In last-minute vote, Senate approves fiscal deal In a frantic rush of negotiations on New Year's Eve, the Senate moved the nation away from the fiscal cliff, voting on a compromise package that increases tax rates on those making above $400,000 a year. NBC's Kelly O'Donnell reports and NBC political director Chuck Todd offers analysis. The United States narrowly avoided going over the fiscal cliff early on New Year's Day after a last-minute bipartisan agreement cleared the way for a middle-of-the-night vote in the Senate. The interim deal would raise income taxes on single earners with annual incomes above $400,000 and married couples with incomes above $450,000. It also blocks spending cuts for two months, extends unemployment benefits for the long-term jobless, prevents a 27 percent cut in fees for doctors who treat Medicare patients and prevents a spike in milk prices. It now heads to the House, which is scheduled to meet on Tuesday at noon. The high-stakes drama was resolved after days of back and forth between Vice President Joe Biden, negotiating for Democrats, and Senate Republican Leader Mitch McConnell of Kentucky, who finally came to an agreement late Monday night. The measure was then brought to the Senate floor where it passed by an overwhelming majority of 89-8. Senators who voted against the legislation included Republicans Marco Rubio of Fla., Rand Paul of Kentucky, and Democrat Richard Shelby of Ala. President Obama acknowledged the difficulties the parties had coming to an agreement and pushed the House to quickly approve the bill in a statement released just after the vote. "While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay," the statement said. This agreement will also grow the economy and shrink our deficits in a balanced way -- by investing in our middle class, and by asking the wealthy to pay a little more. Squabbling far from over Despite the relief in Washington, D.C. over this first step, House Speaker John Boehner and other Republican congressional leaders refused to endorse the agreement. "The House will honor its commitment to consider the Senate agreement if it is passed," Boehner and the other leaders said in a statement on Monday. Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members -- and the American people -- have been able to review the legislation. In addition to the battle the legislation faces in the House, there are several other difficult issues that political leaders will be forced to revisit over the coming weeks and months, including cuts to defense and other domestic programs, and the debt ceiling, the subject of a mammoth congressional brouhaha last year. The imposed delay would allow the White House and lawmakers time to regroup before plunging very quickly into a new round of budget brinkmanship, certain to revolve around Republican calls to rein in the cost of Medicare and other government benefit programs. Devil in the details The measure is the first significant bipartisan tax increase since 1990, when former President George H.W. Bush violated his "read my lips" promise on taxes. It would raise an additional $620 billion over the coming decade when compared with revenues after tax cuts passed in 2001 and 2003, during the Bush administration. But because those policies expired at midnight Monday, the measure is officially scored as a whopping $3.9 trillion tax cut over the next decade. The sweeping Senate vote exceeded expectations - tea party conservatives like Pat Toomey, R-Pa., and Ron Johnson, R-Wis., backed the measure - and would appear to grease enactment of the measure despite lingering questions in the House, where conservative forces sank a recent bid by Boehner to permit tax rates on incomes exceeding $1 million to go back to Clinton-era levels. Under the Senate deal, taxes would remain steady for the middle class but rise at incomes over $400,000 for individuals and $450,000 for couples - levels higher than Obama had campaigned for in his successful drive for a second term in office. Some liberal Democrats were disappointed that the White House did not stick to a harder line, while other Democrats sided with Republicans to force the White House to partially retreat on increases in taxes on multi-million-dollar estates. Officials also decided at the last minute to use the measure to prevent a $900 pay raise for lawmakers due to take effect this spring. Not everyone's happy Even by the dysfunctional standards of government-by-gridlock, the activity at both ends of historic Pennsylvania Avenue was remarkable as the administration and lawmakers spent the final hours of 2012 haggling over long-festering differences. Republicans said McConnell and Biden had struck an agreement Sunday night but that Democrats pulled back Monday morning. Democrats like Tom Harkin of Iowa said the agreement was too generous to upper-bracket earners. Obama's longstanding position was to push the top tax rate on family income exceeding $250,000 from 35 percent to 39 percent. No deal is better than a bad deal. And this look like a very bad deal," said Harkin. The measure would raise the top tax rate on large estates to 40 percent, with a $5 million exemption on estates inherited from individuals and a $10 million exemption on family estates. At the insistence of Republicans and some Democrats, the exemption levels would be indexed for inflation. Taxes on capital gains and dividends over $400,000 for individuals and $450,000 for couples would be taxed at 20 percent, up from 15 percent. The bill would also extend jobless benefits for the long-term unemployed for an additional year at a cost of $30 billion, and would spend $31 billion to prevent a 27 percent cut in Medicare payments to doctors. Another $64 billion would go to renew tax breaks for businesses and for renewable energy purposes, like tax credits for energy-efficient appliances. Despite bitter battling over taxes in the campaign, even die-hard conservatives endorsed the measure, arguing that the alternative was to raise taxes on virtually every earner. "I reluctantly supported it because it sets in stone lower tax rates for roughly 99 percent of American taxpayers," said Sen. Orrin Hatch, R-Utah. With millions of Americans watching Washington with anger, frustration and anxiety that their taxes will skyrocket, this is the best course of action we can take to protect as many people as possible from massive tax hikes. The Associated Press contributed to this report.