US Senate leaders set to work on last-minute tax agreement

JONATHAN WEISMAN & JENNIFER STEINHAUER

At the urging of US President Barack Obama, the Democratic and Republican leaders of the Senate set to work Friday night to assemble a last-minute tax deal that could pass both chambers of Congress and avert large tax increases and budget cuts next year, or at least stop the worst of the economic punch from landing beginning January 1.

After weeks of fruitless negotiations between the president and Speaker John A Boehner, Obama turned to Senator Harry Reid, the majority leader, and Senator Mitch McConnell of Kentucky, the Republican leader — two men who have been fighting for dominance of the Senate for years — to find a solution. The speaker, once seen as the lynchpin for any agreement, essentially ceded final control to the Senate and said the House would act on whatever the Senate could produce.

"The hour for immediate action is here. It is now," Obama said in the White House briefing room after an hourlong meeting with the two Senate leaders, Boehner and Representative Nancy Pelosi, the House Democratic leader. He added, "The American people are not going to have any patience for a politically self-inflicted wound to our economy, not right now."

Bipartisan agreement still hinged on the Senate leaders finding an income level above which taxes will rise on January 1, most likely higher than Obama's level of $250,000. Quiet negotiations between Senate and White House officials were already drifting up toward around $400,000 before Friday's White House meeting. The two sides were also apart on where to set taxes on inherited estates.

But senators broke from a long huddle on the Senate floor with McConnell on Friday night to say they were more optimistic that a deal was within reach. McConnell, White House aides and Reid were to continue talks on Saturday, aiming for a breakthrough as soon as Sunday.

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