Fiscal Cliff: Biden, McConnell making 'major progress' on deal, reports Politico


Coined by Fed Chairman Ben Bernanke, “fiscal cliff” refers to a series of draconian tax increases and spending cuts scheduled to take effect at the start of 2013.

With less than 24 hours left before the United States plunges over the "fiscal cliff", Senate leaders are racing against the clock to reach a deal that the House and Senate can approve on New Year's Eve.

All hope is not lost, however. Vice President Joe Biden and Senate Minority Leader Mitch McConnell "engaged in furious overnight negotiations to avert the fiscal cliff," Politico reported, making "major progress" in the negotiations.

Biden was called in on Sunday after talks between Senate Majority Leader Harry Reid hit a major setback during weekend negotiations. Though the two planned to reach a deal before 3 p.m. on Sunday, their deadline came and went without agreement.

The Senate plans to reconvene at 11 a.m. this morning, and the House will be on recess until about that time, The Hill blog reported. The House on Sunday positioned itself to vote immediately on any legislation that will pass the Senate, waiving its usual three-day rule to consider a deal from the upper chamber.

According to CNN, the main hurdle is over which income groups would be hit with tax hikes in the new year. While Democrats proposed raising taxes on people who make more than $360,000 annually, and families who make more than $450,000, McConnell countered with a tax hike for individuals above $450,000 and couples who earn more than $550,000.

The New York Times faulted both parties for the last-minute negotiations. "Members of both parties have become increasingly addicted to short-term solutions to long-term problems, cobbling together two- and three-month bills and short term extensions to fight over again and again until the string has run out on many major pressing issues."

However, President Barack Obama, speaking in a rare appearance on weekend political talk show "Meet the Press" placed the blame squarely on the Republican party.

"They say that their biggest priority is making sure that we deal with the deficit in a serious way, but the way they're behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected. That seems to be their only overriding, unifying theme," Obama said, the Guardian reported.

If Congress is unable to make a deal, 88 percent of Americans will see their taxes rise on Jan 1, and approximately 2 million long-term unemployed people will lose their benefits. 

The Associated Press reported that if no deal on the fiscal cliff is reached, "the Pentagon would soon begin notifying its 800,000 civilian employees that they should expect some furloughs — mandatory unpaid leave, not layoffs." Though these furloughs would take some time before they were implemented, military families are wary for the the fallout.

Meanwhile, US stocks moved lower on the last trading day of 2012 as the fiscal cliff deadline loomed on the horizon, USA Today reported. Though the Europe market remained steady, the Asian market closed lower at the end of Monday.  

The Financial Times reported that fears that the US was headed into a year of $600bn in tax increases and spending cuts, which may fuel a recession, drove "haven buying in gold." 

Here's a look at some responses to the stalemate:  

[View the story "What works better than the US Congress?" on Storify]