Senate’s “fiscal cliff” bill adds $4 trillion to deficits: CBO

WASHINGTON (Reuters) – The Congressional Budget Office on Tuesday said Senate-passed legislation to avert the “fiscal cliff” would add nearly $ 4 trillion to federal deficits over a decade, largely because it would extend low tax rates for almost all Americans.

The congressional scorekeeper’s analysis was released as a number of Republicans in the House of Representatives voiced opposition to the bill, and considered amending it with deeper spending cuts.

House Majority Leader Eric Cantor and others complained the bill’s spending cuts would do little to curb trillion-dollar deficits.

Senate-passed plan extends decade-old Bush-era tax rates for individuals earning up to $ 400,000 and couples earning up to $ 450,000 – nearly 99 percent of U.S. taxpayers.

But the non-partisan CBO compared the Senate plan’s revenue and expenditure changes to laws that are currently in force, which call for $ 600 billion in tax hikes and automatic spending cuts in 2013 alone – effectively a dive off the fiscal cliff.

With Congress feverishly working to avoid the fiscal cliff in recent weeks, many Washington policymakers had viewed the current-law budget “baseline” as unlikely to be maintained.

Compared to an alternative CBO scenario in which Congress extends all expiring tax provisions and turns off automatic spending cuts slated to start taking effect this week, the Senate plan achieves minimal deficit reduction in the early years.

Over 10 years, deficits under the Senate plan would be $ 3.75 trillion less than permanently extending all of the tax and spending policies in the alternative scenario. That is largely because the CBO expects that remaining on an unsustainable fiscal path would severely constrict economic growth later in the decade, holding back revenue growth and keeping outlays higher.

FISCAL 2013 EFFECTS

By going over the fiscal cliff, the CBO had previously forecast that the higher taxes and lower spending would slash the fiscal 2013 U.S. budget deficit by more than half, to $ 641 billion from $ 1.1 trillion the prior year.

But in its analysis of the Senate-passed plan, the CBO said fiscal 2013 revenues would be $ 280 billion lower and spending $ 50 billion higher, resulting in a $ 330 billion deficit increase, for a total deficit of around $ 971 billion.

Under the CBO’s keep-taxes-unchanged scenario, the deficit would be $ 1.04 trillion for fiscal 2013.

None of the CBO’s analyses takes into consideration possible future spending cuts and reforms to federal health care and retirement programs that Congress might make in a new budget battle emerging around mid-February over the next increase in the U.S. debt limit.

(Reporting By Kim Dixon and David Lawder; Editing by David Gregorio and Vicki Allen)

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House faces test on fiscal cliff deal

Vice President Joe Biden gives two thumbs up following a Senate Democratic caucus meeting about the fiscal cliff …

Updated 4:25 pm ET

A hard-fought bipartisan compromise passed in the Senate early Tuesday to spare all but the richest Americans from painful income-tax hikes teetered on the edge of collapse as angry House Republicans denounced its lack of spending cuts.

While House Speaker John Boehner considered whether to bring the Senate-passed measure to the floor for a vote Tuesday, Majority Leader Eric Cantor told fellow Republicans in a closed-door meeting that he opposed the legislation negotiated by Vice President Joe Biden and Republican Senate Minority Leader Mitch McConnell and passed by the Senate 89-8 shortly after 2 a.m.

Cantor told the group he could not back the bill in its current form, according to two officials in the room, which could leave open the possibility of an attempt to modify the package and send it back to the upper chamber. But Democrats there have signaled that changing the compromise risks killing it.

A report released by the Congressional Budget Office Tuesday complicated matters further still. The nonpartisan group "scored" the Biden-McConnell compromise as likely adding nearly $4 trillion to the federal deficit over 10 years, hardening opposition among many Republicans seeking further spending cuts.

The country technically went over the “fiscal cliff” at midnight, triggering across-the-board income-tax increases and deep, automatic cuts to domestic and defense programs. Taken together, those factors could plunge the still-fragile economy into a fresh recession. Financial markets were closed for New Year’s Day, potentially limiting the damage from the partisan impasse in dysfunctional Washington at least until Wednesday.

