Just one more day for US to seal 'fiscal cliff' deal

Rush to replace expired laws and stop economy tipping back into recession before markets open

NEW YORK

Frantic negotiations to find a way to protect the American economy from the worst effects of the looming "fiscal cliff" were under way in Washington DC last night, with Democratic and Republican leaders rushing to cobble together proposals that could be put before lawmakers as early as today.

President Barack Obama, who reiterated the case for a bipartisan deal that protects middle-class Americans from imminent tax hikes and extends unemployment benefits for the more than two million people who would otherwise lose federal aid, continued to press the argument in his weekly address to the country yesterday. Echoing his remarks following an Oval Office meeting with congressional leaders on Friday, Mr Obama said: "We cannot let Washington politics get in the way of America's progress. We've got to do what it takes to protect the middle class, grow this economy and move our country forward."

Without new laws, expiring legislation will automatically trigger steep tax hikes for almost all Americans, while at the same time robbing government departments of billions in spending. The unemployed who have been depending on federal help for more than six months will be stripped of any future cheques. Taken together, the changes are worth more than half a trillion dollars – and would almost certainly tip the weak American economy back into recession.

Although lawmakers could in theory delay an agreement until early or mid-January, and then return to repeal the most damaging measures, the fragile economy needs a deal before the end of 2012. Risks are also mounting of a stock market panic.

The ball is in the court of the Senate, with Harry Reid, the Democratic leader of the upper chamber of Congress, working with Mitch McConnell, who leads the Republican minority, to forge a pact that could find favour in Congress. Their efforts come after John Boehner, the Speaker of the Republican-controlled House of Representatives, failed to strike an accord with the White House.

Mr Boehner has resolutely opposed the President's push for higher taxes on the wealthy. Mr Obama wants taxes to be protected for those earning less than $250,000 a year, implying higher rates for those whose earnings surpass that level.The President did, however, offer to raise that threshold to $400,000 before negotiations with Mr Boehner broke down.

Mr Reid is due to hold a meeting with his Democratic colleagues in the Senate this afternoon, where he hopes to discuss a plan agreed with Mr McConnell. The Republican has promised to do the same with his party colleagues. Later in the day, the House will return to consider the plan, and potentially vote on it before stock markets open tomorrow.

Although Mr Obama has given Mr Reid and Mr McConnell time to formulate an agreement within Congress, he has also drawn a line in the sand: if they fail to agree on a deal that can pass through the Senate and also find passage in the House, he has called for a vote on his basic proposals that would, for the time being, protect middle-class incomes and long-term unemployment benefits while a more comprehensive deal is worked out.

Suggested Topics
Arts and Entertainment
books
News
Dr Alice Roberts in front of a
people
Voices
Nigel Farage arrives for a hustings event at The Oddfellows Hall in Ramsgate on Tuesday
voicesA defection that shows who has the most to fear from the rise of Ukip
Arts and Entertainment
The Doctor and the Dalek meet
tvReview: Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Sport
Diego Costa
footballEverton 3 Chelsea 6: Diego Costa double has manager purring
Arts and Entertainment
The 'three chords and the truth gal' performing at the Cornbury Music Festival, Oxford, earlier this summer
music... so how did she become country music's hottest new star?
Life and Style
The spy mistress-general: A lecturer in nutritional therapy in her modern life, Heather Rosa favours a Byzantine look topped off with a squid and a schooner
fashionEurope's biggest steampunk convention heads to Lincoln
Voices
Caustic she may be, but Joan Rivers is a feminist hero, whether she likes it or not
voicesShe's an inspiration, whether she likes it or not, says Ellen E Jones
News
i100
Arts and Entertainment
Star turns: Montacute House
tv
News
i100Steve Carell selling chicken, Tina Fey selling saving accounts and Steve Colbert selling, um...
Arts and Entertainment
Unsettling perspective: Iraq gave Turner a subject and a voice (stock photo)
booksBrian Turner's new book goes back to the bloody battles he fought in Iraq
News
i100
Arts and Entertainment
Some of the key words and phrases to remember
booksA user's guide to weasel words
Life and Style
Brave step: A live collection from Alexander McQueen whose internet show crashed because of high demand
fashionAs the collections start, Alexander Fury finds video and the internet are proving more attractive
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

IT Teacher

£22000 - £33000 per annum: Randstad Education Leeds: ICT TeacherLeedsRandstad ...

Graduate C#.NET Developer (TDD, ASP.NET, SQL)

Negotiable: Harrington Starr: Graduate C#.NET Developer (TDD, ASP.NET, SQL) Su...

Junior SQL DBA (SQL Server 2012, T-SQL, SSIS) London - Finance

£30000 - £33000 per annum + Benefits + Bonus: Harrington Starr: Junior SQL DBA...

C# Web Developer (ASP.NET, JavaScript, MVC-4, HTML5) London

£35000 - £45000 per annum + Benefits + Bonus: Harrington Starr: C# Web Develop...

Day In a Page

The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Fashion walks away from the celebrity runway show

Fashion walks away from the celebrity runway show

As the collections start, fashion editor Alexander Fury finds video and the internet are proving more attractive
Meet the stars of TV's Wolf Hall... and it's not the cast of the Tudor trilogy

Meet the stars of TV's Wolf Hall...

... and it's not the cast of the Tudor trilogy
Weekend at the Asylum: Europe's biggest steampunk convention heads to Lincoln

Europe's biggest steampunk convention

Jake Wallis Simons discovers how Victorian ray guns and the martial art of biscuit dunking are precisely what the 21st century needs
Don't swallow the tripe – a user's guide to weasel words

Don't swallow the tripe – a user's guide to weasel words

Lying is dangerous and unnecessary. A new book explains the strategies needed to avoid it. John Rentoul on the art of 'uncommunication'
Daddy, who was Richard Attenborough? Was the beloved thespian the last of the cross-generation stars?

Daddy, who was Richard Attenborough?

The atomisation of culture means that few of those we regard as stars are universally loved any more, says DJ Taylor
She's dark, sarcastic, and bashes life in Nowheresville ... so how did Kacey Musgraves become country music's hottest new star?

Kacey Musgraves: Nashville's hottest new star

The singer has two Grammys for her first album under her belt and her celebrity fans include Willie Nelson, Ryan Adams and Katy Perry
American soldier-poet Brian Turner reveals the enduring turmoil that inspired his memoir

Soldier-poet Brian Turner on his new memoir

James Kidd meets the prize-winning writer, whose new memoir takes him back to the bloody battles he fought in Iraq
Aston Villa vs Hull match preview: Villa were not surprised that Ron Vlaar was a World Cup star

Villa were not surprised that Vlaar was a World Cup star

Andi Weimann reveals just how good his Dutch teammate really is
Bill Granger recipes: Our chef ekes out his holiday in Italy with divine, simple salads

Bill Granger's simple Italian salads

Our chef presents his own version of Italian dishes, taking in the flavours and produce that inspired him while he was in the country
The Last Word: Tumbleweed through deserted stands and suites at Wembley

The Last Word: Tumbleweed through deserted stands and suites at Wembley

If supporters begin to close bank accounts, switch broadband suppliers or shun satellite sales, their voices will be heard. It’s time for revolution