bill; 16 Democrats and 151 Republicans opposed it.

The approved plan maintains tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000. It will raise tax rates for those who make more -- marking the first time since 1993 that federal income tax rates have gone up for any Americans, according to the Tax Foundation.

The bill also extends unemployment insurance and delays for two months a series of automatic cuts in federal spending.

World markets rose after the news. U.S. stocks jumped, too, with the Dow rising 210 points after opening.

Just hours before the bill passed, House Speaker John Boehner pitched to fellow Republicans the idea of amending the Senate-approved bill to add a package of spending cuts. He cautioned about the risk in such a strategy, saying there was no guarantee the Senate would act on it.

Rum, electric vehicles and motor sports: Nuggets in the fiscal cliff bill

By the end of the night, he was among the Republicans who voted for the bill as written.

President Barack Obama said he would sign the bill into law, but he did not say when. After the vote, he flew to Hawaii to rejoin his wife and daughters on their winter vacation.

Congress is planning to send the bill to the White House by early afternoon, a Republican leadership aide told CNN.

In practical terms, there's no urgency on the president's signature. It's up to the Obama administration to implement the budget and tax changes, and since the president has said he will sign the measure, the administration can begin planning for the changes immediately.

Had the House not acted, and the Bush-era tax cuts expired fully, broad tax increases would have kicked in. In addition, $110 billion in automatic cuts to domestic and military spending would have taken place.

The combined effect could have dampened economic growth by 0.5%, possibly tipping the U.S. economy back into a recession and driving unemployment from its current 7.7% back over 9%, according to economists' estimates.

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

It doesn't mention the $16.4 trillion debt ceiling that the United States reached Monday.

iReport: What's your message for Washington?

It also puts off the so-called sequester, cuts in federal spending that would have taken effect Wednesday and reduced the budgets of most agencies and programs by 8% to 10%.

Come late February, Congress will have to tackle both those thorny issues.

Obama warned Congress that he will not tolerate another act of prolonged brinksmanship.

"While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up through the laws that they've passed," he said after the Tuesday night vote.

"We can't not pay bills that we've already incurred. If Congress refuses to give the United States government the ability to pay these bills in time, the consequences for the entire global economy would be catastrophic -- far worse than the impact of the fiscal cliff."

How they voted: House | Senate

A partial victory

While the deal gives Obama bragging rights for raising taxes on the wealthiest Americans, it also leaves him breaking a promise.

Obama had vowed to raise tax rates for the top-earning 2% of Americans, including those with household income above $250,000 and individuals earning more than $200,000.

Raising the threshold for higher tax rates shrinks the number of Americans affected.

While nearly 2% of filers have adjusted gross incomes over $250,000, only 0.6% have incomes above $500,000, according to the Tax Policy Center.

Some House Republicans weren't exactly overjoyed in voting for the plan.

Opinion: Look beyond the fiscal cliff

"I'm a very reluctant yes," said Rep. Nan Hayworth, an outgoing Republican representative from New York.

"This is the best we can do, given the Senate and the White House sentiment at this point in time, and it is at least a partial victory for the American people," she said. "I'll take that at this point."

Conservative lobbyist Grover Norquist, whose Americans for Tax Reform pushes candidates to sign a pledge never to raise taxes, said the plan preserves most of the Bush tax cuts and won't violate his group's beliefs.

"The Bush tax cuts lapsed at midnight last night," Norquist tweeted Tuesday. "Every (Republican) voting for Senate bill is cutting taxes and keeping his/her pledge."

The timing of the vote was crucial, as a new Congress is set to be sworn in Thursday. And without a breakthrough, the entire process would have had to start over.

Cliff deal spurs global market rally

Specifics of the plan

The legislation will raise roughly $600 billion in new revenues over 10 years, according to various estimates.

According to the deal:

-- The tax rate for individuals making more than $400,000 and couples making more than $450,000 will rise from the current 35% to the Clinton-era rate of 39.6%.

-- Itemized deductions will be capped for individuals making $250,000 and for married couples making $300,000.

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

-- Unemployment insurance will be extended for a year for 2 million people.

-- The alternative minimum tax, a perennial issue, will be permanently adjusted for inflation.

