Taxes on the wealthy and Republican demands for budget cuts to pay for Democratic spending proposals were separating the two parties as the deadline for avoiding the ``fiscal cliff'' has drawn to within hours.
Senate Minority Leader Mitch McConnell, R-Ky., spoke repeatedly Sunday to Vice President Joe Biden, a former Senate colleague, in hopes of settling remaining differences and clinching a breakthrough that has evaded the two sides since President Barack Obama's November re-election. In one indication of the eleventh-hour activity, aides said the president, Biden and top administration bargainer Rob Nabors were all working late at the White House, and McConnell was making late-night phone calls as well.
Unless an agreement is reached and approved by Congress by the start of New Year's Day, more than $500 billion in 2013 tax increases will begin to take effect and $109 billion will be carved from defense and domestic programs. Though the tax hikes and budget cuts would be felt gradually, economists warn that if allowed to fully take hold, their combined impact - the so-called fiscal cliff - would rekindle a recession.
"There is still significant distance between the two sides, but negotiations continue," Senate Majority Leader Harry Reid, D-Nev., said shortly before the Senate ended an unusual Sunday session. "There is still time to reach an agreement, and we intend to continue negotiations."
The House and Senate planned to meet Monday, a rarity for New Year's Eve, in hopes of having a tentative agreement to consider. Yet despite the flurry of activity, there was still no final pact.
And in a move that was sure to irritate Republicans, Reid was planning - absent a deal - to force a Senate vote Monday on Obama's campaign-season proposal to continue expiring tax cuts for all but those with income exceeding $200,000 for individuals and $250,000 for couples.
Attached to the measure - which the GOP seemed likely to block - would be an extension of jobless benefits for around 2 million long-term unemployed people. The plan was described by Sen. Richard Durbin of Illinois, the chamber's No. 2 Democrat.
The House and Senate met Sunday ready to debate an agreement or at least show voters they were trying. But the day produced alternating bursts of progress and pitfalls, despite Senate chaplain Barry Black's opening prayer in which he asked the heavens, "Look with favor on our nation and save us from self-inflicted wounds."
In one sign of movement, Republicans dropped a demand to slow the growth of Social Security and other benefits by changing how those payments are increased each year to allow for inflation.
Obama had offered to include that change, despite opposition by many Democrats, as part of earlier, failed bargaining with House Speaker John Boehner, R-Ohio, over a larger deficit reduction agreement. But Democrats said they would never include the new inflation formula in the smaller deal now being sought to forestall wide-ranging tax boosts and budget cuts, and Republicans relented.