The U.S. Congress looks set to miss its midnight deadline on a deal averting the so-called fiscal cliff, as members of the House of Representatives are scheduled to recess without taking a vote on the issue.
It is not yet clear whether the Senate will vote before leaving for the night, after a day of racing the deadline to avoid sharp tax hikes that would take effect at the beginning of the new year.
Earlier Monday, Republican Senate leader Mitch McConnell said Republicans and Democrats have agreed on all tax issues, and he urged that a vote be held on those portions of the deal immediately. He said the two sides are “very, very close” to an overall agreement.
Earlier, President Barack Obama said a compromise with congressional leaders is “within sight,” but not yet completed.
In a White House speech, Obama said negotiators still have work to do to reach an accord on whether to delay significant, mandated government spending cuts that also are set for Wednesday. Analysts say that absent a compromise, the $500 billion in austerity measures eventually could plunge the U.S. economy into another recession.
The president urged lawmakers to complete a deal. “Democrats and Republicans in Congress have to get this done, but they’re not there yet. They are close, but they’re not there yet,” he said.
Obama did not spell out terms of the emerging tax deal.
But officials familiar with the talks say that tax rates will remain at their current level for all but the wealthiest couples, those making more than $450,000 a year. In addition, tax rates for large inheritances would be increased and unemployment assistance would be extended for a year.
Obama and congressional Republicans have sparred for more than a year over tax rates, the extent of government spending, chronic budget deficits and the country’s mounting debt, now at more than $16 trillion. But the looming tax increases and spending cuts forced the president and Republican lawmakers to revisit the contentious issues as the calendar turns to 2013.
The White House and Republicans relented on tax rates, agreeing to keep the current tax rates for wealthy couples earning up to $450,000 a year, a jump from Obama’s earlier demand calling for a tax hike for those making above $250,000. Republicans have opposed any tax increases.
Some Americans, like Peggy Kreischer, a temporary worker at a Wall Street firm in New York, are frustrated by Washington’s lack of agreement.
“The whole thing is Washington is unable to come to any kind of conclusion, to come to any kind of camaraderie which is what this whole country is based on. I mean, this is the season of good will peace towards men, and we have had anything but. The only part of this country that’s done this are the American people,” she said. “Not the ones we voted into office. So it’s really a dichotomy here. I think it’s Washington that should be looking at us, saying ‘what can we learn from the people, from what the people want. Not the fighting that’s going on between us.”’
Even if a deal is reached, however, it is not likely to increase the U.S. government’s current borrowing limit of $16.4 trillion. Treasury Secretary Timothy Geithner says the nation’s debt ceiling will be reached Monday. The ceiling is a cap on how much money the government can borrow to avoid defaulting on its debt.
Geithner says Treasury officials will take what he calls “extraordinary measures” under the law to avoid default.
The Congress and White House are then expected to negotiate a new limit in the next couple of months, although it, too, likely will produce another extensive debate about Washington’s spending priorities.