-- Child care, tuition and research and development tax credits will 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.

The Democratic-led Senate overwhelmingly approved the bill early Tuesday before passing it to the House.

As news about the fiscal cliff's deflection spread across the world, several markets reacted positively Wednesday.

Australia's ASX All Ordinaries index added 1.2%. South Korea's KOSPI gained 1.5%, and the Hang Seng in Hong Kong advanced 1.9%. Tokyo's Nikkei and the Shanghai Composite remain closed for holiday celebrations but will reopen later in the week.

More fiscal cliffs loom

Payroll taxes still set to go up

Despite the last-minute fiscal cliff agreements, Americans are still likely to see their paychecks shrink somewhat because of a separate battle over payroll taxes.

The government temporarily lowered the payroll tax rate in 2011 from 6.2% to 4.2% to put more money in the pockets of Americans. That adjustment, which has cost about $120 billion each year, expired Monday.

Now, Americans earning $30,000 a year will take home $50 less per month. Those earning $113,700 will lose $189.50 a month.

Opinion: Cliff deal hollow victory for American people

With the latest battle round over, lawmakers will next set their sights on the other items on their docket of congressional squabbles over money: the debt ceiling and resolving the sequester.

Obama said he hopes leaders in Washington this year will focus on "seeing if we can put a package like this together with a little bit less drama, a little less brinksmanship (and) not scare the heck out of folks quite as much."

He thanked bipartisan House and Senate leaders for finally reaching a resolution Tuesday, but said Congress' work this year is just beginning.

"I hope that everybody now gets at least a day off I guess, or a few days off, so that people can refresh themselves, because we're going to have a lot of work to do in 2013."

Read more: 5 things to know about the fiscal cliff

Angry rhetoric flew

In the tense days leading up to the deal, heated words flew between some Democrats and Republicans.

On Friday, after Democratic Senate Majority Leader Harry Reid accused Boehner of holding a "dictatorship" in his chamber, the House speaker responded with a profanity.

"Go f— yourself," Boehner said to Reid, according to a source with knowledge of the exchange in a White House lobby.

Big issues still pending

CNN's Dana Bash, Rich Barbieri, Charles Riley, Dana Ford, Matt Smith, Jessica Yellin, Deirdre Walsh and Ted Barrett contributed to this report.

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House GOP blasted for scrapping Sandy aid vote

WASHINGTON New York area-lawmakers in both parties erupted in anger late Tuesday night after learning the House Republican leadership decided to allow the current term of Congress to end without holding a vote on aid for victims of Superstorm Sandy.

Rep. Peter King, R-N.Y., said he was told by the office of Majority Leader Eric Cantor of Virginia that Speaker John Boehner of Ohio had decided to abandon a vote this session.

Cantor, who sets the House schedule, did not immediately comment. House Democratic Whip Steny Hoyer of Maryland told reporters that just before Tuesday evening's vote on "fiscal cliff" legislation, Cantor told him that he was "99.9 percent confident that this bill would be on the floor, and that's what he wanted."

A spokesman for Boehner, Michael Steel said, "The speaker is committed to getting this bill passed this month."

A House Republican aide confirmed to CBS News producer Jill Jackson that the House would not take up the bill during this session.

In remarks on the House floor, King called the decision "absolutely inexcusable, absolutely indefensible. We cannot just walk away from our responsibilities."

The Senate approved a $60.4 billion measure Friday to help with recovery from the October storm that devastated parts of New York, New Jersey and nearby states. The House Appropriations Committee has drafted a smaller, $27 billion measure, and a vote had been expected before Congress' term ends Thursday at noon.

29 Photos

Cleaning up after Sandy

29 Photos

Superstorm Sandy: State-by-state snapshots

More than $2 billion in federal funds has been spent so far on relief efforts for 11 states and the District of Columbia struck by the storm, one of the worst ever to hit the Northeast. The Federal Emergency Management Agency's disaster relief fund still has about $4.3 billion, enough to pay for recovery efforts into early spring, according to officials. The unspent FEMA money can only be used for emergency services, said Rep. Frank Pallone Jr., D-N.J.

