With the clock ticking ever closer to the New Year’s time bomb, the suddenly alarmed Senate and House were holding special sessions 36 hours before the year-end deadline for a plan that would keep America from tumbling off the so-called fiscal cliff.
The stakes in the game of holiday-interrupting brinkmanship are enormous.
Economists agree the $500 billion in fiscal pain due to hit when the new year starts would stifle the US economic recovery and send the country back into recession, spelling bad news for the global economy as well.
Aides to both sides’ leaders in the Democrat-controlled Senate worked feverishly behind closed doors Saturday to fashion a deal palatable to Democrats as well as to Republicans, who control the House of Representatives.
The Senate convenes Sunday at 1pm (1800 GMT) while the House goes into session an hour later, with no votes expected before 2330 GMT.
Both chambers would have little time to debate and then pass a deal that has eluded the White House and Congress for weeks.
President Barack Obama, who called congressional leaders to the White House on Friday, will address the crisis once more when he gives an interview on NBC’s Sunday morning talk show “Meet the Press.”
Amid the tense negotiations, Obama pressed lawmakers to clinch a deal, even if they must reach a compromise that lacks the significant deficit-reduction measures both sides had sought.
The country “just can’t afford a politically self-inflicted wound to our economy,” he said.
If lawmakers fail, “every American’s pay cheque will get a lot smaller,” he warned. “Congress can prevent it from happening, if they act now.”
The president, sensing a mandate from his re-election last month, wants to raise taxes on the rich. Republicans want only to close tax loopholes to raise revenue and demand significant spending cuts in return, notably to federal benefit programs like Social Security.
But if nothing is done by the deadline, all taxpayers will see an increase.
Following the White House talks, the Senate Majority Leader Harry Reid and Republican Minority Leader Mitch McConnell are heading efforts to craft a deal.
But any agreement would also have to pass the House, where there is doubt that an Obama-backed deal would win favour with restive conservatives in the Republican caucus.
While each side must for the sake of appearances be seen to be seeking a deal, one way out is to go over the cliff, then fix the problem in the first days of next year.
Under that scenario, Republicans who are philosophically opposed to raising taxes could vote to lower the newly raised rates on almost all Americans without formally hiking taxes.