Biden, Senate nearing ‘cliff’ deal, but no House vote before midnight

Biden, Senate nearing ‘cliff’ deal, but no House vote before midnight

Senate leaders and Vice President Biden are putting the finishing touches on an agreement to extend income tax rates for the vast majority of the country, just hours before the "fiscal cliff" deadline.

The agreement will extend Bush-era income tax rates on individual income up to $400,000 and on family income up to $450,000, according to a senior GOP aide. It will adjust the estate tax rate to 40 percent, up from 35 percent, but maintain the exemption for all inheritances below $5 million, the aide said.

GOP Senate leader Mitch McConnellAddison (Mitch) Mitchell McConnellSenate passes 0B defense bill Overnight Health Care: New GOP ObamaCare repeal bill gains momentum Overnight Finance: CBO to release limited analysis of ObamaCare repeal bill | DOJ investigates Equifax stock sales | House weighs tougher rules for banks dealing with North Korea MORE (R-Ky.), who is engaged in one-on-one talks with Biden, said the tax portion of the deal was finished, and that a broader agreement was at hand. 

“I can report that we’ve reached an agreement on all of the tax issues,” McConnell said. “We are very, very close.”

Republican leaders in the House, meanwhile, said they would not hold a late-night vote even if tax and spending legislation cleared the Senate, guaranteeing that the nation will go over the fiscal cliff at midnight, if only for a few hours. 

Going over the fiscal cliff could make it easier to move a bill through the House. A vote on Jan. 1 would then be tantamount to a tax cut, not an increase, since the higher rates would have taken effect.

As of late Monday afternoon, there was no word from McConnell, Biden or Senate Majority Leader Harry ReidHarry ReidThe Memo: Trump pulls off a stone-cold stunner The Memo: Ending DACA a risky move for Trump Manchin pressed from both sides in reelection fight MORE (D-Nev.) about a final deal, though there appeared to be progress on another major sticking point. 

McConnell told his GOP colleagues that an agreement had been reached to postpone $109 billion of the automatic spending cuts from sequestration for two months, though Senate Democrats had yet to sign off on it.

President Obama signaled progress earlier Monday when he said the tentative agreement would extend tax credits for families with children, college tuition tax breaks, and tax incentives for renewable energy development. He said it would also extend unemployment benefits, a key Democratic demand.

“Today it appears that an agreement to prevent this New Year’s tax hike is within site but it’s not done. There are still issues left to resolve, but we’re hopeful Congress can get it done. But it’s not done,” Obama said at a campaign-style rally in Washington. 

Biden visited the Senate Monday afternoon to give Democratic lawmakers an update on the talks.  

The emerging package has alarmed a small group of liberal Democrats who are concerned it will enshrine tax rates for individuals and families earning many times above the national average.

Democrats such as Sen. Tom HarkinTom HarkinDistance education: Tumultuous today and yesterday Grassley challenger no stranger to defying odds Clinton ally stands between Sanders and chairmanship dream MORE (Iowa) worry the package will do little to protect middle-class families from Republican demands to reduce spending on social safety-net programs when Congress has to increase the federal debt ceiling in two months.

“We’re going to lock in forever the idea that $450,000 a year is middle class in America? Need I remind people that at $250,000 a year, that’s the top 2 percent income earners in America?” said Harkin, chairman of the Health, Education, Labor and Pensions Committee. “I know the president keeps saying he wants to protect tax cuts for the middle class.

“Have we forgotten average income earners in America are making $25,000, $30,000, $40,000, $60,000 a year?” he said. “That’s the real middle class in America and they are the ones getting hammered now.”

Harkin and liberal Sens. Al FrankenAlan (Al) Stuart FrankenGOP eying 'blue slip' break to help Trump fill the courts Overnight Regulation: FTC launches probe into Equifax | Dems propose tougher data security rules | NYC aims to slash greenhouse gas emissions | EPA to reconsider Obama coal ash rule Overnight Cybersecurity: Kaspersky to testify before House | US sanctions Iranians over cyberattacks | Equifax reveals flaw that led to hack MORE (D-Minn.), Jeff MerkleyJeffrey (Jeff) Alan MerkleySenate Dems hold floor talk-a-thon against latest ObamaCare repeal bill Overnight Defense: Senate passes 0B defense bill | 3,000 US troops heading to Afghanistan | Two more Navy officials fired over ship collisions Senate passes 0B defense bill MORE (D-Ore.) and Bernie SandersBernard (Bernie) SandersOvernight Defense: Senate passes 0B defense bill | 3,000 US troops heading to Afghanistan | Two more Navy officials fired over ship collisions Senate passes 0B defense bill Dems fear lasting damage from Clinton-Sanders fight MORE (I-Vt.) were spotted walking to Reid's office to air their concerns about the emerging compromise. Sen. Jay RockefellerJay RockefellerOvernight Tech: Trump nominates Dem to FCC | Facebook pulls suspected baseball gunman's pages | Uber board member resigns after sexist comment Trump nominates former FCC Dem for another term Obama to preserve torture report in presidential papers MORE (D-W.Va.) headed to Reid’s office on their heels.

Emerging from Reid's office, Sanders declined to say whether he would oppose the deal. 

"We'll see what the vice president says," Sanders said. "We'll see what's in the deal." 

Russell Berman, Erik Wasson and Molly K. Hooper contributed.

This story has been updated.