Time was running short for another reason, however: A new Congress will take office at noon on Thursday, forcing efforts to craft a compromise by the current Congress back to the drawing board.

“The Speaker and Leader laid out options to the members and listened to feedback,” Boehner spokesman Brendan Buck said in a statement emailed to reporters. “The lack of spending cuts in the Senate bill was a universal concern amongst members in today’s meeting.”

“Conversations with members will continue throughout the afternoon on the path forward,” Buck said.

As House Republicans raged at the bill, key House Democrats emerging from a closed-door meeting with Biden expressed support for the compromise and pressed Boehner for a vote on the legislation as currently written.

“Our Speaker has said when the Senate acts, we will have a vote in the House. That is what he said, that is what we expect, that is what the American people deserve…a straight up-or-down vote,” Democratic House Minority Leader Nancy Pelosi told reporters.

Conservative activist organizations like the anti-tax Club for Growth warned lawmakers to oppose the compromise. The Club charged in a message to Congress that “this bill raises taxes immediately with the promise of cutting spending later.”

Under the compromise arrangement, taxes would rise on income above $400,000 for individuals and $450,000 for households, while exemptions and deductions the wealthiest Americans use to reduce their tax bill would face new limits. The accord would also raise the taxes paid on large inheritances from 35% to 40% for estates over $5 million. And it would extend by one year unemployment benefits for some two million Americans. It would also prevent cuts in payments to doctors who treat Medicare patients and spare tens of millions of Americans who otherwise would have been hit with the Alternative Minimum Tax. And it would extend some stimulus-era tax breaks championed by progressives.

The middle class will still see its taxes go up: The final deal did not include an extension of the payroll tax holiday.

Efforts to modify the first installment of $1.2 trillion in cuts to domestic and defense programs over 10 years -- the other portion of the “fiscal cliff,” known as sequestration -- had proved a sticking point late in the game. Democrats had sought a year-long freeze but ultimately caved to Republican pressure and signed on to just a two-month delay while broader deficit-reduction talks continue.

That would put the next major battle over spending cuts right around the time that the White House and its Republican foes are battling it out over whether to raise the country's debt limit. Republicans have vowed to push for more spending cuts, equivalent to the amount of new borrowing. Obama has vowed not to negotiate as he did in 2011, when a bruising fight threatened the first-ever default on America's obligations and resulted in the first-ever downgrade of the country's credit rating. Biden sent that message to Democrats in Congress, two senators said.

“This agreement is the right thing to do for our country and the House should pass it without delay,” President Barack Obama said in a written statement shortly after the Senate vote.

There were signs that the 2016 presidential race shaped the outcome in the Senate. Republican Senator Marco Rubio, widely thought to have his eye on his party’s nomination, voted no. Republican Senator Rand Paul, who could take up the libertarian mantle of his father Ron Paul, did as well.

Biden's visit -- his second to Congressional Democrats in two days -- aimed to soothe concerns about the bill and about the coming battles on deficit reduction.

“This is a simple case of trying to Make sure that the perfect does not become the enemy of the good,” said Democratic Representative Elijah Cummings, one of the chamber’s most steadfast liberals. “Nobody’s going to like everything about it.”

Asked whether House progressives, who had hoped for a lower income threshold, would back the bill, Cummings said he could not predict but stressed: “I am one of the most progressive members, and I will vote for it.”

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Ban on demanding Facebook passwords among new 2013 state laws

CHICAGO (Reuters) – Employers in California and Illinois will be prohibited from demanding access to workers’ password-protected social networking accounts and teachers in Oregon will be required to report suspected student bullies thanks to new laws taking effect in 2013.

In all, more than 400 measures were enacted at the state level during 2012 and will become law in the new year, according to the National Conference of State Legislatures (NCSL).

Some of the statutes, which deal with everything from consumer protection to gun control and healthcare, take effect at the stroke of midnight. Others will not kick in until later in the year.

The raft of measures includes a new abortion restriction in New Hampshire, public-employee pension reform in California and Alabama, same-sex marriage in Maryland, and a requirement that private insurers in Alaska cover autism in kids and young adults, NCSL said.

