By David Espo and Jim KuhnhennWASHINGTON -- Senate leaders groped for a last-minute compromise Saturday to avoid middle-class tax increases and possibly prevent deep spending cuts at the dawn of the new year as President Barack Obama warned that failure could mean a "self-inflicted wound to the economy." Obama chastised lawmakers in his weekly radio and Internet address for waiting until the last minute to try and avoid a "fiscal cliff," yet said there was still time for an agreement. "We cannot let Washington politics get in the way of America's progress," he said as the hurry-up negotiations unfolded. For all the recent expressions of urgency, bargaining took place by phone, email and paper in a Capitol nearly empty except for tourists. Alone among top lawmakers, Senate Republican leader Mitch McConnell spent the day in his office. In the Republicans' weekly address, Sen. Roy Blunt of Missouri cited a readiness to compromise. "Divided government is a good time to solve hard problems -- and in the next few days, leaders in Washington have an important responsibility to work together and do just that," he said. Even so, there was no guarantee of success, and a dispute over the federal tax on large estates emerged as yet another key sticking point alongside personal income tax rates. In a blunt challenge to Republicans, Obama said that barring a bipartisan agreement, he expected both houses to vote on his own proposal to block tax increases on all but the wealthy and simultaneously preserve expiring unemployment benefits. Political calculations mattered as much as deep-seated differences over the issues, as divided government struggled with its first big challenge since the November elections. Speaker John Boehner remained at arms-length, juggling a desire to avoid the fiscal cliff with his goal of winning another term as speaker when a new Congress convenes next Thursday. Any compromise legislation is certain to include higher tax rates on the wealthy, and the House GOP rank and file rejected the idea when he presented it to them as part of a final attempt to strike a more sweeping agreement with Obama.