WASHINGTON: As the United States teeters on the edge of the fiscal cliff, politicians had yet to agree on Monday on a New Year's Eve escape route to prevent taxes from rising on all Americans on January 1.
Despite several sticking points, the framework of a possible deal was emerging after midnight talks between top Senate Republican Mitch McConnell and Vice President Joe Biden, a Democrat with whom he has a close rapport.
With time running out to avert $500 billion in tax hikes and spending cuts set to kick in within hours, the White House announced that President Barack Obama was to speak on the looming "fiscal cliff" at 1:30 pm (1830 GMT).
Even if the Democratically-controlled Senate does sign off on a deal Monday, avoiding the cliff could go down to the wire.
The bill must then go to the Republican-held House of Representatives. The chamber is in session on Monday, but House Speaker John Boehner has struggled to control his party's restive conservative wing, many of whom may balk at signing on to any Obama-approved deal that raises taxes.
The key areas of friction are the income threshold at which taxes should rise, Obama's insistence on extending unemployment benefits and Republican demands for increased federal spending cuts.
"There are a number of issues on which the two sides are still apart," Democratic Senate Majority Harry Reid conceded. "Negotiations are continuing as I speak, but we really are running out of time.
"Whether or not we reach an agreement in the short time we have left, we'll need cooperation on both sides to prevent taxes from going up tomorrow for every family in America."
Days of last-gasp talks have produced no deal between US political leaders struggling for a compromise to head off a fiscal crisis that could roil global markets and plunge the United States back into a punishing recession.
Asian stocks were flat Monday while Europe was mixed, as markets nervously digested the Washington gridlock.
Disagreement has simmered over the threshold at which taxes would rise in any new deal.
Obama campaigned for re-election vowing to raise taxes on households with a combined income above $250,000, but in an 11th-hour concession has agreed to negotiate a higher rate - as much as $450,000 - to the chagrin of some his own Democrats.
Some reports said Republican leaders were still seeking $550,000 as the cut-off point.
Republicans have dropped their demand for a new way of calculating inflation that would have cut the level of benefits for Social Security recipients.
But they were reportedly maintaining their insistence that estate inheritance tax rates stay at current levels.
The two sides remained bitterly at odds over the $109 billion in automatic spending cuts set to hit the Pentagon as well as other federal agencies beginning in early January.
Democrats said they were pushing for a delay of the cuts, known as the "sequester," for about two years, while some Republicans, including Senator Roy Blunt, said it was inconceivable to allow a delay without imposing more targeted offsets to pay for such a postponement.
Don Stewart, McConnell's spokesman, said in a statement on Monday morning that the Republican leader and Biden had talked long into the night to try to hammer out a deal.
Democratic congressman Chris Van Hollen said there was better than a 50-50 chance of a pre-midnight agreement, but his Republican rivals were a question mark.
"One big question of course is whether an agreement put together by the senators on a bipartisan basis, whether that can pass the House of Representatives," he told CNN.
Republicans largely oppose raising taxes on anyone. There may be a push by conservatives to let the economy slide off the cliff so that taxes rise on all Americans, only for lawmakers to quickly turn around and vote for a tax cut on the middle class.
- AFP/de
No deal yet as US teeters on fiscal cliff edge
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No deal yet as US teeters on fiscal cliff edge
