[John Berman, Cnn Anchor:] Our STARTING POINT, a new year and a new agreement on the fiscal cliff. The bill as amended is passed.
[Berman:] Just hours ago, the senate reaches a deal to avoid major tax hikes and spending cuts after some serious back and forth on Capitol Hill.
[Sen. Harry Reid , Majority Leader:] I'm disappointed we weren't able to make the grand bargain as we tried to do for so long, but we tried.
[Unidentified Male:] No deal is better than a bad deal and this looks like a very bad deal.
[Berman:] And with the deal headed to the house floor for a vote, will it survive? This morning, what's in this agreement, and what does it mean for you and your taxes. We have a packed two hours ahead. Maryland Congressman Elijah Cummings, Kansas Congressman Tim Huelskamp, Texas Congressman Lloyd Doggett all three of them will get a chance to vote on the bill likely today, and Sheila Bair, former chair of the FDIC. Good morning, I'm John Berman.
[Christine Romans, Cnn Anchor:] Good morning and happy new year, I'm Christine Romans.
[Ali Velshi, Cnn Anchor:] And I'm Ali Velshi. Soledad O'Brien is off. It's Tuesday, January the first. Special fiscal cliff edition of STARTING POINT begins right now.
[Berman:] And our STARTING POINT this morning is breaking news. The Senate strikes a deal on the fiscal cliff, but not before we've officially fallen off the cliff. We are off it right now. Here is where things stand right now. A bill crafted by Vice President Joe Biden And Minority Leader Mitch McConnell passed overwhelmingly in the Senate by a margin of 89-8. That happened just after 2:00 in the morning. The Republican- controlled House has agreed to consider this later this morning, but it is anyone's guess how this will turn out. Now, if the House votes yes, the measure would generate about $600 billion in new revenues over the next 10 years. Here is how the Senate leaders sized things up overnight.
[Reid:] I've said all along that our most important priority is protecting middle class families. This legislation does this.
[Mcconnell:] This shouldn't be the model of how we do things around here. But I think we can sigh we've done some good for the country.
[Berman:] Again, if it passes the House, here is what the plan means for you and your family. Bush era tax cuts would stay in place for individuals earning less than $400,000 a year and couples earning less than $450,000. If you make more than that your taxes are going up. Unemployment benefits for 2 million Americans would be extended for a year, and the alternative minimum tax would permanently be adjusted for inflation. But when it comes to spending cuts, lawmakers defer for two more months. That's a nice way of saying kicking the can down the road. So we can expect more finger pointing and fighting in 2013. White House correspondent Brianna Keilar has been up all night, joins us to talk about what's going phone in Washington, in the White House. This is a wild card. We know they will take it up, but we don't know what it means.
[Brianna Keilar, Cnn White House Correspondent:] It does get tricky, John, because some House Republicans have been the ones that said throughout the whole process, we don't want to move forward on certain things. Granted, now we've gone over the cliff. Tax hikes, technically are in effect. So any vote in the House will be a vote for tax cuts, not for tax hikes. That helps. But also what John Boehner needs to do here is take this deal struck in the Senate that presumably has some buy in from him if not from his rank and file, because Mitch McConnell did not negotiate this is a vacuum and this is a pretty overwhelming vote. He will take this to his conference today and see where they are at. The expectation is there are two directions this could go. Either a vote on the bill or House Republicans propose changes so they can amend the Bill more to their liking and send it back to the Senate. But I think this is expected to move along here.
[Berman:] There could be amendments. Once past, they could vote on amendments, could fail, and then vote on the full measure. Isn't that true also?
[Keilar:] Yes, that is true, and the other thing is once anything goes to the floor, it's not just up to Republicans, it will and the think the expectation all along, whatever ultimately passes the house as we saw in the Senate will require Democrats and Republicans.
[Berman:] We were talking to Congressman Phil Gingrey, a Republican, a short while ago. He seemed to be leaning no on this. But this time, Speaker Boehner does no need all the Republican votes.
[Keilar:] And what struck me listening to Congressman Gingrey is that even though it seems like he is probably leaning no, there may be many Republicans are leaning no, but not necessarily saying this is this is a deal that should not go through. In a way, they may vote no, but they also sort of acquiesce to it moving forward and seeing the need for it to move forward even if they don't go on the record to say yes for it.
[Berman:] That's right, voting no and whipping no and trying to generate more no votes are two very different things. Brianna Keilar in Washington, thank you very much.
[Christine Romans, Cnn Anchor:] All right, so let's break down some of what's in the deal. We've been telling you about the so-called dairy cliff. In addition to dealing with the fiscal crisis, the Senate deal would extend federal farm policies through September. That means milk prices, milk prices will not double. The deal also nixes a set pay raise for Congress. The White House scored an agreement to raise the tax rates on larger estates from 35 percent to 40 percent, but Republicans successfully insist that the exemption should be adjusted annually for inflation and that provision would increase the exemption to $7.5 million for independent and $15 million for couples by 2020. Those households would also pay higher rates on investment assets, the rates on dividends and capital gains rising to 20 percent. For taxpayers earning less than $450,000, the deal with restore limits on personal exemptions and itemized deductions. Those benefits phasing out for couples earning more than $250 a year, single people more than $200,000. Now, the deal calls for a permanent fix for the alternative minimum tax, which otherwise would hit about 30 million taxpayers for the first time filing their 2012 returns. And this deal would extend tax credits for college tuition and the working poor for five years.
[Velshi:] The AMT fix is important, it was really going to kick that number up.
[Romans:] That was another yearly crisis manufactured by Congress. It was designed to get rich people to make sure they made more taxes.
