On ‘fiscal cliff,’ Obama and senators returning to Washington for one last attempt at deal

With historic tax increases set to hit virtually every American in five days, President Obama and members of the Senate are headed back to Washington on Thursday to take one last shot at a deal to protect taxpayers and the gathering economic recovery.

If anything, hope for success appeared to have dimmed over the Christmas holiday. The Republican-controlled House last week abdicated responsibility for resolving the crisis, leaving all eyes on the Senate. But senior aides in both parties said Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) have not met or even spoken since leaving town for the weekend.

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The difference between the Democratic and Republican plans floated last week was relatively small.

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One small sign of progress came from House GOP leaders, who vowed Wednesday to call the House into session and stage a vote on anything the Democratic-controlled Senate approved.

But Speaker John A. Boehner (Ohio) and other top Republicans also demanded that Senate leaders take up a bill approved by the House months ago that would preserve expiring tax cuts for the wealthy as well as the middle class.

After failing to persuade their fellow Republicans last week to let taxes rise on income over $1 million, GOP leaders offered no guidance on the shape of a package the House could ultimately accept. “The House will take . . . action on whatever the Senate can pass, but the Senate first must act,” the leaders said in a joint statement.

The White House, meanwhile, was working with Reid on an alternative package that would keep Obama’s vow to let taxes rise on income over $250,000. Top Senate aides said their approach also would protect millions of middle-class Americans from having to pay the costly alternative minimum tax for the first time and would keep benefits flowing to 2 million unemployed workers who otherwise would be cut off in January.

The measure also could delay deep spending cuts set to strike at the Pentagon and other federal agencies next month. But aides said the scope of the package depends on negotiations with Senate Republicans, and the talks had yet to get off the ground.

With no sign of urgency, aides in both parties predicted that failure was not just a possibility — it was rapidly becoming the most likely outcome. No significant movement was expected Thursday: Obama was scheduled to be in the air traveling back from his Hawaiian holiday for a good portion of the day, and the Senate wasn’t set to convene for votes until the evening.

Unless the House and the Senate can agree on a way to avoid the “fiscal cliff,” more than $500 billion in tax increases and spending cuts will take effect next year, potentially sparking a new recession.

In a sign of mounting anxiety over Washington gridlock, Starbucks is asking employees in its D.C. area stores to write the words “Come Together” on cups provided to customers Thursday and Friday. The aim is to send a message to lawmakers that they must settle their differences and resolve the fiscal crisis, Starbucks chief executive Howard Schultz said in a letter posted online.