December 31 2012

Fiscal cliff deadline just hours away as Congress returns. No agreement has been reached between White House and Republicans in early morning talks. Latest deal to raise taxes on incomes over $450,000. Harry Reid says: ‘We really are running out of time’…



Powered by Guardian.co.ukThis article titled “Fiscal cliff deadline looms as talks on a deal continue – live updates” was written by Richard Adams in Washington DC, for guardian.co.uk on Monday 31st December 2012 17.19 UTC

12.19pm ET

Republican senator John Cornyn of Texas tweets:

11.50am ET

This may be a good sign. Or a bad sign. It’s too soon to say.

Updated at 11.52am ET

11.44am ET

Politico takes a metaphor and mixes it to death:

The last-ditch horse-trading underscored the urgency of the situation….

Old Politico saying: never switch a gift horse in the ditch.

11.22am ET

GOP senator: ‘There has been a lot of progress’

Senate minority whip Jon Kyl is making happy noises to Reuters:

Senator Jon Kyl on Monday said a “lot of progress” has been made in talks to avert the “fiscal cliff” but he cautioned that it is unclear if the progress will spur legislation the Senate can vote on before a midnight deadline when taxes and spending cuts kick-in.

“There is no agreement yet,” Kyl said. “Conversations are still ongoing. There has been a lot of progress.”

Then Kyl has a little joke at Reuters’ expense:

Asked how long talks could go on, Kyl said: “I guess until 11.59.”

Updated at 11.24am ET

11.06am ET

Harry Reid: ‘discussions continue as I speak’

The Senate has just got underway, and here’s the Democratic majority leader Harry Reid:

Discussions continue today, Reid notes:

There are a number of issues on which the two sides are apart but discussions continue as I speak….

We really are running out of time, Americans are threatened with a tax hike in a few hours.

That was short and sweet from Reid. And believe it or not, that tells us a lot, because Reid didn’t bash the Republicans as he has done on every available occasion in the last week.

Equally significant: Mitch McConnell didn’t take the floor after Reid.

So a deal is on the way, is the bet.

Updated at 11.09am ET

11.00am ET

This one is for total US politics geeks only:

If you know what that means, you’ll know what that means. If you know what I mean.

Updated at 11.01am ET

10.57am ET

Deal is on the cards, reports ABC News

Are Joe Biden and Mitch McConnell getting close to a deal? ABC News thinks so:

An emerging tentative agreement would extend current tax rates for households making $450,000 or less; extend the estate tax at its current level of 35% for estates larger than $5m; and prevent the Alternative Minimum Tax from hammering millions of middle-class workers, sources said.

The deal would also extend unemployment benefits set to expire Tuesday and avert a steep cut to Medicare payments for doctors.

Both sides also seem willing to delay by three months automatic spending cuts to defense and domestic programs, the sources said, setting the stage for continued fiscal debate in the next few months tied to the debt ceiling.

Still have to get it through the House, though.

Updated at 10.57am ET

10.48am ET

The ‘dairy cliff’ explained

Bloomberg has some background on the little-known ‘dairy cliff‘, which is triggered by the failure to pass a new farm bill of agricultural support and subsidies, as well as food stamps:

The most recent farm law, enacted in 2008, expired after attempts to pass a new five-year proposal failed. Without that plan, agricultural programs automatically return to rules passed in 1949, the basis of all subsequent legislation.

The effects of that transition have been delayed because of the growing seasons of different crops. Dairy production, a year-round business, is the first major commodity affected. In November, the US Department of Agriculture put the price of a gallon of fresh whole milk at just under $3.54.

Under President Harry Truman’s farm policy, the government bought supplies of a product until its price reached “parity” with the cost immediately before World War I. Adjusted for a century of inflation, the Agriculture Department’s milk-support price today would be $39.08 per hundred pounds, more than double the dairy futures price in Chicago on December 28.

Updated at 10.49am ET

10.41am ET

McConnell and Biden have early talks

There’s a flurry of fiscal cliff stuff going on, as the House starts its session, and the Senate prepares to get going at 11am, with comments expected from majority leader Harry Reid and (presumably) minority leader Mitch McConnell.

Politico is reporting on optimistic signs of a deal emerging:

Senate Minority Leader Mitch McConnell 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.

It also says that conversations between Biden and McConnell occurred early Monday morning, at 12.45am and 6.30am, and quotes a McConnell spokesman:

The leader and the VP continued their discussion late into the evening and will continue to work toward a solution. More info as it becomes available.

