With taxes set to increase for almost every U.S. worker at midnight, Congress hasn’t reached a budget deal that Democrats and Republicans say is necessary to prevent a blow to the U.S. economy.
Private talks between Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell that began Dec. 28 stalled yesterday because of disputes over income tax rates, the estate tax and other issues.
McConnell, a Kentucky Republican, reached out to Vice President Joe Biden in an effort to break the impasse, while staffers worked into the night trading and reviewing offers. The two made progress, according to a person familiar with the negotiations who requested anonymity to discuss the talks.
Representative Chris Van Hollen of Maryland, the top Democrat on the House Budget Committee, told Bloomberg Television today that the odds of reaching a deal are "a little better than 50-50" while noting that "a lot has to go right."
The Senate will reconvene today at 11 a.m. Washington time. Reid said yesterday on the Senate floor that there would "perhaps" be further announcements then. "I certainly hope so," he said.
Congress is working to avert more than $600 billion U.S. in tax increases and federal spending cuts, the so-called fiscal cliff, set to start taking effect tomorrow. Allowing those changes to take effect would cause a recession in the first half of 2013, according to the Congressional Budget Office.
Tax cuts first enacted during George W. Bush’s presidency are scheduled to expire tonight. President Barack Obama and other Democrats have sought to extend the reductions for married couples’ income up to $250,000 U.S. a year while letting tax rates rise for income above that amount. Republicans oppose tax rate increases for any income level.
