Breaking: Congress Misses Fiscal Cliff Deadline; Senate Leaders Hope to Vote in the Coming Hours
Congress blew past the deadline for averting historic tax hikes as the ball dropped and Americans rang in 2013, but lawmakers were making seemingly steady progress toward a deal that could contain the damage in the days ahead.
Senate leaders were trying to tee up a vote in the early morning hours, after White House and Senate Republican negotiators reached a late-night deal on the fiscal crisis. Negotiations were effectively capped after Vice President Biden visited the Hill in a bid to get rank-and-file Democrats on board.
A senior official told Fox News that President Obama has gotten the sign-off from Senate Democratic Leader Harry Reid and House Democratic Leader Nancy Pelosi. But the official said they are “not spiking the ball” yet.
Both chambers of Congress still must pass whatever is introduced, and negotiators could face some heavy lifting in selling the plan to skeptical House conservatives. Though Biden said he was feeling good about the Senate side, some liberal Democrats were still expressing reservations.
For the near-term, it appears a tax hike will technically go into effect on Jan. 1, as the midnight deadline was missed. The House adjourned for the night, and while the Senate could act in the coming hours, taxpayers were nevertheless left without a clear answer on how much they’ll be paying in 2013.
In total, $600 billion in tax hikes and spending cuts are scheduled to hit in the new year.
But the goal in Washington is to produce a bill that could patch up the problem in the coming days, sparing most Americans from any major or lasting blow to their paychecks.
Senate leaders were tentatively moving toward a vote, after a marathon weekend of talks during which Biden and Senate Republican Leader Mitch McConnell did much of the hard bargaining.
According to a senior official, the White House and Senate Republicans struck an agreement Monday on the last major sticking point -- what to do about the $110 billion in automatic spending cuts set to kick in starting next month.
The official said the two sides agreed to postpone the cuts by two months, in exchange for a 50-50 mix of revenue increases and spending cuts. Of those cuts, half would come from defense and half would come from other budgets.
The deal also includes an extension of current tax rates for everyone except families making above $450,000 -- up from Obama's earlier threshold of $250,000. The draft framework would also extend long-term jobless benefits for a year and address other expiring provisions like the estate tax.
The big question is whether the plan being drafted by Senate leaders can pass both chambers -- and if so, when. The longer the stalemate drags on, the greater the risk for the economy and taxpayers.
House conservatives could take issue with the way the spending cuts were overhauled -- particularly the inclusion of additional tax increases.
House Republican leaders made clear they were reserving judgment on the package. The House GOP leadership team said any decision on whether to accept or amend any Senate-passed bill would not be made until the House and the American people “have been able to review the legislation.”
On the other side, Democrats were crying foul all afternoon over the move to raise taxes only on those making over $450,000.
"Looks like a very bad deal the way this is shaping up," Sen. Tom Harkin, D-Iowa, said.
But all sides were stressing the urgency of the situation.
Of the looming tax hike, Obama said: "Middle class families can't afford it, businesses can't afford it, our economy can't afford it."
The tax hikes, combined with the spending cuts, could trigger another recession if they are not dealt with soon, economists warn. The fiscal deal, though, still pushes off a permanent decision on the spending cuts until two months down the road, when lawmakers could find themselves in a similar position – only this time, with the debt ceiling playing a far more prominent role.
Fox News' Ed Henry, Chad Pergram and Mike Emanuel contributed to this report.