UPDATE: At least a bungee-jump off the so-called “fiscal cliff” now likely, CNN:
The feared fiscal cliff was at hand Monday night, with nothing expected to pass Congress before a combination of tax increases and spending cuts starts to kick in at midnight.
A deal to avert that combination, which economists warn could push the U.S. economy back into recession, was “within sight” on Monday afternoon, President Barack Obama said. And in the Senate, Minority Leader Mitch McConnell told members that they were “very, very close” to a deal, having worked out an agreement on taxes…
In the House, GOP sources said there’s little practical difference in settling the issue Monday night versus Tuesday. But if House Republicans approve the bill on Tuesday — when taxes have technically gone up — they can argue they’ve voted for a tax cut to bring rates back down, even after just a few hours, GOP sources said. That could bring some more Republicans on board, one source said.
As the clocks ticks down to midnight, Politico reports:
Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden engaged in furious overnight negotiations to avert the fiscal cliff and made major progress toward a year-end tax deal, giving sudden hope to high-stakes talks that had been on the brink of collapse, according to sources familiar with the discussion.
McConnell and Biden, who served in the Senate together for 23 years, are closing in on an agreement that would hike tax rates for families who earn more than $450,000, and individuals who make more than $400,000, according to sources familiar with talks…
After loud Democratic protests on Sunday, Republicans agreed to take off the table a controversial provision that would have cut Social Security benefits. But more hurdles soon emerged, including over automatic spending cuts set to take place next year, and the rates for estate taxes that are set to balloon if no deal is reached by the new year.
[T]he talks hit a ditch on Saturday night when McConnell made a proposal that included switching the formula used to calculate Social Security benefit payments. Using the chained consumer price index, or “chained CPI,” would curb the growth of the program’s cost-of-living adjustments.
Democrats slammed it as a poison pill and warned there would be no last-minute deal to avoid tax hikes if Republicans insisted on entitlement reform, which Democrats had assumed was off the table at this late stage.
The dwindling scope of any potential deal with Republicans is the biggest reason why Democrats have refused to include the so-called “chained CPI” reductions in the future growth of Social Security benefits–a concession President Barack Obama himself had offered at an earlier stage of negotiations in hope of a much larger agreement. Mitch McConnell’s quick retreat on that proposal shows which side has more to lose from the failure to reach an agreement, and (finally!) seems to acknowledge the tremendous public opposition to cutting Social Security.
It’s not even known at this point if the deal that’s ultimately reached–if any–will include rescinding, or at least delaying, major cuts set to go into effect tomorrow to a multitude of domestic and military programs known as the “sequester”–cuts mandated by the 2011 Budget Control Act compromise on raising the debt ceiling. Also unknown is the status of extending unemployment compensation, the so-called “doc fix” for Medicare reimbursement, the estate tax, and many other issues up against deadlines. And of course, whatever they cobble together in the Senate must pass the House, which is, as you know, a more or less dysfunctional body.
We’ll update throughout the day as (and if) necessary.