Updated at 10.41am ET

10.10am ET

‘Dairy cliff’ approaches sell-by date

Aside from the fiscal cliff, what about the so-called “dairy cliff,” the possibility of a sharp hike in the price of milk if a new farm bill isn’t passed quickly?

There was some positive movement over the weekend, when leaders in both parties on the House and Senate agriculture committees agreed on a one-year extension of the previous farm bill.

But hold on, what’s this? Via AP:

A spokesman for House Speaker John Boehner said Sunday that Republican leaders had not decided how they would proceed on the farm extension, though a vote could come as soon as Monday.

Oh well, so much for that outbreak of bipartisanship. It turns out the House GOP is also considering two other extensions: a one-month extension and an even smaller bill that would merely extends the current policy that expires on 1 January.

Update: ‘Diary cliff’? Yes we only have a few hours left to get our 2013 calendars (hat tip: @Mattywills). Anyway, dairy cliff…

Updated at 10.31am ET

9.54am ET

Is Obama caving in to the Republicans?

Is President Obama giving away too much? In New York magazine, Jonathan Chait fears that Obama is caving in to the Republicans on taxes, and wants a stiffer backbone:

[Obama] is allowing Republicans to whittle down the sum by essentially threatening to shoot themselves in the head. And this is the most ominous thing about it. The big meta question looming over Obama’s term is whether he has learned to grapple with Republican political hostage-taking. Hostage-taking is not simply aggressive or even irrational negotiating. It is the specific tactic of extracting concessions by threatening to withhold support for policies you yourself endorse, simply because your opponent cares more about the damage.

9.49am ET

The effects of the budget cuts contained within the fiscal cliff could be felt in short order on the US military, as the Associated Press reports:

A senior defense official said if the sequester were triggered, the Pentagon would soon begin notifying its 800,000 civilian employees that they should expect some furloughs — mandatory unpaid leave, not layoffs. It would then take some time for the furloughs to begin being implemented, said the official, who requested anonymity because the official was not authorized to discuss the internal preparations.

9.43am ET

Deal or no deal? Where the two sides differ

So where are the two sides at this point? Based on various reports, here’s where things stood at the end of the weekend in talks between Senate republicans, Democrats and the White House.

• Income tax: Senate Republicans propose higher taxes on incomes above $450,000. Democrats propose tax rises on incomes over $360,000

• Estate tax: Republicans want to tax inheritances valued above $5m at 35%. Democrats want to tax inheritances above $3.5m at 45%

• Budget cuts: a “pause” before implementing the across-the-board cuts demanded by the sequester – Democrats in favour, Republicans oppose

• Spending: Proposals to avoid a cut in Medicare payments to doctors and extend benefits for the long-term unemployed – Republicans say they should be paid for through budget cuts elsewhere

• Alternative minimum tax: Democrats want any deal to include a permanent revision to stop the AMT hitting middle class taxpayers

Updated at 9.48am ET

9.30am ET

With only hours remaining until midnight, can America’s political system avert the fiscal cliff of tax hikes and sweeping budget cuts before 2013 is ushered in?

Congress reconvenes this morning after hopes of a deal between the Democratic and Republican leaders in the Senate over the weekend, came to naught. The talks faltered after Republicans threw up a string of objections – leading the Republican Senate minority leader Mitch McConnell to open a new line of dialogue with vice president Joe Biden.

Harry Reid, the Senate majority leader, left the field yesterday evening, telling journalists “Talk to Joe Biden and McConnell” as his farewell remark.

Congress went home for the night soon after. But there was some progress, based on reports leaking out of the two caucuses. The New York Times reported:

On some of the biggest sticking points, the two sides are now inches apart. Barely a week after House Republicans refused to vote to allow taxes to rise on incomes over $1m, Senate Republicans proposed allowing tax rates to rise on incomes over $450,000 for singles and $550,000 for couples. Democrats countered with a proposal to extend expiring Bush-era tax cuts up to $360,000 for singles, $450,000 for couples. For both sides, that meant major movement. Mr Obama has been holding firm at a $250,000 threshold.

Despite that shift, Republicans first insisted that a new measure of inflation, known as “chained CPI”, be used to calculate future – and slower – increases in social security payments. Democrats rejected that but the Republicans produced a new objection, based on the putative deal’s delay of the severe budget cuts that form one half of the feared fiscal cliff.

President Obama weighed in via an appearance on NBC’s Meet The Press on Sunday morning, blaming Republicans intransigence for their failure to reach a deal:

We have been talking to the Republicans ever since the election was over. They have had trouble saying yes to a number of repeated offers.

We’ll be bringing you all the action or inaction as the clock ticks down. It could be a late night.

Updated at 10.59am ET

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