No vote before midnight on fiscal 'cliff' deal

Reported by AAP
Tuesday, January 1, 2013

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An agreement to avoid the sharp tax hikes and spending cuts known as the fiscal cliff won't be reached before the midnight deadline, lawmakers in the Republican controlled House of Representatives say.

The Senate however continued talks on Monday to reach a deal.

House Republicans notified lawmakers that the chamber will vote on Monday evening on other bills. They said that will be their only votes of the day.

Congress could pass later legislation retroactively blocking the tax hikes and spending cuts.

Earlier US President Barack Obama and Senate Republican leader Mitch McConnell said they were near a deal to avoid wide-ranging tax increases and spending cuts - the fiscal cliff - that take effect with the new year.

Both men said they were still bargaining over whether - and how - to avoid $US109 billion ($A105 billion) in cuts to defence and domestic programs that take effect on Wednesday.

Speaking from the White House, Obama expressed regret that his administration and Congress couldn't produce a "grand bargain" to address the country's chronic deficit spending, but he said that was impossible "with this Congress, at this time."

Both sides have been unable to make such a sweeping deal since they set the midnight deadline in 2011 as motivation.

"There are still issues left to resolve, but we're hopeful Congress can get it done," Obama said.

"But it's not done."

Officials familiar with Monday's negotiations said an agreement would address the biggest issue by raising tax rates on family income over $US450,000 ($A436,000) a year.

But how to handle deep spending cuts remained unsolved.

Some leading Republicans quickly objected to Obama's comments.

"At a time of crisis, on New Year's Eve ... you had the president of the United States go over and have a cheerleading, ridiculing-of-Republicans exercise," Senator John McCain said.

But Senate Republican leader Mitch McConnell said he and the White House had agreed on preventing tax hikes and that they were very close to an overall deal that would also prevent budget-wide spending cuts.

The hope of the White House and lawmakers was to seal an agreement, enact it and send it to Obama for his signature before taxpayers felt the impact of higher income taxes or federal agencies began issuing furloughs or taking other steps required by spending cuts.

The contours of a deal to avert the so-called "fiscal cliff" emerged on Monday, as officials familiar with the negotiations said the agreement would raise tax rates on families making over $US450,000 a year to 39.6 per cent. The tax on estates worth more than $US5 million would increase to 40 per cent from 35 per cent. Unemployment benefits would continue for one year. Without that extension, two million people would lose benefits beginning in early January.

But the officials said the White House and Republicans were at an impasse over what to do about automatic, across-the-board spending cuts set to start taking effect on Tuesday. Democrats want to put off the cuts for one year and offset them with unspecified revenue.

28/07/2014 16:16Sydney, Australia. 28 July,2014
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