The new year is fast approaching and there’s still “significant distance between the two sides,” according to Harry Reid. However, he also said there’s still time to reach an agreement. The House Rules Committee approved a rule that would allow the chamber to immediately consider a Senate deal—although, with less than 24 hours left to strike a deal, time is quickly running out. The Senate will reconvene at 11am.
Where negotiations stand (via The Hill):
Leaders in the upper chamber narrowed their differences Sunday as Republicans agreed to drop a demand to curb cost-of-living increases to entitlement benefits, while Democrats showed flexibility on taxes.
Yet after months of talks on ways to avoid the fiscal cliff of tax hikes and spending cuts at the end of 2012, House and Senate lawmakers find themselves approaching the new year without a bill to present to their members.
Significant differences remain over two key parts of a deal — the automatic spending cuts known as the sequester and the estate tax. […]
Reid has proposed raising the threshold for extending current tax rates on individual income to $360,000 and on family income to $450,000, according to Democratic senators who received a briefing from him. Republicans have countered with a proposal to raise the threshold for individuals to $450,000 and families to $550,000.
But the estate tax and the sequester, an automatic $109 billion cut to domestic and defense spending next year, remain outstanding issues.
Republicans want to extend the estate tax at its current 35 percent rate and exempt inheritances below $5 million.
Both sides want to halt the sequester but cannot agree how to offset its cost.
Meanwhile, Sen. Joe Manchin (D-W.Va.) introduced a bill on Sunday that would “soften the landing” if America goes over the ‘cliff’.
Manchin said his bill, the Cliff Alleviation at the Last Minute Act, — the CALM Act — would slowly phase in the tax rate increases and allow the Office of Management and Budget (OMB) to propose substitute cuts to replace sequestration. […]
The bill would phase January’s tax rate increases over the course of three years. In addition, it would grant OMB “the flexibility to recommend what agencies and accounts to cut,” he said.