Senate passes fiscal cliff deal

Bill would prevent middle class taxes from rising.

Two hours after the midnight deadline, the US Senate voted 89-8 to pass legislation that would block the worst effects of the so-called "fiscal cliff". The bill would prevent middle-class taxes from rising, and raise rates on incomes over $400,000 for individuals and $450,000 for couples. The vote was the result of a bipartisan deal reached on Monday night to block some (but not all) of the austerity measures due to kick in today.

The implementation of the deal now depends on a vote in the Republican-controlled House of Representatives, due to take place today or tomorrow. Barack Obama has called for it to follow the Senate example "without delay" and vote in favour of the deal.

But since the midnight deadline was missed, the question remains - did the US go over the cliff after all, and does it make a difference?

The Guardian thinks so:

Technically the US has just gone over the cliff but if the House approves the agreement the economic damage could be fleeting and relatively minor. The goal will be to have full Congressional approval before Wall Street reopens on Wednesday.

Barack Obama. Photograph: Getty Images

Caroline Crampton is assistant editor of the New Statesman. She writes a weekly podcast column.

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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