In New Hampshire, a rarely used form of late-term abortion will become illegal except to save the life of the mother – and even then only if two doctors from separate hospitals certify the procedure is medically necessary.

John Lynch, the state’s outgoing Democratic governor, had vetoed the measure, saying it would threaten the lives of women in rural areas. But the state’s Republican-controlled legislature later overrode him.

In California and Illinois, laws that take effect at 12:01 a.m. local time will make it illegal for bosses to request social networking passwords or non-public online account information from their employees or job applicants.

Michigan’s Republican Governor Rick Snyder signed a similar measure into law earlier this month that took effect immediately. The Michigan law also penalizes educational institutions for dismissing or failing to admit a student who does not provide passwords and other account information used to access private internet and email accounts, including social networks like Facebook and Twitter.

But workers and job seekers in all three states will still need to be careful what they post online: Employers may continue to use publicly available social networking information. So inappropriate pictures, tweets and other social media indiscretions can still come back to haunt them.

Gun violence – in places where it’s all too common, such as Chicago, and in places where it’s unexpected, such as Sandy Hook Elementary School in Newtown, Connecticut – was big news in 2012. But only a handful of new state firearms laws are set to take effect in 2013.

In Michigan, the definition of a “pistol” under the law will now include any firearm less than 26 inches in length. The new definition encompasses some rifles with folding stocks and will make the weapons subject to the same restrictions as pistols.

In Illinois, certain guns currently regulated by state law, including paintball guns, will be excluded from the definition of a firearm and participants in military re-enactments will be exempt from some weapons laws.

Another big story in 2012 was the effort by lawmakers in a number of cash-strapped states to put their public employee pension funds on a sounder financial footing.

In California and Alabama, reforms designed to begin to address the unfunded liabilities of those retirement systems will take effect in 2013.

Among the other new laws on the books in 2013:

* In California, prison workers and peace officers will now be prohibited from having sex with inmates and prisoners in transport.

* In Illinois, sex offenders will be prohibited from distributing candy on Halloween, or playing Santa or the Easter Bunny.

* In Oregon, employers won’t be allowed to advertise a job vacancy if they won’t consider applicants who are currently out of work.

* In Kentucky, residents will be prohibited from releasing feral or wild hogs back into the wild and Illinois will ban the possession and sale of shark fins.

* And in Florida, the term “motor vehicle” will no longer apply to the specialized all-terrain vehicles with over-sized tires known as “swamp buggies” that are popular in some parts of the state.

(Reporting by James B. Kelleher; Editing by Greg McCune and Nick Zieminski)

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Kardashian, West feel ‘blessed’ over baby news

ATLANTIC CITY, N.J. (AP) — Kim Kardashian and Kanye West are feeling lucky about their first child together.

“It’s true,” the 32-year-old reality TV star said in a statement on her site Monday. “Kanye and I are expecting a baby. We feel so blessed and lucky and wish that in addition to both of our families, his mom and my dad could be here to celebrate this special time with us.”

Kardashian’s father, Robert Kardashian, died in 2003. West’s mother, Donda West, died in 2007.

Kardashian added in the blog post that she was “looking forward to great new beginnings in 2013 and to starting a family.”

The 35-year-old rapper revealed to a crowd of more than 5,000 in song form at a concert Sunday that his girlfriend is pregnant. Kardashian was in the crowd at Revel Resort’s Ovation Hall with her mother, Kris Jenner, and West’s mentor and best friend, Jay-Z.

The news instantly went viral online, with thousands posting and commenting on the expecting couple.

Most of the Kardashian clan tweeted about the news, including Kim’s sisters. Kourtney Kardashian wrote: “Another angel to welcome to our family. Overwhelmed with excitement!”

West told concertgoers to congratulate his “baby mom” and that this was the “most amazing thing.”

Representatives for West and Kardashian didn’t immediately respond to emails about the pregnancy.

The rapper and reality TV star went public with their relationship in March.

Kardashian married NBA player Kris Humphries in August 2011 and their divorce is not finalized.

West’s Sunday-night show was his third consecutive performance at Revel. He took the stage for nearly two hours, performing hits like “Good Life,” ”Jesus Walks” and “Clique” in an all-white ensemble with two bandmates.

