WASHINGTON — A frantic round of late-night negotiations on Sunday between Vice President Joseph R. Biden Jr. and Senator Mitch McConnell of Kentucky, the Republican leader, moved the Senate close to a deal to stave off hundreds of billions of dollars in tax increases and across-the-board spending cuts that would begin to kick in on Tuesday, according to people familiar with the talks.
T.J. Kirkpatrick for The New York Times
“It looks awful,” Senator Richard J. Durbin of Illinois, the second-ranking Democrat, said after tense negotiations on Sunday. More Photos »
But with almost no time on the clock and the Senate convening at 11 a.m. Monday, officials cautioned that optimism had risen in past days only to burst hours later. An objection by just one senator could derail a deal until the next Congress convenes on Thursday.
Representative Kevin McCarthy, a California Republican and the House majority whip, advised House members at 9 a.m. “to remain close to the Capitol as additional legislation and votes are possible pending action from the Senate.”
The last of a round of calls between Mr. Biden and Mr. McConnell ended around midnight, with both men promising to resume talks Monday morning.
“The leader and the V.P. continued their discussion late into the evening and will continue to work toward a solution,” Don Stewart, a spokesman for Mr. McConnell, said on Monday.
Both sides were already close Sunday on the central issue surrounding whether Congress would intervene before the nation careened off the so-called fiscal cliff: What would be the income threshold for the families that would absorb tax increases beginning Tuesday? Barely a week after House Republicans refused to vote to allow taxes to rise on income over $1 million, Senate Republicans proposed allowing tax rates to rise on income over $450,000 for individuals and $550,000 for couples. Democrats countered with a proposal to extend expiring Bush-era tax cuts for up to $360,000 for individuals and $450,000 for couples. For both sides, that meant major movement. Mr. Obama has been holding firm at a $250,000 threshold.
But Democrats were inching upward, possibly to $450,000 for all households. That had liberal Democrats nervous but centrists optimistic that a deal was in reach that could pass both the Senate and the House. The House Rules Committee on Sunday night was considering an emergency rules change that would suspend requirements that legislation be posted for at least 48 hours, so that a deal could be rushed to the floor.
The two sides are also getting closer on a new rate of taxation on inherited estates, one source said. The biggest stumbling block remains Democrats’ demand for a one-year “pause” on across-the-board spending cuts, which Republicans say can happen only with other up-front spending cuts.
In the balance are more than a half-trillion dollars in tax increases on virtually every working American and across-the-board spending cuts that are scheduled to begin Tuesday. Taken together, they threaten to push the economy back into recession.
The weekend saw a round of volatile negotiations as senators tried to reach a deal, only to be stalled for hours over a Republican demand that any accord must include a new way of calculating inflation that would mean smaller increases in payments to beneficiaries of programs like Social Security. Democrats halted the negotiations, which did not resume until Mr. McConnell made an emergency call to Mr. Biden and the White House sent the president’s chief legislative negotiator to meet with Senate Democrats. Soon after, Republicans withdrew their demand and discussions resumed, but little progress was made.
“It looks awful,” said Senator Richard J. Durbin of Illinois, the second-ranking Democrat. “I’m sure the American people are saying, with so much at stake why are they waiting so late to get this done?”
Senator Lindsey Graham, Republican of South Carolina, who had said early Sunday that he thought a deal was within reach, said later on his Twitter feed, “I think we’re going over the cliff.”
Weeks of negotiations between Mr. Obama and Speaker John A. Boehner inched toward a deal to avert the fiscal cliff, while locking in trillions of dollars in deficit reduction over 10 years and starting an effort to overhaul the tax code and entitlement programs like Medicare. But earlier this month, Mr. Boehner walked away from those talks.
Instead he tried to reach a much more modest deal to avoid a fiscal crisis by extending the expiring tax cuts for incomes under $1 million. When Mr. Boehner’s own Republican members revolted, he ceded negotiations to the Senate. But compromise has proved equally elusive in that chamber.
Absent a last-minute deal, Mr. Reid is expected to move on Monday to bring to a vote a stopgap measure pushed by Mr. Obama, which would retain lower tax rates for incomes below $250,000 and extend unemployment benefits. But it was not clear that would even get a vote. The objection of a single senator on Monday would run out the clock on the 112th Congress before a final tally could be taken.
Mr. Obama appeared on the NBC program “Meet the Press” on Sunday and implored Congress to act. “We have been talking to the Republicans ever since the election was over,” Mr. Obama said in the interview. “They have had trouble saying yes to a number of repeated offers.”
He added, “Now the pressure’s on Congress to produce.”
2 Sides in Talks Inch Closer but No Fiscal Deal on Final Day
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2 Sides in Talks Inch Closer but No Fiscal Deal on Final Day
