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| Fiscal cliff: Obama 'optimistic' on Senate-led deal | Fiscal cliff: Obama 'optimistic' on Senate-led deal |
| (35 minutes later) | |
| US President Barack Obama says he is "modestly optimistic" that a deal to avoid the "fiscal cliff" is possible, after a last-ditch White House meeting. | US President Barack Obama says he is "modestly optimistic" that a deal to avoid the "fiscal cliff" is possible, after a last-ditch White House meeting. |
| Mr Obama said Senate leaders were working to craft a bill that could win approval in both chambers of Congress. | |
| But if a compromise was not reached, the president said he would ask for a quick vote on preventing tax rises. | But if a compromise was not reached, the president said he would ask for a quick vote on preventing tax rises. |
| Congress has only four days to reach an agreement before across-the-board tax rises and spending cuts take effect. | Congress has only four days to reach an agreement before across-the-board tax rises and spending cuts take effect. |
| Analysts say sliding over the so-called "cliff" could tip the US into recession and set back the global economic recovery. | Analysts say sliding over the so-called "cliff" could tip the US into recession and set back the global economic recovery. |
| If Senate majority leader Harry Reid and minority leader Mitch McConnell do not work out a deal, Mr Obama is seeking a vote to prevent tax rises on incomes up to $250,000 (£150,000) and ensure unemployment insurance is continued. | |
| He described that as the "bare minimum" Congress should get done before 1 January. | He described that as the "bare minimum" Congress should get done before 1 January. |
| "The hour for immediate action is here, it is now," Mr Obama said. | "The hour for immediate action is here, it is now," Mr Obama said. |
| 'Imperfect' deal | |
| Earlier on Friday, Mr Obama met Mr Reid, Mr McConnell, House Speaker John Boehner and House minority leader Nancy Pelosi at the White House for just over an hour. | |
| Mr McConnell and Mr Reid said they were entering talks shortly after the meeting, and gave relatively upbeat assessments on their task. | |
| Mr McConnell said he was "hopeful and optimistic" that he could present a comprise to his caucus by Sunday, just over 24 hours before the deadline. | |
| His Democratic counterpart said he would "do everything I can" to make the deal happened. | |
| But Mr Reid cautioned that "whatever we come up with is going to be imperfect". | |
| The renewed effort towards a Senate deal that could pass both chambers comes after much of the focus in negotiations rested on House Speaker John Boehner. | |
| An alternative plan proposed by Mr Boehner - which would have seen taxes rise only on those earning over $1m - failed in the House of Representatives late last week. | |
| Mr Boehner has called the lower chamber into session on Sunday. A staff member in the house speaker's office told Reuters that the House would consider Senate legislation. | |
| "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 unnamed aide said. | |
| 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. | |
| During the news conference on Friday, Mr Obama said any last minute action on tax rises would form the groundwork for further negotiations in the new year. | |
| "The American people are watching what we do here," he said. "Obviously their patience is already thin." | |
| Cuts and benefits | |
| The term fiscal cliff refers to the combination of almost $600bn (£370bn) of tax rises and spending cuts due to come into force on 1 January if Congress does not pass new legislation. | |
| Sweeping tax cuts passed during the presidency of George W Bush will expire, eventually affecting people of all income levels, and many businesses. | |
| Other tax cuts and benefits set to expire include: | |
| • A 2010 payroll tax cut, the expiration of which would prompt immediate wage-packet cuts | |
| • Benefits for the long-term unemployed | |
| • Compensation for doctors treating patients on federal healthcare programmes | |
| • Inheritance taxes are also likely to be affected if no deal is reached. | |
| In addition, spending cuts mandated by a law passed to break a previous fiscal impasse in Congress will come into force, affecting both military and domestic budgets. | |
| The cuts are expected to affect federal government departments and the defence sector, as well as hitting unemployment insurance and veterans' support. |