[Velshi:] It didn't work out. To Capitol Hill, Jonathan Allen is the senior Congressional correspondent for "Politico." Did you sleep there last night?
[Jonathan Allen, Senior Congressional Correspondent, "politico":] I didn't sleep in the capitol, no. I make a rule not to do that. Once you start, it's a slippery slope.
[Velshi:] There you go. Brianna made a good point. There may be some people, like Phil Gingrey from Georgia, who will vote no. Is that the same as a conservative movement, or for that matter, a liberal movement on the Democratic side to defeat the bill that they will face in the house today?
[Allen:] I think what Brianna said is right. She used the term "acquiesce." On the right and the left, I think they will acquiesce. Some voices will come out and say it's a bad idea. Tom Harkin, Democratic senator from Iowa, was one of them last night. He torched this whole plan. But it's interesting. When it comes down to the last minutes here, how much less energy and vigor some of the no voters have. They would like to at least be able to go home for a day before the new Congress starts on January 3rd.
[Velshi:] They want to tell their constituents, I wasn't all that into this, but that had nothing to do with me. Here is the problem, as we get further and further. This could have amendments and setbacks. Does that give energy to interest groups who started last night politicking and lobbying both senators and congressmen to say this is a bad deal that gives too much to the other side?
[Allen:] Sure, this absolutely gives an opportunity for opponents to make arguments this is a bad deal. Of course this legislation not available to anybody publicly when the Senate voted it on last night. There were early returns from Heritage Action Group telling folks to vote no on it if they could. But basically this is the opportunity the no crowd will have over the next 12 hours, 24 hours to make their arguments. This is the way Congress does business in the dark of night without any transparency to what they are doing, and I think ultimately that's one of the reasons the American public has such little faith.
[Velshi:] You can't blame them, Jonathan. They only had 517 days to work this out at some point it will take to you the middle of the night. John, good to see you as always. Continue that habit of not sleeping in Congress. Jonathan Allen joining us at the Capitol.
[Romans:] I say that about
[Cnn. Velshi:] I've done it. In that room once and it is hard.
[Berman:] I'm you didn't lose it for 2013, the dripping sarcasm. There is a lot of football to watch today, but we should say it's not the only game in town. This fiscal cliff debate, the discussion is not over, not even close. The House still needs to vote on this, so please stay with CNN all day for all of the developments. The House back in session at noon. This is not over yet. It could be a lot more.
[Velshi:] That's very compelling. I'm totally not watching football today.
[Berman:] Do not watch football, watch us. In other news, Hillary Clinton's doctors revealing new details about the blood clot that landed her in the hospital. Doctors say Mrs. Clinton did not have a stroke or suffer any neurological damage. They also say they are confident that the second of state will make a full recovery. CNN's Jill Dougherty is live at the state department this morning. Jill, what is the latest on the secretary's condition?
[Jill Dougherty, Cnn Correspondent:] John, the latest is as the secretary is in that New York hospital, she's being treated with blood thinners, that's the main thing. They have to get blood thinners as they say treated properly so they give her enough, not too much, and be able to be released. It won't happen until they do that. It's really a turnabout. I was sitting here in a quiet state department this morning. It's a holiday, very few people around, and thinking how things have really changed this is a secretary who has traveled a million miles. She's traveled to more than 100 countries. And here in the waning days, we have a few weeks before the end of this administration, this part of the administration, and, you know, she's in the hospital. It's quite striking. It's good they are saying that she is talking with her doctors, talking with her family, and they expect her to make a full recovery. But in a broader sense, it's really quite amazing what has happened at the end of a very vigorous, vigorous position of Hillary Clinton as secretary of state.
[Berman:] It's such an interesting juxtaposition, after such an eventful for years in the position, the end is fairly quiet. We're all thoughts with Mrs. Clinton as she recovers and doctors expect her to make a full and complete recovery. Thanks, Jill. Amid Secretary Clinton's illness and the fiscal cliff, Americans rang in the New Year in spectacular style. One million jammed into Times Square welcomed in 2013. And in Atlanta, the Georgia peach, a giant peach was lowered as the New Year arrived there. In Las Vegas, where everything is big and over the top, it was an amazing fireworks display over the Vegas strip. Just in case anyone missed the point that it was 2013, the fireworks telling them that it had officially begun. Very cool.
[Velshi:] They think big there.
[Berman:] They know how to throw a party time to time. Two planes were damaged at Fort Lauderdale, Hollywood International Airport last night when the wing of a taxiing Spirit Airlines flight clipped the tail sections of a parked United Airlines jets. There was a gash in the tail section of the United plane, but no fuel leak from either aircraft, and luckily no injuries were reported. Off the coast of Alaska, the Coast Guard and tugboat crews are trying to pull an oil rig into safe waters. Lines were reattached yesterday, but 60-mile-an-hour wind and 28-foot high waves were in the forecast for today. Officials fear a fuel spill if that rig is grounded. And those were wedding bells ringing in the stroke of midnight in Maryland. That's when same-sex marriage became legal there. Voters approved the new law in November. Seven same-sex couples got hitched at 12:01 a.m. with Mayor Stephanie Rawlins Blake presiding. Ahead on STARTING POINT, how the House handles the deal won't just affect us, it could take an effect on the global economy. Our own Richard Quest breaks it down for us next.
[Romans:] And Maryland Congressman Elijah Cummings joins us live. Does he see the fiscal cliff agreement getting through the House? And we leave you with London's New Year's celebration. There it is. You're watching STARTING POINT. Happy New Year.