President Barack Obama has returned to Washington to tackle issues around the looming deadline for tax and spending cuts. Congressional Republicans and Democrats remain at loggerheads.
With five days left to reach a political solution with Congress, President Barack Obama has returned early from holidays to Washington. He is attempting to broker a deal to avoid the US falling over the so-called fiscal cliff next Monday.
Almost $600 billion (453 billion euros) of tax rises and spending cuts will to come into force on January 1 if a deal is not agreed.
In a Senate floor speech at the opening of a post-Christmas session on Thursday, Senate Majority Leader Harry Reid, the top Democrat in Congress, criticized Republicans for failing to act.
"We are here in Washington working while the members of the House of Representatives are out watching movies and watching their kids play soccer and basketball and doing all kinds of things. They should be here," Reid said. "I can't imagine their consciences."
A day earlier House of Representatives Speaker John Boehner, the top Republican in Congress, urged the Democratic-controlled Senate to act first to avoid the fiscal cliff, offering to at least consider anything that the Senate produced. However, Boehner has not returned to Washington, or called the House back into session.
Sources on Capitol Hill say President Barack Obama told Senate Republican Leader Mitch McConnell he would send to Congress on Thursday a scaled back fiscal cliff measure. It would hold back for some the tax hike scheduled to take place in the new year.
McConnell has said he can not say whether he would require a simple majority or 60 votes for passage in the Senate until he sees Obama's proposal. It is expected that the measure would extend the Bush-era tax breaks for income under $250,000, extend the current estate tax rate, and extend unemployment insurance.
House Republicans are expected to hold a telephone conference call on the fiscal cliff later on Thursday and will discuss a schedule for returning to Washington.
If Congress fails to act by December 31, tax rates for all Americans would revert to pre-2001 levels. Two days later, $109 billion in automatic spending cuts would start to take effect. The cuts are expected to affect federal government departments and the defense sector, as well as hitting unemployment insurance and veterans' support.
Together, the higher taxes and lower spending would remove some $600 billion from the US economy, threatening a new recession in 2013.
jm/ccp (Reuters, AP) dw de
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