U.S. Senate session fails to reach deal

U.S. Senate leaders have called a recess until today after a long day of little progress trying to negotiate a deal to avoid the so-called fiscal cliff that would take effect Jan. 1.

Senate Majority Leader Harry Reid said significant differences remain between Democratic and Republican lawmakers, despite a rare Sunday session to try to reach a deal.

Republican leader Mitch McConnell said he is concerned about a lack of urgency in the last-minute negotiations. He said the sticking point appears to be “a willingness, an interest or courage” among lawmakers to arrive at a deal.

Democratic Leader Reid said he has so far failed to come up with a counteroffer to a Republican proposal made late Saturday. He said McConnell has shown absolutely good faith in negotiations, but he said the two parties remain far apart on big issues.

Resolution of tax and spending problems has long stymied Washington leaders, with President Barack Obama’s Democratic Party colleagues mostly favoring higher taxes on the wealthy to pay for benefits for retirees and the impoverished. Republican Party lawmakers adamantly oppose any tax increases.

Congressional and White House negotiators also are grappling with decisions on other key issues, including unemployment benefits, taxes on large inheritances and possible cuts in payments to doctors who treat elderly Americans.

Even if the Democratic-controlled Senate votes for a compromise deal, the Republican-led House would have to approve the measure. Passage of tax-and-spending legislation there is far from certain.

If Congress can agree on a compromise, the president could sign the measure today, which would avoid having automatic tax increases on nearly all Americans kick in Tuesday.

Earlier Sunday, Obama urged Congress to avert impending sharp tax increases for most American workers and government spending cuts that could plunge the country into another recession if a compromise is not reached.

Obama said in an interview on NBC’s “Meet the Press” that lawmakers need to act quickly to keep tax rates at their current level for all but the wealthiest wage earners, rather than have them revert on New Year’s Day to much higher levels set in the 1990s.

He said such legislation would avert the worst economic outcome for the country. He said more negotiations could then be held in the coming weeks to reduce the country’s chronic budget deficits and growing national debt and how to boost job growth.

“If we can get that done, that takes a big bite out of the fiscal cliff. It avoids the worst outcomes. And we’re then going to have some tough negotiations in terms of how we continue to reduce the deficit, grow the economy, create jobs,” he said.

The president said his offer to curb government spending on popular social welfare programs has been so fair that some of his Democratic colleagues have balked. But Obama said his Republican opponents in Congress have had difficulty agreeing to any tax increases, including increasing rates on the wealthiest households, such as those making $250,000 or more a year, about 2 percent of U.S. taxpayers.

“The offers that I’ve made to them have been so fair that a lot of Democrats get mad at me,” he said.

The leader of the Republican-controlled House of Representatives, Speaker John Boehner, blamed Obama for the impasse. He said the president has been unwilling to agree to big enough cuts in government spending.

Even if a deal is reached, however, it is unlikely 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, New Year’s Eve. 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 a contentious debate about Washington’s spending priorities.

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