Washington - US President Barack Obama's contentious deal with Republicans to avert a massive New Year's tax hike easily cleared the US Senate on Wednesday, setting the stage for a showdown in the House.
Lawmakers voted 81-19 to pass the $858bn deal not long after Obama warned rebellious House of Representatives Democrats that defeating the compromise would deal a painful blow to US recovery hopes.
"We can't afford to let it fall victim to either delay or defeat," Obama said on his way into a meeting with 20 top US business executives to map ways to revive the weak US economy and battle near 10% unemployment.
Senior Democratic aides in the House of Representatives raised the prospects of action in that chamber by the end of the day, though lawmakers were expected to try to modify with the deal's provisions on the inheritance tax.
The president said the $858bn deal was not "perfect" but would help grow the US economy at a crucial moment, create jobs in the private sector, lift up hard-pressed middle class families and help the unemployed.
"I urge members of Congress to pass these tax cuts as swiftly as possible," said Obama, seeking what would be a bipartisan victory six weeks after voters routed his Democrats in November 2 elections.
Republicans have warned that any changes will scuttle the tax deal, with Senate Minority Leader Mitch McConnell bluntly pressing the House to "simply pass the Senate bill" and get it to Obama to sign into law.
The legislation extends unemployment benefits by 13 months and adds two years to middle-class tax cuts passed in 2001 and 2003 but due to expire January 1, 2011.
Obama angered many Democrats by bowing to Republican demands that the package also extend tax cuts that directly benefit only the richest US earners, as well as roll back the inheritance tax on the wealthiest estates.
Democrats in the lower chamber met late Tuesday to discuss their options, but it was unclear whether they would press for changes to the measure, which swept aside a procedural hurdle on Monday by a wide 83-15 margin.
It was also unclear whether Democrats had the votes to toughen the inheritance tax compromise, which exempts estates up to five million dollars and set a 35% rate on funds above that threshold.
Democratic House Majority Leader Steny Hoyer said Tuesday that Senate action had highlighted the "urgency" of approving a bill, but told reporters that many in his rank and file were "pretty cold" to the agreement.
Still, "the legislative process is a process of give and take. And invariably you end up with bills that you like some things in it and you may not like other things," he told reporters, sounding a conciliatory tone.
Some leading Democrats have criticized the deal but warned that Obama will not be able to get as good a deal in January when Democrats lose five Senate seats and hand control of the House of Representatives to Republicans.
"I think, frankly, that ultimately we will pass legislation," said Hoyer.
Democrats had hoped to extend tax cuts for individuals up to $200 000 per year or families up to $250 000, but Republicans held fast to their demands that all of the cuts be extended.