Politicians in the US are running out of time to avoid the “fiscal cliff” deadline.
Republican and Democratic congressional leaders worked through Sunday without success, hoping to bridge differences over how to avoid year-end tax increases and possibly spending cuts.
Senate negotiators missed a self-imposed deadline on Sunday afternoon and later reports said the talks see-sawed between possible success and failure late into the day.
Vice President Joe Biden was asked by Senate Minority leader Mitch O'Connell to try to find a way out of the impasse, while the White House sent the president’s chief legislative negotiator to the Capitol to meet with Senate Democrats.
The talks went on behind closed doors and the media were dependent on various statements from aides on both sides.
In the end, Senate Majority leader Harry Reid recessed the Senate until Monday at 11am (local time).
"There is significant distance between the two sides," he told reporters. "There is still time left to reach an agreement and we intend to continue negotiations."
In the absence of a bipartisan deal, Senator Reid is preparing for a Monday vote on a bill to carry out President Obama's backup proposal, which tackles only a few items on the legislative agenda, including extending current tax rates for income up to $US250,000 for couples filing jointly.
Democrats are confident they can pass the bill through the Senate. A key question is whether the House will approve it if it doesn't enjoy broad bipartisan support in the Senate.
Recent issues include slowing CPI adjustments to social security payments and tax cuts for the wealthiest Americans.
The first cuts, involving $US110 billion in domestic and military spending, are set to take effect on January 2.
In a television appearance on Sunday, President Barack Obama sought to increase pressure on congressional Republicans by attempting to hold them responsible if talks fail.
Interviewed on NBC's Meet the Press, he rejected the idea that both sides were equally at fault.
Crucial to any deal are income tax rates that will expire and be replaced by higher rates that prevailed during the Clinton administration.
Republicans have conceded that rates will go up for wealthier Americans and the talks centre on efforts to reduce the number of people in that category.
While President Barack Obama is plumping for a $US250,000 threshold, the Republicans want it raised to at least $US400,000.
Another sticking point is estate tax, which the Republicans want kept at current levels rather than rising as President Obama and many Democrats desire.
However, some farm-state Democratic senators also back a lower rate.
President Obama has told Republican leaders they will have to accept a higher estate tax if they also want to raise the income threshold to $US400,000.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- NBR Radio Rich List Special: Interviews with Rich Listers, philanthropists, property gurus, investors and much, much more
- “An RBA interest rate cut is pretty much a done deal,” says Capital Economic's Paul Dales
- Japan’s Prime Minister Shinzō Abe opens the floodgates to more stimulus. Join NBR's Jason Walls as he explains why
- Despite a few howls of protest, land economics expert Adam Thompson rates the Auckland Unitary Plan
- Hamish McNicol discusses the Serious Fraud Office’s warning to companies about employee fraud