Fiscal Cliff Deal Would Pale Against Expectations

Workers could see more taxes withheld from their paychecks and federal agencies are likely to soon receive warning of possible furloughs if lawmakers fail to reach a deal to avert the cliff. The new Congress will be sworn in on Thursday and would inherit the problem if the current crop of lame-duck lawmakers can't find an answer before then.

Sen. Dick Durbin, D-Ill., said the two sides remained at odds over the income threshold for higher tax rates and tax levels on large estates. Republicans said that Democratic demands for new money to prevent a cut in Medicare payments to doctors and renew jobless benefits for the long-term unemployed should be financed with cuts elsewhere in the budget. Republicans also balked at a Democratic proposal to use new tax revenues to shut off the across-the-board spending cuts, known as a sequester in Washington-speak.

President Barack Obama, in a televised interview, blamed Republicans for putting the nation's shaky economy at risk.

"We have been talking to the Republicans ever since the election was over," Obama said in the interview that was taped Saturday and aired Sunday on NBC's "Meet the Press." ''They have had trouble saying yes to a number of repeated offers."

"The mood is discouraged," said Sen. Joe Lieberman, a Connecticut independent who caucuses with Democrats. "The parties are much further apart than I hoped they'd be by now."

The pessimistic turn came as the House and Senate returned to the Capitol for a rare Sunday session. Reid and McConnell had hoped to have a blueprint to present to their rank and file by mid-afternoon.

McConnell and Reid were hoping for a deal that would prevent higher taxes for most Americans while letting rates rise at higher income levels, although the precise point at which that would occur was a sticking point.

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