With hours remaining, US fiscal deal uncertain
The chances of a deal to prevent the US economy from tumbling over a "fiscal cliff" remain uncertain.PT1M21S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-2c1xj 620 349 December 31, 2012
The US Senate has adjourned for the day and will reconvene at 11am on Monday as last-minute "fiscal cliff" talks stall between top US political leaders, with Democrats and Republicans blaming each other for a lack of progress.
I'm incredibly disappointed we cannot seem to find common ground. I think we're going over the cliff
Top Democrats and Republicans worked for a compromise before a punishing package of government spending cuts and tax hikes come into force on January 1 that could roil global markets and send the US economy back into recession.
US Senate Minority Leader Mitch McConnell ... admits there is a long way to go. Photo: Reuters
Senate Republican minority leader Mitch McConnell warned that, despite through-the-night talks, negotiators were still a long way from success, as they raced against the ebbing 2012 calendar in search of a compromise.
McConnell said he had got no response to a "good faith offer" to Senate Democrats, and called on his old friend and sparring partner Vice-President Joe Biden to join the fray in the hope of breaking the stalemate.
"I'm willing to get this done, but I need a dance partner," McConnell said.
Senate Democratic Majority Leader Harry Reid agreed that talks were at a standstill, and warned that Americans could ring in the New Year with no deal to avert a budget disaster known as the "fiscal cliff".
"There is still significant distance between the two sides, but negotiations continue," Reid told the Senate, after huddling for nearly two hours with his Democratic caucus on one of the latest December Senate workdays in 50 years.
"There is still time left to reach an agreement, and we intend to continue negotiations," he said, as he ordered the Senate back into session at 11am on Monday, New Year's eve and the last day before the deadline.
Reid said Democrats were unwilling to brook talk of social security cuts.
"This morning, we have been trying to come up with some counter-offer to my friend's proposal," Reid told the Senate. "We have been unable to do that."
The already tense mood on Capitol Hill had soured during Sunday's confusing hours, when some lawmakers tossed out varying versions of what may or may not be in Democratic and Republican offers.
"I'm incredibly disappointed we cannot seem to find common ground. I think we're going over the cliff," Republican Senator Lindsey Graham said on Twitter.
Moderate Democrat Clair McCaskill was also pessimistic.
"This is definitely not a kumbaya moment," she said.
Buoyed by his re-election in November, President Barack Obama has insisted that any deal must include a tax increase on the wealthiest Americans, who have seen their earnings rise steadily over the past decade at a time when income has stalled for the less affluent.
Many conservative Republicans in the House of Representatives oppose a tax hike on anyone, no matter how wealthy.
The two sides were close to agreeing to raise taxes on households earning around $400,000 or $500,000 a year - higher than Obama's preferred threshold of $250,000 - several senators told reporters.
Republicans aim to pair any tax increase with government spending cuts to benefit programs that are projected to grow ever more expensive as the population ages in coming decades.
But their proposal to slow the growth of Social Security benefits by changing the way they are measured against inflation met fierce resistance from Democrats. Obama included the proposal, known as "chained CPI," in an earlier proposal, but many of his fellow Democrats remain opposed.
"We consider it a poison pill - they know we can't accept it. It is a big step back from where we were on Friday," a Senate Democratic aide said.
Several Senate Republicans said they would support taking that idea out of the discussion. "Most of us agree the chained CPI is off the table in these negotiations," Senator John McCain said on Twitter.
Earlier, Democratic President Barack Obama, accused Republicans of causing the mess, saying they had refused to move on what he said were genuine offers of compromise from Democrats.
"Now the pressure's on Congress to produce," Obama said, in an interview with NBC's Meet the Press that was recorded on Saturday, a day after he expressed modest optimism that a deal could be reached.
Obama said it had been "very hard" for top Republican leaders to accept that "taxes on the wealthiest Americans should go up a little bit, as part of an overall deficit reduction package."
But Republicans were irked by Obama's tone and matched his accusations. The ugly mood could suggest that hopes for a consensus are fading - or be the kind of political-base pleasing rhetoric that sometimes heralds a compromise.
"Americans elected President Obama to lead, not cast blame," said Republican House Speaker John Boehner, arguing Republicans sought a 'balanced' deficit deal while Obama insisted on higher taxes that would kill jobs.
"We've been reasonable and responsible. The president is the one who has never been able to get to 'yes'."
If no deal is reached, a package of tax cuts for all Americans that was first passed by former president George W Bush will expire on January 1.
All American workers will see their own pay cheque hit and the broader economy will be hit by massive automatic spending cuts across the government.
Experts expect the US economy could slide into recession if the stand-off is prolonged, in a scenario that could cause turmoil in stock markets and hit prospects for global growth in 2013.
Republican Senator Lindsey Graham, speaking as his party bosses huddled with senior Democrats in search of a deal, predicted a short-term agreement would emerge, but would only postpone the budget battle by a few months.
"Hats off to the president. He stood his ground. He's going to get tax rate increases," Graham told Fox News Sunday.
"The sad news for the country is that we have accomplished little in terms of not becoming Greece or getting out of debt."