Fiscal deal 'within sight' -- but chances in Congress unclear

Facing the near-certainty that they would miss the midnight deadline for averting sweeping tax hikes, Senate lawmakers on Monday nevertheless edged closer to a potential deal that could undo most of the damage -- presuming Congress approves it. President Obama, speaking from the White House Monday afternoon, reported that a deal was "within sight." But he cautioned that it's "not done" yet. Indeed, a number of potential roadblocks lie ahead. The two sides are still at odds over a couple provisions in the proposed framework -- and as details of that framework leaked out, the rank-and-file in both parties were already howling about the terms.

The reaction raises the possibility that if any agreement is announced, Senate Majority Leader Harry Reid and House Speaker John Boehner might still struggle to sell it to their members. Amid the uncertainty, Obama said: "There are still issues left to resolve, but we're hopeful that Congress can get it done. But it's not done." The president stressed that if taxes rise, "middle class families can't afford it, business can't afford it, our economy can't afford it." Logistically speaking, it is highly unlikely that both chambers can pass anything by midnight, after which the more than $500 billion in tax hikes are set to start kicking in, followed by sweeping spending cuts. Lawmakers, though, could potentially let the tax rates lapse, only to patch up the problem in early January. To do that, they need a deal.

Officials familiar with the working agreement said Democrats and Republicans were making progress on the sticky issue of tax hikes, with Democrats opening the door to raising rates only for 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. The sticking point, though, concerns how to address automatic spending cuts poised to hit next month. According to an email from Senate Republican Leader Mitch McConnell to colleagues, obtained by Fox News, McConnell said he thought "the entire deal was sealed" by early Monday. But he claimed the White House called in the morning "demanding" to avert the automatic spending cuts, $110 billion of which is set to take effect in 2013. McConnell said he now wants to find "offsets" to allow for a two-month delay in those cuts.

The two sides, he said, have not yet reached an agreement. Further, Fox News is told there are no new spending cuts as part of a deal. Senior Republican lawmakers told Fox News it would be very difficult to pass a bill out of the House if they can't extract additional spending cuts. On the other side, Democrats were crying foul 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. Reid said shortly before noon that the two sides still had not reached an agreement. "We really are running out of time," Reid said. "Americans are still threatened with a tax hike in just a few hours." Reid stressed that "there are a number of issues on which the two sides are still apart, and negotiations are continuing." He said those "issues" need to be resolved before lawmakers can introduce a bill. In the worst-case scenario, the stalemate drags on, and more than $600 billion in tax hikes and spending cuts kicks in with no relief in sight.

Read more: http://www.foxnews.com/politics/2012/12/31/lawmakers-struggle-to-produce-fiscal-deal-as-ball-drop-set-to-ring-in-tax-hikes/#ixzz2GjlBP4G2