Fiscal Cliff Deadline: Biden, McConnell Working To Beat Midnight Buzzer

Pressure is mounting on Congress to produce an alternative to the fiscal cliff, a combination of tax increases and spending cuts set to take effect on New Year’s Day. Senate leaders will be back in session 11 a.m. on Monday.

All eyes are now on Senate Minority Leader Mitch McConnell, R-Ky., and Vice President Joe Biden, tapped on an emergency basis after talks stalled on Sunday.

If lawmakers cannot cut a bipartisan deal, then Majority Leader Harry Reid will put a bare bones bill to the floor for an up-or-down vote. This bill will ask for a tax extension for the middle class and unemployment insurance for some two million Americans. Whether the House will accept this measure is uncertain, and so failure on the part of lawmakers to agree will push the nation over the cliff.

A bipartisan deal would trigger the confidence needed for more investment in America, leading to additional growth. However, sans an agreement, an estimated $600 billion in spending cuts and tax increases would begin Jan. 1.

Agreeing that revenue should be a starting point, Democrats and Republicans were close to agreeing on a tax increase threshold with Democrats reportedly proposing a hike on people earning more than $360,000 annually and households with more than $450,000 income. The GOP’s counter-offer was to increase taxes on those individuals making more than $450,000 and households bringing in $550,000 annually.

Sen. Lindsey Graham, R-S.C., was optimistic about the progress, telling “Fox News Sunday” early on Sunday that whatever is accomplished will be a political victory for President Barack Obama.

“Hats off to the president,” Graham said. “He stood his ground. He’s going to get tax rate increases, maybe not $250,000, but [on] upper income Americans.”

Obama insisted on a tax hike for households with incomes of more than $250,000 a year while on the campaign trail, and he opened fiscal cliff negotiations with House Speaker John Boehner on the same note. This was before Boehner left the negotiating table to try to push through his alternative fiscal cliff “Plan B” but failed to get enough votes for it, as it would have allowed for a tax increase on those with annual incomes of $1 million or more, a threshold too low for rank and file Republican House members too approve.

The latest gridlock, however, came when Republicans demanded that the Democrats' proposal include a chained consumer price index, or chained CPI. This is a new way of calculating inflation that would ultimately result in smaller payments to Social Security beneficiaries.

Republicans later withdrew their demand. The optimism Graham had earlier in the day was gone by Sunday evening.

“I’m incredibly disappointed we cannot seem to find common ground,” he tweeted. “I think we’re going over the cliff.”

In a rare interview on Sunday on NBC’s “Meet the Press,” Obama said if all efforts fail, a tax cut will be proposed first thing in 2013.