America headed over 'fiscal cliff' as hopes for a deal fade
America is on course to plunge over the so-called 'fiscal cliff', senior Democrat leaders have warned as hopes for a budget deal before the new year deadline receded sharply.
"That looks like where we're headed," said Harry Reid, the majority leader of the Democrat-controlled Senate, launching a bitter attack on the leadership of the Republican-controlled House of Representatives, which he blamed for the failure to clinch a deal.
He chastised John Boehner, the Republican Speaker of the House, for failing to call his members back to work. Winter snow storms forecast for the weekend now threaten to enmesh any attempt to reconvene the House into widely predicted travel chaos.
In a bid to give the broken-down process fresh impetus, US President Barack Obama returned to the White House after cutting short his Hawaiian holiday in a move calculated to show his own willingness to negotiate a last-minute deal if Congress was able to find common ground.
But as Mr Obama arrived, there were few signs of progress in negotiations to avert a crisis that economists warn could throw the US back into recession as some $680bn (€513bn) in tax hikes and spending cuts bite after the December 31 deadline expires.
Senior aides from both parties said negotiations appeared to be at a stalemate, with Republican and Democrat Senate leaders not meeting since Congress broke up for Christmas.
Talk was already shifting yesterday to who was to blame for failing to reach a deal that in the weeks before Christmas appeared to be taking shape, but collapsed when Mr Obama and Mr Boehner failed to close the narrow gap that separated them.
Steve LaTourette, a moderate Republican from Ohio echoed public frustration over the inability of politicians to strike a deal on reining in America's deficits, when the broad terms of a deal are well known to both sides.
"Nobody's willing to pull the trigger. Everybody wants to play the blame game.
"And this blame game's about to put us over the edge," Mr LaTourette said.
"This isn't a one-party or a one-house problem," he said.
Tim Geithner, the US treasury secretary, warned this week in an open letter to Congress of "the significant uncertainty that now exists with regard to unresolved tax and spending policies for 2013".
Markets have so far remained largely unruffled by the failed negotiations, but analysts predicted a correction in January if the difficulties thrown up by going over the cliff were not swiftly resolved. (© Daily Telegraph, London)