The top Democrat in the Senate has warned the United States looks
to be headed over the fiscal cliff of tax hikes and spending cuts
that will start next week if politicians do not reach a deal.
Majority Leader Harry Reid told the Senate that "it looks like
that is where we're headed".
He called on the Republicans who control the House of
Representatives to prevent the worst of the fiscal shock by getting
behind a Senate bill to extend existing tax cuts for all except
those households earning more than $250,000 (pound(s)155,000) a
year. With the House not in session and the clock ticking toward the
scheduled January start of tax increases and deep, automatic
government spending cuts, Mr Reid offered little hope. "I don't know
time-wise how it can happen now," he said.
Referring to the House run by Speaker John Boehner - the top
Republican in Congress - Mr Reid said: "It's being operated with a
dictatorship of the speaker, not allowing a vast majority of the
House of Representatives to get what they want."
Mr Boehner's failed effort last week to push his own solution
through the House was a "debacle", Mr Reid added. He accused Mr
Boehner of delaying fiscal cliff action until after he seeks re-
election as speaker on January 3.
"John Boehner seems to care more about keeping his speakership
than about keeping the nation on firm financial footing," Mr Reid
added.
His remarks sent world stocks tumbling but they may have been
more of an attempt to spur Republicans into action.
President Barack Obama arrived back at the White House from his
holiday in Hawaii to try to restart stalled negotiations with
Congress. Mr Obama made calls to congressional leaders from both
parties on Wednesday to try to revive the talks.
In addition, consumer confidence fell to a four-month low in
December. But the chances of a last-minute deal remained uncertain,
with Republicans and Democrats each insisting the other side move
first.
The Senate, controlled by Democrats, was scheduled to meet later
yesterday but on matters unrelated to the fiscal cliff.
Mr Boehner and other House Republican leaders, who say they are
willing to take up a fiscal cliff measure only after the Senate acts
on one, were to hold a conference call with Republican House
members.
The expectation for the call was that politicians would be told
to get back to Washington within 48 hours to consider anything the
Senate might pass.
That would bring them to Washington with three days left before
the deadline for action.
The House and Senate passed bills months ago reflecting their own
sharply divergent positions.
Hope persisted that Republicans and Democrats might come up with
a resolution before New Year's Day that could at least postpone the
impact of the tax hikes and spending cuts while discussions take
place.
Another battle looms in late January or early February over
raising the debt ceiling, which puts a limit on the amount of money
the US Government can borrow and can be raised only with the
approval of Congress.
Republican leaders said they will insist on more budget cuts.
Without action, the US Treasury said the government will reach its
$16.4 trillion debt ceiling on December 31.
Many analysts believe the government can stave the default date
off into late February.
