A deal still has not been struck to avert tax hikes and budget cuts after Friday's meeting between the president and congressional leaders.
WASHINGTON — U.S. Senate leaders are working to craft legislation by Sunday to avert the year-end "fiscal cliff" of tax hikes and spending cuts, but many details needed to be worked out after a crucial meeting with President Barack Obama on Friday.
President Obama spoke about the meeting at a press conference late afternoon.
The president said he had a “constructive meeting today” and he’s still "modestly optimistic" that an agreement can be reached. But if an agreement isn’t struck by the Dec. 31 deadline, then he will seek an up-or-down vote on a basic package that would include preserve tax cuts for middle-class Americans, while extending unemployment benefits for the long-term jobless and working toward a foundation for a broader deal.
President Obama says the fact that elected leadership can’t make deadlines is mind-boggling to the average American. “We’re now at the last minute”, he said.
The president will discuss the last-minute negotiations on NBC's "Meet the Press" on Sunday, the network said in a statement.
Sen. Majority Leader Harry Reid said he was preparing legislation to prevent middle-class tax hikes for a possible vote by Monday even as he negotiates with top Sen. Republican Mitch McConnell for a larger deal to avert the looming fiscal cliff.
"At President Obama's request, I am readying a bill for a vote by Monday that will prevent a tax hike on middle-class families making up to $250,000, and that will include the additional, critical provisions outlined by President Obama," Reid said in a statement. "In the next 24 hours, I look forward to hearing any good-faith proposals Senator McConnell has for altering this bill."
Reid and McConnell termed Friday's meeting "constructive" and "positive," and said they would keep working on trying to find a solution over the weekend.
After adjourning on Friday, Reid said he would probably not call the Senate back into session until about 1 p.m. EST on Sunday to give leaders time to hash out a deal.
"We are engaged in discussions, the majority leader and myself and the White House, in the hopes that we can come forward as early as Sunday and have a recommendation that I can make to my conference and the majority leader can make to his conference," McConnell said on the Senate floor.
"So we'll be working hard to try to see if we can get there in the next 24 hours. So I'm hopeful and optimistic," he added.
An aide to House Speaker John Boehner said it was agreed at the White House meeting that the Senate should act first.
"The speaker told the president that if the Senate amends the House-passed legislation and sends back a plan, the House will consider it — either by accepting or amending," the aide said.
However, Reid said it would be difficult to craft a solution that can win passage in both the House and Senate, adding that it involves "big numbers."
"Whatever we come up with is going to be imperfect," Reid said. "Some people aren't going to like it. Some people will like it less. But that's where we are and I feel confident that we have an obligation to do the best we can."
U.S. stocks fell for a fifth straight day, dropping 1 percent as the federal government edged closer to the fiscal cliff with no solution in sight.
Members of Congress are increasingly looking at the period right after the Dec. 31 deadline to come up with a retroactive fix to avoid steep tax increases and sharp spending cuts that economists have said could plunge the country into another recession.
With taxes on all Americans set to rise when rates established under former President George W. Bush expire on New Year's Eve, lawmakers would be able to come back in January and take a more politically palatable vote to cut some of the tax rates.
If congressional leaders objected to his plan, Obama was planning to ask them for a viable counterproposal, the source said.
The guest list included two Republicans, Boehner and McConnell, as well as Democrats Reid and Rep. Nancy Pelosi of California, the House minority leader.
The same group last met more than a month ago and emerged expressing optimism they could strike a deal that avoided the fiscal cliff. At that point, Boehner had already said he was willing to let tax revenues rise as part of an agreement, and the president and his Democratic allies said they were ready to accept spending cuts.
Since then, though, talks between Obama and Boehner faltered, the speaker struggled to control his rebellious rank and file - and Reid and McConnell sparred almost daily in speeches on the Senate floor. Through it all, Wall Street has paid close attention, and in the moments before the meeting, stocks were trading lower for the fifth day in a row.
The core issue is the same as it has been for more than a year: Obama's demand for tax rates to rise on upper incomes while remaining at current levels for most Americans. He made the proposal central to his successful campaign for re-election, when he said incomes above $200,000 for individuals and $250,000 for couples should rise to 39.6 percent from the current 35 percent.
Boehner refused for weeks to accept any rate increases, and simultaneously accused Obama of skimping on the spending cuts he would support as part of a balanced deal to reduce deficits, remove the threat of spending cuts and prevent the across-the-board tax cuts.
Last week, the Ohio Republican pivoted and presented a "Plan "B measure that would have let rates rise on million-dollar earners. That was well above Obama's latest offer, which called for a $400,000 threshold, but more than the speaker's rank and file were willing to accept.
Facing defeat, Boehner scrapped plans for a vote, leaving the economy on track for the cliff that political leaders in both parties had said they could avoid. In the aftermath, Democrats said they doubted any compromise was possible until Boehner has been elected to a second term as speaker when the new Congress convenes on Jan. 3.
Apart from income tax rates, congressional officials in both parties said a handful of other issues were the subject of private talks in the Capitol. These included the alternative minimum tax, which would effectively raise taxes on millions of upper-middle-class families unless Congress acts, as well as taxes on capital gains, dividends and estates.
In addition, benefits for the long-term unemployed are due to expire in the next few days, and doctors face the prospect of a deep cut in the fees they receive for treating Medicare patients unless legislation is passed to prevent it.
Further compounding the year-end maneuvering, there are warnings that the price of milk could virtually double beginning next year.
Congressional officials said that under current law, the federal government is obligated to maintain prices so that fluid milk sells for about $20 per hundredweight. If the law lapses, the Department of Agriculture would be required to maintain a price closer to $36 of $38 per hundredweight, they said. It is unclear when price increases might be felt by consumers.
Associated Press and Reuters contributed to this story.