New York, New Jersey, Connecticut, District of Columbia, West Virginia, Virginia, Maryland, New Hampshire, Delaware, Rhode Island, Pennsylvania and Massachusetts are receiving federal aid.

Sandy was blamed for at least 120 deaths and battered coastline areas from North Carolina to Maine. New York, New Jersey and Connecticut were the hardest hit states and suffered high winds, flooding and storm surges. The storm damaged or destroyed more than 72,000 homes and businesses in New Jersey. In New York, 305,000 housing units were damaged or destroyed and more than 265,000 businesses were affected.

"This is an absolute disgrace and the speaker should hang his head in shame," said Rep. Eliot Engel, D-N.Y.

"I'm here tonight saying to myself for the first time that I'm not proud of the decision my team has made," said Rep. Michael Grimm, R-N.Y. "It is the wrong decision, and I' m going to be respectful and ask that the speaker reconsider his decision. Because it's not about politics, it's about human lives."

"I truly feel betrayed this evening," said Rep. Nita Lowey, D-N.Y.

"We need to be there for all those in need now after Hurricane Sandy," said Rep. Gregory Meeks, D-N.Y.

The House Democratic leader, Rep. Nancy Pelosi of California, said she didn't know whether a decision has been made and added, "We cannot leave here doing nothing. That would be a disgrace."

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Obama Hails 'Cliff' Deal, Warns of Next Fiscal Fight

Minutes after the House of Representatives approved a bipartisan Senate deal to avert the "fiscal cliff" and preserve Bush-era tax cuts for all Americans making less than $400,000 per year, President Obama praised party leaders and wasted little time turning to the next fiscal fight.

"This is one step in the broader effort to strengthen our economy for everybody," Obama said.

Obama lamented that earlier attempts at a much larger fiscal deal that would have cut spending and dealt with entitlement reforms failed. He said he hoped future debates would be done with "a little less drama, a little less brinksmanship, and not scare folks quite as much."

But Obama drew a line in the sand on the debt ceiling, which is set to be reached by March.

"While I will negotiate over many things, I will not have another debate with this Congress over whether they should pay the bills for what they've racked up," Obama said. "We can't not pay bills that we've already incurred."

An hour after his remarks, Obama boarded Air Force One to rejoin his family in Hawaii, where they have been since before Christmas.

AP Photo/Charles Dharapak

House Republicans agreed to the up-or-down vote Tuesday evening, despite earlier talk of trying to amend the Senate bill with more spending cuts before taking a vote. The bill delays for two months tough decisions about automatic spending cuts that were set to kick in Wednesday.

A majority of the Republicans in the GOP-majority House voted against the fiscal cliff deal. About twice as many Democrats voted in favor of the deal compared to Republicans. One hundred fifty-one Republicans joined 16 Democrats to vote against the deal, while 172 Democrats carried the vote along with 85 Republicans.

The Senate passed the same bill by an 89-8 vote in the wee hours of New Year's Day. If House Republicans had tweaked the legislation, there would have been no clear path for its return to the Senate before a new Congress is sworn in Thursday.

The vote split Republican leaders in the House. House Speaker John Boehner, R-Ohio, voted yes, and so did the GOP's 2012 vice presidential candidate, Rep. Paul Ryan, R-Wis.

But House Majority Leader Eric Cantor, R-Va., the No. 2 Republican in the House, voted no. It was his opposition that had made passage of the bill seem unlikely earlier in the day.

The deal does little to address the nation's long-term debt woes and does not entirely solve the problem of the "fiscal cliff."

Indeed, the last-minute compromise -- far short from a so-called grand bargain on deficit reduction -- sets up a new showdown on the same spending cuts in two months amplified by a brewing fight on how to raise the debt ceiling beyond $16.4 trillion. That new fiscal battle has the potential to eclipse the "fiscal cliff" in short order.

"Now the focus turns to spending," said Boehner in a statement after the vote. "The American people re-elected a Republican majority in the House, and we will use it in 2013 to hold the president accountable for the 'balanced' approach he promised, meaning significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt."

Republicans hope that allowing the fiscal cliff compromise, which raised taxes without an equal amount of spending cuts, will settle the issue of tax rates for the coming debates on spending.

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