'Fiscal cliff' tumble looms despite U.S. Senate efforts
Emerging deal would raise tax rates on families making over $450,000 a year to 39.6 percent.
The United States looked ontrack to tumble over the "fiscal cliff" at midnight on Monday, at least for a day, as lawmakers remained reluctant to backlast-minute efforts by Senate leaders to avert severe taxincreases and spending cuts.
The U.S. House of Representatives might not vote on anyfiscal cliff" plan before midnight (0500 GMT Tuesday), possiblypushing a legislative decision into New Year's Day, whenfinancial markets will be closed, said a Republican aide.
The Senate plan was heavy on tax increases and light onspending cuts, raising concerns that it would repelrank-and-file lawmakers, particularly in theRepublican-controlled House.
As Senate Republican leader Mitch McConnell and VicePresident Joe Biden kept working on unresolved parts of thedeal, there was deep discontent among Senate Democrats.
"The caucus as a whole is not sold" on the proposal, said aSenate Democratic aide. "We just don't have the votes for it."
If Congress fails to act, about e600 billion in taxincreases and government-wide spending cuts will begin takingeffect after midnight, harsh measures that could push the U.S. economy into recession.
But lawmakers could still vote for any deal on New Year'sDay and prevent the worst of the fiscal cliff effect.
Under the Senate plan, those with household income above$450,000 or individual income above $400,000 would be taxed at39.6 percent, up from 35 percent. Those with lower income wouldbe taxed at the current, reduced tax rates put in place underformer President George W. Bush.
The aide said Democrats did not like the $450,000 thresholdfor raising taxes on the rich - they wanted $250,000 - or thehigher threshold for raising estate taxes. Democrats also areupset that there is no agreement yet to put off the first roundof $1.2 trillion in automatic spending cuts.
Republicans already are pushing for switching thoseacross-the-board cuts to savings in Medicare and Social Securityand threatening to block a debt limit increase in Februaryunless they get their way. But that is a fight that would mostlikely play out in January and February.
A group of liberal senators met with Senate Majority LeaderHarry Reid to register anger with the deal being negotiated byBiden, and some aides were dispirited that the vice president, afellow Democrat, had gone further than they wanted, just as hedid in December 2010 when all Bush tax cuts were extended fortwo years.
Shortly after the plan emerged, President Barack Obama saidagreement was within sight, but he sounded a cautious note.
"There are still issues to resolve, but we're hopeful thatCongress can get it done, but it's not done," Obama, a Democrat, said at a White House event.
U.S. stocks rose on the day, with the market closing beforethe latest news broke about the House not voting. The benchmarkDow Jones industrial average closed up 1.3 percent at 13,104.