Kardashian is expected to spend New Year’s Eve at public appearance at a Las Vegas nightclub.

___

AP Writer Bianca Roach contributed to this report.

___

Follow Mesfin Fekadu on Twitter at http://twitter.com/MusicMesfin . Follow Bianca Roach at http://twitter.com/B__Roach

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Are recession babies prone to be delinquent teens?

NEW YORK (Reuters Health) – A new analysis of data on U.S. teens born during the early 1980s ties slightly higher rates of adolescent smoking, drinking, arrests and thefts to macroeconomic conditions during the first year of life.

What was “striking for us was it basically went across all socioeconomic strata,” said Dr. Seethalakshmi Ramanathan, the lead author of the study. “From a national level, it seems like everyone is affected.”

Ramanathan‘s study focused on babies born around the time of the recessions of 1980-1981 and 1982, when unemployment rates around the nation ranged from 6.6 percent to 11.25 percent, but she said she wouldn’t be surprised if the most recent recession also has a lasting impact.

“The mechanisms involved maybe different in intensity and severity, (but) based on the study it seems like there would be some effects,” said Ramanathan, a researcher at State University of New York Upstate Medical University.

Earlier research has suggested that widespread economic strain might negatively impact kids in the short term.

One group of researchers found that the rate of serious physical abuse towards children spiked as the U.S. economy crashed in 2007 (see Reuters Health report of September 19, 2011 here: http://reut.rs/q97xYA).

To get some sense of how recessions might affect children long term, Ramanathan and her colleagues used a 1997 survey of nearly 9,000 children who were born in the U.S. between 1980 and 1984.

The questions asked about drug, alcohol and gun use, arrests, theft and other behaviors.

The researchers were able to determine the economic circumstances for the region in which each kid spent his or her first two years of life.

They found that some of the delinquent behaviors were more common among children who were surrounded by higher unemployment during infancy.

For instance, the teens were nine percent more likely to use marijuana if the region where they celebrated their first birthday experienced a one percent drop in employment during the early 1980s.

This means that instead of 20 out of every 1,000 kids smoking pot, the increased risk in higher unemployment regions would result in 23 pot smokers out of every 1,000 teens.

Such an increase nationwide would result in 115,000 additional pot smokers, the group estimates in its report, published in the Archives of General Psychiatry.

“That’s a big number when you look at it,” Ramanathan told Reuters Health.

The risks for being arrested, joining a gang, stealing, and using alcohol and tobacco also increased between 6 percent and 17 percent among kids who were babies in areas experiencing a spike in unemployment.

The findings held up regardless of whether the kids grew up in wealthy homes or poor ones.

“These results suggest that, irrespective of socioeconomic status, unfavorable economic conditions during infancy may create circumstances that can have an adverse effect on the psychological development of the infant and lead to the development of behavioral problems,” the authors wrote in their study.

Assault, and the use of hard drugs or guns, however, were not affected by employment rates.

Ramanathan said it’s not clear why certain behaviors were more likely in regions impacted by the recessions.

“People have talked about how economic stability can help parents invest in the child’s development and how economic instability can affect family dynamics and the ability to be an effective parent,” she said.

But she added that this is speculation, and more studies need to unravel the factors that are taking root in infancy and spilling out in teenage delinquency.

“We can’t say high unemployment caused the effects. We don’t know what the mediating factors are,” Ramanathan said.

SOURCE: http://bit.ly/P0ZWgD Archives of General Psychiatry, online December 31, 2012.

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Congress to miss midnight cliff deadline

America is going over the “fiscal cliff” – for a few minutes, or hours, at the very least. Don't panic. There's no need to move the family into the Doomsday bunker in the backyard. Yet.

While President Barack Obama and Republican Senate Minority Leader Mitch McConnell have said they are close to a broad agreement that would prevent across-the-board income-tax hikes, lawmakers are unlikely to approve actual legislation before a midnight deadline.

That’s not expected to pose any major logistical problem in the next few days, provided that Democrats and Republicans actually have a deal. Unlike a college student who writes an end-of-semester paper overnight before a morning deadline, then drops the assignment off hours after it was due, Congress can write its own rules to minimize the damage – and Americans whose taxes are staying the same won’t see a change in their bottom line.

