Despite a last minute deal reached between the White House, Democrats and the Republicans brokered by the US Vice President, Joe Biden, the US missed the Monday midnight "fiscal cliff" deadline to avert sweeping tax hikes.
While the Senate was moving ahead with its plan to vote on the deal, but the Republican-majority House of Representatives was unlikely to meet before Tuesday noon local time (late Tuesday night IST) to vote on the "fiscal cliff" deal that
would extend tax rates on annual income under USD 450,000, delay for two months part of the USD 110 billion in spending cuts.
In total, USD 600 billion in tax hikes and spending cuts are scheduled to hit in the New Year.
In theory, the fiscal cliff has hit the US, which among other things, means across the board hike in income tax rates.
But the Congressional leaders and White House hopes that they can neutralise it by passing the Bill before it can have an adverse effect on the country's economy.
The House Minority Leader, Nancy Pelosi, said she would present the Bill to the House Democratic caucus once it is passed by the Senate.
"By waiting until the last minute, and reaching a deal on a much smaller scale than either side once envisioned, Washington also deferred many of its thorniest questions for perhaps as little as a few weeks," 'The Wall Street Journal' said.
Earlier in the day both the Republican Leaders and US President Barack Obama said they were very close to reaching a deal.
The Senate Minority Leader Mitch McConnell said both sides were "very, very close" to an agreement.
"I can report that we've reached an agreement on all of the tax issues," Obama said at the White House.
"It would extend our tuition tax credit that's helped millions of families pay for college. It would extend tax credits for clean energy companies that are creating jobs and reducing our dependence on foreign oil. It would extend unemployment insurance to 2 million Americans who are out there still actively looking for a job," he said.
Congressional Budget Office, in a report, had predicted that fiscal cliff could dampen economic growth by 0.5 per cent. That could tip the US economy into a recession and driving unemployment from its current 7.7 per cent back over nine per cent, the non-partisan CBO estimated.
FACTBOX: Key points in tentative U.S. deal to avert 'fiscal cliff'
The US Senate