Hours from ‘fiscal cliff’, still no deal in Congress

Taxes were on track to rise for many Americans this week unless lawmakers could cut a last-minute deal on Monday to avoid the "fiscal cliff", an outcome that seemed unlikely, but still possible.

Financial markets were on edge only hours before the midnight arrival at the long-awaited "cliff", an assortment of $600 billion in tax hikes and broad federal spending cuts on defense and domestic programs that has defied a political solution.

Senate Republican Leader Mitch McConnell and Democratic Vice President Joe Biden carried on "good talks" late into Sunday evening, aides said. Details of their discussions were unclear.

Any resolution in the tug-of-war over taxes and spending cuts forged in the Senate would need to win approval in the House of Representatives and the outcome in that chamber was uncertain.

Still, a serious jolt from the markets could prod Democrats and Republicans into action, even at the eleventh hour — or in this case, December 31 at 11:59 p.m. Eastern Standard Time (1659 GMT).

The main sticking point between Republicans and Democrats remained whether to extend existing tax rates for everyone, as Republicans want, or just for income below $250,000 to $400,000, as Democrats have proposed. That threshold may be rising closer to a level of $500,000 or so, analysts said.

Wall Street edged higher in a choppy session on Monday, with the S&P 500 on track for double-digit gains for the year, as politicians bargained for a deal to avert the "fiscal cliff".

The Dow Jones industrial average was up 7.45 points, or 0.06 percent, at 12,945.56. The Standard & Poor's 500 Index was up 4.53 points, or 0.32 percent, at 1,406.96. The Nasdaq Composite Index was up 17.63 points, or 0.60 percent, at 2,977.95.

While midnight is the deadline for a fiscal deal, the government can pass legislation in 2013 that retroactively cancels or moderates the impact of going over the fiscal cliff.

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