Fiscal Cliff: Obama signs American Taxpayer Relief Act of 2012 into law
President Barack Obama has signed into law the contentious compromise bill hammered out in Congress, narrowly averting the US ‘fiscal cliff’ of tax hikes and drastic, immediate cuts in spending, the White House said early Thursday.
In a statement, the White House said that Obama late on Wednesday signed the “American Taxpayer Relief Act of 2012,” raising taxes on households earning above $450,000 and delaying spending decisions for two months.
Officials said the US president, who is on vacation in Hawaii, signed the measure electronically by autopen.
The “fiscal cliff” crisis was finally averted on Tuesday as the House of Representatives, by a vote of 257 to 167, approved a stop-gap agreement passed one day earlier by the US Senate.
The measure dodged across-the-board tax hikes and automatic spending cuts that had threatened to unleash economic turmoil and perhaps drive America back into recession.
The hard-fought agreement, seen as a political victory for Obama, raised taxes on the very rich and delayed the threat of $109 billion in automatic spending cuts for two months.
The respite will prove temporary, however: The Democratic administration and the Republican-controlled House of Representatives face several clashes in the coming months on spending cuts and raising the government debt ceiling.
Had the deal fallen apart, all Americans would have been hit by tax increases and spending cuts would have kicked in across government — a combined $500 billion shock that could have rocked the fragile recovery.
Relief was felt internationally and markets surged, although China’s official news agency Xinhua warned: “People, or governments, can overspend for some time, but they simply cannot live on borrowed prosperity forever.”
Obama also signed into law a $633 billion US defense spending bill that funds the war in Afghanistan and boosts security at US missions worldwide.
“I have approved this annual defense authorization legislation, as I have in previous years, because it authorizes essential support for service members and their families, renews vital national security programs, and helps ensure that the United States will continue to have the strongest military in the world,” Obama said in a statement early Thursday after signing the measure.
Obama said that he signed the measure despite reservations.
“In a time when all public servants recognize the need to eliminate wasteful or duplicative spending, various sections in the Act limit the Defense Department’s ability to direct scarce resources towards the highest priorities for our national security,” the president said.
“Even though I support the vast majority of the provisions contained in this Act… I do not agree with them all,” he said in his statement, adding that he did not have the constitutional authority to approve piecemeal items within the sprawling bill.
“I am empowered either to sign the bill, or reject it, as a whole,” he said.