31 December 2012 Last updated at 14:18 ET
A deal to avoid the “fiscal cliff” of tax rises and spending cuts is “within sight” – but not yet done, US President Barack Obama has said.
But he told an audience of taxpayers it was unlikely that a “grand bargain” on tax and spending would happen.
Democrats are said to have offered to extend tax cuts on couples earning up to $ 450,000 (£277,000). But divisions remain over how to tackle spending.
Analysts say failure to reach a deal by 1 January could spark a new recession.
Speaking just hours ahead of the midnight deadline for a deal to avert tax rises and spending cuts, the president said: “There are still issues left to resolve but we’re hopeful Congress can get it done.”
Any deal needs to pass the 100-member Senate, which is controlled by Democrats, before heading to the House of Representatives, where Republicans hold the majority.
Agreeing to a $ 450,000 threshold ($ 400,000 for couples) would be a notable compromise by Democrats, analysts say.
The party previously only wanted tax rate extensions for earnings under $ 200,000 (£123,000) for individuals and $ 250,000 (£154,000) for couples.
But after weeks of increasingly desperate horse trading and public pronouncements, the “contours” of a deal were said to be emerging just hours before the midnight deadline.
Inheritance tax rates and the continuation of unemployment benefits were also part of the deal-making, reports said, but disagreements remained over how to deal with the automatic spending cuts due to kick in on 1 January.
BBC News – Business
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