“It’s basically a matter of saying it’s effective January 1,” one senior Republican aide shrugged.

The deal – if a final deal is reached – will originate in the Democratic-led Senate (but on a House bill, since legislation affecting revenues technically has to start in the lower chamber). Republican House Speaker John Boehner has said that the House will only act after the Senate does. Obama and McConnell have both said that they expected work to continue on avoiding the first installment in $1.2 trillion in cuts to domestic and defense programs, the other part of the "fiscal cliff." McConnell called earlier in the day for lawmakers to vote on the tax component now, but Democrats demurred.

As of 5 p.m. on Monday, it was not clear whether the Senate would vote before midnight.

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Purported photo of new BlackBerry phone with QWERTY keyboard leaks

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“The Hobbit” keeps box office crown for third week

(Reuters) – The dwarfs and elves of “The Hobbit: An Unexpected Journey” prevailed at the North American box office again over the weekend, as its $ 32.9 million in ticket sales topped both the star-packed musical “Les Miserables” and the western “Django Unchained.”

Despite surging past “The Hobbit” on Christmas day with an $ 18.1 million opening, “Les Miz” managed only third place in U.S. and Canadian sales with $ 28 million as Christmas shoppers returned from the malls to boost Hollywood‘s box office, according to studio estimates.

“The Hobbit,” in its third week of release, has now grossed $ 222.7 million domestically, Warner Bros said.

Quentin Tarantino’s “Django Unchained,” a western starring Jamie Fox as a slave turned bounty hunter, took second with an impressive $ 30.7 million.

Tom Cruise’s crime drama “Jack Reacher,” which features author Lee Child’s former military investigator solving a fatal sniper attack, landed in fifth with $ 14 million, outpaced by “Parental Guidance,” the Billy Crystal-Bette Midler as grandparents comedy which took in $ 14.8 million to nab fourth.

Chris Aronson, president of domestic distribution for Fox, said the “Parental Guidance” performance was “just a tremendous result for our little engine that could.”

Backed by a musical score that made it a Broadway icon, “Les Miz” surged past “The Hobbit” on Christmas day, collecting $ 18.1 million to pass “High School Musical 3: Senior Year” with the biggest midweek opening day by a musical.

But it was not enough to conquer the “Hobbit” juggernaut, which scored its third straight box office weekend win.

Universal’s president for domestic distribution Nikki Rocco called the “Les Miz” $ 28 million take “phenomenal, especially considering we went into the weekend with $ 40 million,” an unexpectedly strong figure for its first few days in release.

“People really love this movie, which is even more rewarding and gratifying,” Rocco said.

“Les Miserables,” which stars Hugh Jackman, Russell Crowe and Anne Hathaway, benefited from Oscar buzz and its star power, said Paul Dergarabedian, president of Hollywood.com’s box office division, who said he wouldn’t be surprised to see the musical pass $ 200 million before it’s done.

That would put it among the Hollywood‘s Top 20 best-selling musicals. It would pass the 1972 film “Cabaret,” which grossed $ 191 million in box office sales adjusted for higher ticket prices, and put it close to “Camelot,” which sold $ 204.5 million in 1967, according to the web site the-numbers.com.

The most successful musical is “Snow White and the Seven Dwarfs,” which grossed more than $ 6.3 billion but has been re-released by Walt Disney nine times since its 1937 premiere, according to the site.

A rush of high-profile films in December is expected to push 2012 to a domestic box office record. The current record is $ 10.6 billion, set in 2009.

“Jack Reacher” debuted just days after the Newtown, Connecticut, school shooting sparked new debate about the impact of movie violence. “Reacher” begins with a sniper killing a handful of seemingly random victims. A red-carpet premiere and a screening to promote the $ 60-million production were postponed after the December 14 Newtown tragedy.

Adult comedy “This is 40″ starring Paul Rudd and Leslie Mann as a middle-aged couple was sixth with $ 13.2 million. The Judd Apatow $ 35 million film totaled $ 37 million after two weeks. The seventh spot went to Steven Spielberg’s historical film “Lincoln,” with $ 7.5 million for a $ 132 million domestic total.

