"Fiscal cliff" tumble looms despite Senate efforts

Mon Dec 31, 2012 6:36pm EST
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By Richard Cowan and Roberta Rampton

WASHINGTON (Reuters) - The United States was on track to tumble over the "fiscal cliff" at midnight on Monday, at least for a day, as lawmakers held back from supporting an eleventh-hour plan from Senate leaders to avert severe tax increases and spending cuts.

The U.S. House of Representatives looked unlikely to vote on a Senate "fiscal cliff" plan before midnight, possibly pushing a legislative decision into New Year's Day, when financial markets will be closed.

The plan was heavy on tax increases and light on spending cuts, which was unlikely to appeal to Republicans in the House.

It would raise income taxes on high-income Americans, but leave taxes at current levels for the middle class, a key goal of President Barack Obama.

But there was discontent among Senate Democrats worried that the proposal did not go far enough in taxing the rich. The Democrats asked for a meeting with Vice President Joe Biden to have him explain the talks he was having with Republican Senate Minority Leader Mitch McConnell.

"The caucus as a whole is not sold" on the plan, said a Senate Democratic aide. "We just don't have the votes for it."

If Congress fails to act, about $600 billion in tax increases - much steeper than those in the Senate plan - and government-wide spending cuts will begin taking effect after midnight, harsh measures that could lead to a recession.

But lawmakers could still vote for a deal on New Year's Day or later and prevent the worst of the fiscal cliff effects.   Continued...

U.S. President Barack Obama speaks about the negotiations with Capitol Hill on the looming fiscal cliff in front of middle class Americans while in the Eisenhower Executive Office Building on the White House complex in Washington, December 31, 2012. REUTERS/Larry Downing