Fiscal Cliff: Sudden Setback

Fiscal cliff deal stalls in House. What does it mean for our economy?
2:43 | 01/01/13

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Transcript for Fiscal Cliff: Sudden Setback
And we begin tonight on this first evening of the new year, when so many americans make resolutions to change, but it appears not much has changed in washington. When that famous ball dropped at midnight, taxes went up for every american. This evening, after the vice president jumped in, a giant setback. So, let's get right to abc's chief white house correspondent jon karl tonight. It would seem like they're playing with fire now. Taxes, at least, for this evening, have gone up and the stock market already seeing jitters leading up to the cliff. Reporter: They are certainly worried about the market reaction. Washington went over the fiscal cliff last night, triggering tax increases for virtually everybody. And despite some hopeful signs very early this morning, we are still in a free fall. It sure looked like a done deal. The yeahs are 89. The nays are 8. The bill as amended is passed. Reporter: After 2:00 a.M. This morning, the senate approved a bill to prevent massive tax increases from going into affect today. The kind of overwhelming bipartisan vote almost never seen anymore. So, it took an imperfect solution to prevent our constituents from a very real financial pain. But in my view, it was worth the effort. Reporter: Finally, it seemed, washington was working. Vice president joe biden and republican leader mitch McCONNELL HASHING OUT THE DEAL Late last night. Really very good about how this vote is going to go. Reporter: He had reason to smile last night, but today, that late night deal hit a wall of republican opposition in the house. Hastily leaving a meeting of house republicans today, eric cantor, the second highest ranking republican in the house, announced even he was opposed. I do not support the bill. Reporter: House republicans objected because the bill including virtually no spending cuts. In fact, the deal would actually add nearly $4 trillion to the deficit over the next ten years. Mostly thanks to the cost of extending those tax cuts for everybody making under $400,000. There's no spending cuts. We're adding $4 billion a day to the debt. And we feel like the senate bill failed miserably. Reporter: If they don't get their act together, the consequences will be immediate. The pentagon has already drafted notices to 800,000 civilian employees warning they may be put on unpaid leave. And those tax increases triggered today will start to hit our paychecks this week. The average family, seeing a tax increase of almost $3,500. There is intense pressure on house republican leaders to resolve this before the stock market opens tomorrow morning. They are hearing from business leaders. They are also from senate republicans, saying that the cost of failure on this, david, would just be too high.

This transcript has been automatically generated and may not be 100% accurate.

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