Barack Obama 'optimistic' over last-ditch 'fiscal cliff' deal

President has four days left to reach agreement with Republicans and stop sudden tax rises

New York

President Obama said he was “modestly optimistic” that the US can avert the looming ‘fiscal cliff’ after a meeting with Congressional leaders last night.

Lawmakers have thus far failed to agree on an alternative to the more than $600bn (£370bn) in tax rises and spending cuts due to automatically come into force in the New Year, and hopes of a pact had been diminishing daily since negotiations broke down before Christmas.

But last night, Mr Obama signaled the possibility of a stripped-down deal after meeting with John Boehner and Mitch McConnell, the top Republicans in the House and Senate respectively, and their Democratic counterparts Nancy Pelosi and Harry Reid. The Oval Office discussion, described by the President as “constructive”, was also attended by the US Treasury Secretary, Tim Geithner.

The President said Mr Reid, the Democratic leader of the Senate, and Mr McConnell had agreed to work on a deal that could be passed in time, potentially on Sunday evening, when the House is scheduled to hold a special session. He added that if they failed to come to an agreement, he would ask Congress to vote on a basic package that would protect middle class Americans from tax hikes and maintain unemployment benefits for the more than 2 million who had been out of a job and claiming state aid for more than six months.

No details were forthcoming about the deal in the works in the Senate - but the Washington Post, quoting people briefed on the White House meeting, said the package would likely protect unemployment benefits and shield taxpayers form the alternative minimum tax, which would otherwise hit some 30 million households. Arguments, however, were said to be continuing on where to set the threshold for tax hikes, whether it should be $250,000, as the President initially proposed, or higher.

“I still want to get this done,” Mr Obama insisted after the meeting, which last just over an hour. Proclaiming that the “hour for immediate action is here, it is now,”he added: “Senators Reid and McConnell are working on... an agreement as we speak... But if an agreement isn’t reached in time ... then I will urge Senator Reid to being to the floor a basic package for an up or down vote.”

Mr Reid, who on Thursday warned that a deal was unlikely, also expressed guarded optimism last night, although he warned that a proposal hand’t yet been agreed. “We have a number of different directions we’re going to try to take and we’re going to see what can be worked out... We’ve got to do it now,” he said.

Mr McConnell said: “I’m hopeful and optimistic.” There was no immediate word from Mr Boehner.

Worst case scenario: No deal is struck...

* This week would be the last time that more than two million Americans who have exhausted the basic six months of state unemployment aid receive welfare payments as a special measure lapses.

* Americans on salaries between $40,000 and $65,000 would see their incomes shrink by an average of $1,500 a year. But the initial impact in January would be far less – an average of $130, according to the Tax Policy Center.

* The biggest risk of a delayed pact is to the stock market. Although it has been easing in recent days, investors have not displayed panic as they watch the negotiations. That could change at a moment's notice.

Start your day with The Independent, sign up for daily news emails
Life and Style
love + sex
Voices
A propaganda video shows Isis forces near Tikrit
voicesAdam Walker: The Koran has violent passages, but it also has others that explicitly tells us how to interpret them
News
people
Sport
football
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Outbound Sales Executive - B2B

£18000 - £22000 per annum: Recruitment Genius: A great opportunity has arisen ...

Recruitment Genius: Online Sales and Customer Services Associate

£14000 - £16000 per annum: Recruitment Genius: Full time and Part time positio...

Ashdown Group: IT Manager - Salesforce / Reports / CRM - North London - NfP

£45000 per annum: Ashdown Group: An established and reputable Not for Profit o...

Recruitment Genius: Sales Ledger & Credit Control Assistant

£14000 - £17000 per annum: Recruitment Genius: A Sales Ledger & Credit Control...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all