Comedy “The Guilt Trip,” starring Barbra Streisand and Seth Rogen as a mother and son on a cross-country drive, pulled in $ 6.7 million for eighth.

Also this week the latest James Bond hit “Skyfall” topped $ 1 billion in worldwide sales, despite falling out of the week’s top 10 films at the box office.

“The Hobbit” was distributed by Time Warner Inc’s Warner Bros studio. Paramount Pictures, a unit of Viacom Inc released, “Jack Reacher” and “The Guilt Trip.” Comcast Corp’s Universal Studios released “Les Miserables” and “This is 40.” “Django Unchained” was released in the United States by the Weinstein Company.

(Reporting By Ronald Grover; Editing by Cynthia Osterman)

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It’s a fight over fitness in Santa Monica’s parks

SANTA MONICA, Calif. (AP) — Physical fitness is a way of life on the beautiful beachfront oasis of Santa Monica. From sunrise to sunset, there’s huffing and puffing in the city’s parks as trainers put their students through the paces of every form of exercise imaginable.

All along the 420 acres of greenery paralleling the Pacific Ocean are groups of a dozen or more people furiously pumping iron, doing sit-ups, stepping on and off little benches and stretching on mats. Some flex their muscles with weight machines tied by big rubber bands to pretty much anything that’s anchored to the ground.

“It’s starting to look like a 24-Hour Fitness gym out there,” complained Johnny Gray, an assistant track coach at UCLA and former Olympic runner who says he’s often forced to navigate around weight machines, barbells and other exercise impediments as he runs.

In recent years, fitness classes have become as ubiquitous in Santa Monica’s signature Palisades Park as dog walkers and senior citizens playing shuffleboard.

Karen Ginsberg, the city’s director of community and cultural services, said other park users are complaining about fitness enthusiasts not only blocking pedestrian walkways but also making too much noise, killing the park’s grass with their weights and damaging its trees and benches with all the exercise gadgets they connect to them.

“Some people have also expressed concerns about people operating a business on city land and putting the city at risk of liability because they aren’t carrying insurance,” she said.

So now the City Council is considering requiring that fitness trainers who conduct workouts in Santa Monica’s parks and on its beaches pay an annual $ 100 fee and turn over 15 percent of their gross revenues to the city.

The council was to take up the issue of regulating fitness trainers this month, but that’s now been pushed back to at least March. Meantime, Ginsberg said city officials are looking at what restrictions they might put on the use of weights, bands and other equipment.

Although classes offering everything from fitness training to yoga to meditation can be found at several city parks and all over Santa Monica’s beaches, Palisades Park, with its stunning ocean views, is by far the most popular place.

As a result, city officials are considering limiting exercise class sizes there to no more than two students per trainer. Under the proposal being considered, other venues could still accommodate the larger groups as long as trainers pay the fees and provide proof of insurance.

The trainers respond that, like any responsible business operators, many already are insured and also know CPR. They also point out that they currently pay the city for business licenses and police-issued permits to hold their classes in the park. Although they don’t have to pay rent to anyone, they believe that’s enough overhead.

“I could easily go back indoors but that’s what I wanted to get away from,” said Ruben Lawrence, who has been offering boxing and fitness training classes at Palisades and other parks for six years. “I wanted to provide these programs to the masses at affordable rates to the community in a place people enjoy.”

Since the city began discussing the additional regulations, Lawrence said, he’s moved most of his classes to other parks in Santa Monica. If he has to pay the additional fees, however, he said he’ll likely just relocate to a gym.

Raisa Lilling, who offers vigorous exercise classes to the mothers of newborns, said she and other trainers have been working to keep their students quiet and out of the way of dog walkers, camera-toting tourists and others.

“I can absolutely see where they’re coming from, but a complete ban, I think, is a little extreme,” said Lilling, adding that the sides can always find a middle ground.

Lilling offers Stroller Strides classes in which mothers push kids in strollers across the park. As part of their workout, they’ll stop from time to time for vigorous bursts of cardio activity, including running up and down the park’s steep stairways to the beach while Lilling watch the kids.

