Fiscal cliff looms as US politicians still divided

The prospects for a fall off the US’s Fiscal Cliff appear to be growing.Fiscal cliff looms as US politicians still dividedUS President Barack Obama has used a last ditch White House meeting to urge Congress to back an interim plan to avoid the “fiscal cliff”.

He reportedly asked Republican and Democratic leaders to back tax cuts for those earning under $250,000.

They have only three days to reach an agreement before across the board tax rises and spending cuts take effect.

Analysts say sliding over the “cliff” could tip the US into recession and set back the global economic recovery.

President Obama cut short his holiday in Hawaii to resume the negotiations. The Senate returned to work on Thursday, with the House due back on Sunday.

Reports ahead of the meeting suggested the president would propose a limited package including the renewal of most expiring tax cuts, and a delay or replacement of some spending cuts.

But as the meeting at the White House began, US media reported that the president was making no new offer, instead seeking a simple vote on extending tax cuts for middle class Americans.

There was no word on whether Republican House Speaker John Boehner and Senate minority leader Mitch McConnell were open to a deal or had a counter offer.

Democratic Senate majority leader Harry Reid and senior House figure Nancy Pelosi were also at the White House.  Earlier, there was upbeat rhetoric from some senators.

Mr Obama’s plans to increase taxes on the wealthiest Americans have remained a point of division between the two parties since he won re-election in November.

Many Republicans oppose new taxes as a matter of principle, and are demanding cuts to what they see as deficit-inflating public spending, putting at risk healthcare and welfare benefit schemes popular with Democrats.

An alternative plan proposed by House Speaker John Boehner – which would have seen taxes rise only on those earning over $1m – failed in the House of Representatives late last week.

In the Senate chamber on Thursday, Mr Reid said the requirement to get at least 60 of 100 votes to move to a vote on any legislation almost certainly doomed any new plan unless Republicans gave it strong backing.

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