By Fred Barbash
WASHINGTON (Reuters) - As the pace of talks quickened to avert the "fiscal cliff" of steep tax hikes and spending cuts set for the end of the year, senior members of the U.S. House of Representatives of both parties cautioned that an agreement on all the outstanding issues remained uncertain.
Republicans and Democrats are not close to "finishing anything," California Representative Kevin McCarthy, the Republican whip in the House, told Fox News Monday night.
"There's nothing agreed to. They are just beginning to talk," he said of House Speaker John Boehner and President Barack Obama.
Meanwhile, Representative Chris Van Hollen of Maryland, the top Democrat on the House Budget Committee, said on MSNBC Monday he thought Congress could resolve some of the issues by the December 31 deadline -- among them the hikes in tax rates-but might have to leave others for the new Congress that takes office in January.
The two major elements of the so-called cliff are automatic spending reductions set to occur starting January 1 and tax cuts that expire at the end of the year. Democrats, including Obama, want the reduced taxes extended for all but the highest earners, while Republicans want them continued for all brackets.
Also in the mix is a payroll tax "holiday" set to expire, which, if not extended, will could quickly reduce the take-home pay of a large segment of the U.S. workforce.
The holiday, now in its second year, has been providing workers with an average of about $1,000 a year in extra cash. Significant divisions remain on the payroll tax question in part because it funds the Social Security retirement program.
The payroll tax, dedicated to financing Social Security, is paid by employers and employees at a rate of 6.2 percent of wages up to a maximum of $110,110. The holiday, enacted in 2010, reduced the rate by 2 percentage points on the portion paid by the worker.
Van Hollen said Republicans were coming around on the tax hikes, and said there was a good chance of resolving that soon.
Other things might have to wait, he said, mentioning the budget cuts, or "sequestration," and the payroll tax.
If not complete by January 1, he said, "my belief is you would get it done very soon" after the New Year, noting that the government has some flexibility on withholding taxes that could limit the immediate hit to taxpayers while negotiations continued into 2013.
There were no travel plans Tuesday on the public schedule of President Barack Obama, which observers on Capitol Hill hoped signaled more negotiations.
(Reporting by Fred Barbash Editing by W Simon)
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