“It’s not just a stroll in the park,” laughed the trainer, who is certified in CPR, carries insurance and also teaches yoga classes.

Ginsberg, emphasizing that planners are still fine-tuning the proposed regulations, agreed there should be a middle ground.

“I think we have to strike a balance between wanting an active community, which I think we do want, with the need to have some sort of ability for all users to enjoy our parks, particularly Palisades Park,” she said.

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GOP Senate leader urges Biden to break ‘fiscal cliff’ impasse

Senate Minority Leader Mitch McConnell (R-KY) is shown in this C-Span video footage as he addresses the Senate …Republican Senate Minority Leader Mitch McConnell urged Vice President Joe Biden on Sunday to jump into “fiscal cliff” talks in hopes of breaking an impasse that threatens Americans with sharply higher income taxes come January 1.

In a brief speech on the Senate floor, McConnell complained that Democrats had not yet placed a counter-offer to a new Republican proposal, delivered at 7 pm on Saturday, “despite the obvious time crunch.”

“I’m concerned about the lack of urgency here,” the Kentucky lawmaker said. “I think we all know we’re running out of time.”

Besides conferring with his Democratic counterpart, Senate Majority Leader Harry Reid, McConnell said he had reached out to Biden "to see if he could help jump-start the negotiations on his side.”

McConnell added, “The vice president and I have worked together on solutions before, and I believe we can again."

Absent a breakthrough by tomorrow, income tax rates will rise across the board while government spending on domestic and defense programs will be slashed – a combination that some experts warn could plunge the economy into a new recession.

President Barack Obama has pressed for extending Bush-era tax rates on income up to $250,000 but letting them expire above that threshold. Republicans have resisted raising taxes on income at all levels. The two sides have also been at odds on issues like the estate tax and whether to extend unemployment benefits that stand to expire for some two million Americans.

Republican aides said that McConnell and Biden had spoken several times. A Biden aide said the vice president went to the White House after spending Christmas with his family in Delaware.

“We’re willing to work with whoever, whoever can help,” McConnell said. “There’s no single issue that remains an impossible sticking point. The sticking point appears to be a willingness, an interest, or frankly the courage to close the deal.”

“I’m willing to get this done, but I need a dance partner,” he said.

Reid said he had spoken several times on Sunday with Obama but acknowledged that his side had been “unable” to present a counter-offer to the latest Republican proposal.

“He and the vice president, I wish them well. In the meantime I will continue to try to come up something but at this stage I don’t have a counter-offer to make,” Reid said. “We are apart on some pretty big issues.”

Reid said he remained "hopeful but realistic" about the prospects for a breakthrough.

But he also seemed to confirm that one key sticking point was a Republican demand for reducing Social Security payments but adopting a less generous cost-of-living calculation known as “chained CPI” (the CPI being “consumer price index,” a measure of inflation).

“We’re not going to have any Social Security cuts,” Reid declared, saying it would not be “appropriate” in a short-term deal. Democratic leaders have cautiously signaled support for that approach – but only as part of a larger-scale deal that would see the U.S. debt limit raised for a significant stretch of time. Republicans want to use the debt ceiling fight to wrangle deeper government spending cuts.

“We're willing to make difficult concessions as part of a balanced, comprehensive agreement,” Reid said, “but we'll not agree to cut Social Security benefits as part of a small or short-term agreement, especially if that agreement gives more handouts to the rich.”

Republican aides bristled at Reid's characterization, noting that Democrats had not yet returned with a counter-offer. "If they don't like the CPI thing, they can strike it out," one told Yahoo News.

Republican senators, meanwhile, emerged from a closed door party meeting saying that chained CPI was off the table for now. The proposal was "not a winning hand" in the current standoff, John McCain told reporters drily.

Republican House Speaker John Boehner has said that it's up to the Senate to craft a compromise that can clear both chambers of Congress. Boehner suffered an embarrassing setback 10 days ago when conservative opposition forced him to withdraw legislation that would have let taxes rise on income of above $1 million. But a senior Republican aide noted that the exercise allowed the speaker to gauge how many of his rank-and-file would accept any increase in tax rates.

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