US fiscal cliff: Still no deal on last day

2012-12-31 13:26
The US Capitol in Washington. (File, AP)

The US Capitol in Washington. (File, AP)

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Washington - US lawmakers will work on New Year's Eve for the first time in more than 40 years in a last-ditch attempt to save the United States from a fiscal calamity that will result in stiff tax hikes and drastic spending cuts.

Senate Democratic Majority Leader Harry Reid has ordered the Senate back into session at 11:00 (1600 GMT) on Monday, the last day before the deadline know as the "fiscal cliff".

Two days of last-gasp talks produced no deal on Sunday between US political leaders struggling for a compromise to head off a punishing package of spending cuts and tax hikes due to come into force on 1 January that could roil global markets and plunge the United States back into a punishing recession.

"There is still time left to reach an agreement, and we intend to continue negotiations," Reid said.

But "there is still significant distance between the two sides", he told the Senate, after huddling for nearly two hours with his Democratic caucus.

Discouraged by a lack of progress in Washington, investors worldwide pulled back from the markets.

Long way from success


Asian stocks fell as hopes that US lawmakers will reach a deal to avert the fiscal cliff faded. Hong Kong closed flat, edging down 9.67 points. Sydney closed 0.48% lower, shedding 22.4 points.

European stocks also fell in opening deals. London's FTSE 100 index of top companies dropped 0.39% and in Paris the CAC 40 shed 0.58%.

Speaking at the Capitol, Reid said Democrats were unwilling to brook talk of social security cuts.

"This morning, we have been trying to come up with some counteroffer to my friend's proposal," Reid told the Senate. "We have been unable to do that."

Senate Republican Minority Leader Mitch McConnell also warned that, despite talks through the night, negotiators were still a long way from success.

McConnell said he received no response to a "good faith offer" to Senate Democrats and had spoken twice by telephone with his old friend and sparring partner Vice President Joe Biden in the hope of breaking the stalemate.

Pessimism


If leaders fail to find agreement, President Barack Obama has demanded a vote on his fallback plan that would preserve lower tax rates for families earning less than $250 000 a year and extend unemployment insurance for two million people.

Republicans admitted such an option could emerge on Monday.

The already tense mood on Capitol Hill soured during Sunday's confusing hours, when some lawmakers tossed out varying versions of what may or may not be in Democratic and Republican offers.

"I'm incredibly disappointed we cannot seem to find common ground. I think we're going over the cliff," Republican Senator Lindsey Graham said on Twitter.

Moderate Democrat Clair McCaskill was also pessimistic.

"This is definitely not a kumbaya moment," she said.

I don't like your tone

Earlier, Obama accused Republicans of causing the mess, saying they had refused to move on what he said were genuine offers of compromise from his Democrats.

In an interview with NBC's Meet the Press that was recorded on Saturday, Obama said it had been "very hard" for top Republican leaders to accept that "taxes on the wealthiest Americans should go up a little bit, as part of an overall deficit reduction package".

Republicans were irked by Obama's tone.

"I don't know if this is the president saying $250 [thousand] or 'Go to hell'," Graham told reporters, referring to Obama's insistence that taxes rise on households income greater than a quarter of a million dollars per year.

The Senate's number two Democrat, Dick Durbin, said Republicans want the tax threshold to be raised to $550 000 per household and that Democrats might counter with $450 000, considerably higher than the president's $250 000.

But Reid warned: "We're still left with a proposal they've given us that protects the wealthy and not the middle class. I'm not going to agree to that."

All paychecks hit

Any deal must pass the Senate before going to the House, where such is the power of the conservative bloc of the Republican Party that it is unclear whether any solution backed by Obama can win majority support.

If no deal is reached, a package of tax cuts for all Americans that was first passed by then-president George W Bush will expire on 1 January.

All American workers will see their paycheck hit, and the broader economy will suffer from massive automatic spending cuts across the government.

The future of the estate tax is also on the table. Democrats want to raise the tax from 35% to 45% and apply it to estates above $3.5m, rather than the current $5.2m. Republicans want to maintain the current rates.

Besides taxes, the two sides are debating whether to extend unemployment benefits for two million Americans and maintain Medicare payments to doctors at the current rate, according to congressional officials.

The overall package being discussed would not stop $109bn in federal government spending cuts set to start after 1 January, or extend a two-percentage-point cut in the payroll tax, set to expire with the tax cuts passed under former president George W Bush.

It also would not increase the government's debt limit.

Experts expect the US economy to slide into recession if the standoff is prolonged, in a scenario that could cause turmoil in stock markets and hit prospects for global growth in 2013.

- SAPA
Read more on:    george w bush  |  barack obama  |  us  |  economy
NEXT ON NEWS24X
SHARE:

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
13 comments
Add your comment
Comment 0 characters remaining
 

Inside News24

 
/Sport
 

3 sports games you have to watch this weekend

Whether it’s date night or a braai with buddies, plan around these three exciting sporting games!

 
 

Men24.com

Everyday struggles of naturally skinny guys
And this year's Miss Bumbum title goes to...
How to maintain your mo, bro
Hottie of the day: Colette

Jobs in Cape Town [change area]

Property [change area]

Travel - Look, Book, Go!

Magical Massinga

Spend 5 nights at the gorgeous Massinga Beach Lodge in Mozambique and only pay for 4 from R13 220 per person sharing. Includes return flights, accommodation, transfers and romantic turndown. Book now!

Kalahari.com - shop online today

20% off ALL TV Series

Choose from 1000’s of the hottest TV Series . While stocks last. Shop now!

Festive gifts!

Check out our awesome range of festive gifts to make everyone’s wishes come true. Shop now!

Seen something you like in our catalogue?

Find the perfect gift and save up to R5000 – As seen on the catalogue. Hurry and shop now!

Save up to R2200 on electronics! – As seen in the catalogue

Wishing for tech gadgets this festive? Save up to R2100 on hot tech products at kalahari.com. While stocks last. Shop now!

Up to 35% off books

Save up to 35% on the latest page-turners. While stocks last. Shop now!

OLX Free Classifieds [change area]

Samsung Galaxy s4

Mobile, Cell Phones in South Africa, Western Cape, Cape Town. Date October 24

Best bargain in big bay

Real Estate, Houses - Apartments for Sale in South Africa, Western Cape, Cape Town. Date October 25

VW Golf 6, 1.6 Trendline (Excellent condition)

Vehicles, Cars in South Africa, Western Cape, Cape Town. Date October 25

Horoscopes
Aquarius
Aquarius

There is a strong focus on social interaction and connecting with your friends. You may have the need to expand and connect with a...read more

There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.








Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.