Senators trade proposals into night to avoid ‘fiscal cliff’

Senate negotiators labored late into Saturday over a last-ditch plan to avert the “fiscal cliff,” struggling to resolve key differences over how many wealthy households should face higher income taxes in the new year and how to tax inherited estates.

As the clock ticked toward a Jan. 1 deadline, the halls of the Capitol were dark and silent. The House and the Senate are shuttered until Sunday afternoon, in part to avoid distractions as the talks over averting sharp tax increases for most American taxpayers entered their final hours.

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While Senate Majority Leader Harry M. Reid (D-Nev.) monitored developments by telephone, Minority Leader Mitch McConnell (R-Ky.) arrived at the Capitol shortly after noon. Asked whether he and Reid would be able to strike a deal, McConnell smiled and replied: “I hope so.”

As nightfall approached, top Democratic and Republican aides continued shuttling paperwork with the latest proposals back and forth between the two leaders’ offices, about 60 steps apart.

Under negotiation is a deal that would extend George W. Bush-era tax cuts for nearly all taxpayers but increase rates on top earners. It also would extend unemployment benefits set to expire in January for 2 million people and prevent about 30 million Americans from having to pay the alternative minimum tax for the first time.

McConnell left the Capitol shortly before 7 p.m, revealing few details. “We’ve been in discussions all day, and they continue,” he said. He added, “We’ve been trading paper all day and talks continue into the evening.”

Reid and McConnell have set a deadline of about 3 p.m. on Sunday for cinching a deal. That’s when they’re planning to convene caucus meetings of their respective members in separate rooms just off the Senate floor. At that point, the leaders will brief their rank and file on whether there has been significant progress and will determine whether there is enough support to press ahead with a proposal.

“They both know the clock ends Sunday,” said Sen. Mark Begich (D-Alaska).

If all goes according to plan, the leaders would roll out the legislation Sunday night and hold a vote by at least midday Monday, giving the House the rest of New Year’s Eve to consider the measure.

In the House, Speaker John A. Boehner (R-Ohio) huddled Saturday with his senior staff for two hours but remained on the periphery of the negotiations. Passage in the unpredictable chamber is anything but certain. Boehner told President Obama and congressional leaders Friday that he could commit only to considering a Senate-passed bill and suggested that the House may amend that bill and send it back to the Senate.

House consideration of the measure could become another white-knuckle moment. Boehner would like the eventual deal to be passed by a bipartisan coalition that is roughly equally divided between Republicans and Democrats, GOP aides said. Republicans have not supported tax increases since 1990, and conservative activists were already criticizing any deal to raise taxes on the wealthy.