WASHINGTON (Reuters) - The chances of a deal to prevent the economy from tumbling over a "fiscal cliff" remained uncertain on Sunday as lawmakers haggled over how to prevent taxes for all Americans from rising on New Year's Day.
Aides to Senate Majority Leader Harry Reid, a Democrat, and Senate Republican leader Mitch McConnell worked on a compromise to stop automatic tax hikes for most Americans on January 1. Any agreement needs to be rushed through both chambers of Congress before midnight on Monday.
One Democratic Senate aide said it was uncertain whether the leaders would reach an accord. Reid and McConnell had been aiming to have an agreement by 3 p.m. EST (2000 GMT) so that they could present it to previously scheduled closed-door meetings of their party colleagues.
"It is going to be difficult," the aide said. Senate Chaplain Barry Black opened a rare Sunday session of the chamber with a plea to God for lawmakers to avoid damaging the economy through their squabbling.
"Look with favor on our nation and save us from self-inflicted wounds," Black said in a prayer.
If the politicians cannot agree, then tax increases and across-the-board government spending cuts will begin on January 1. That would take $600 billion out of the economy, push unemployment up and curb federal spending.
The main focus of negotiations was tax hikes on the wealthy, an increase sought by President Barack Obama but opposed by Republicans, particularly fiscal conservatives in the House of Representatives.
Obama made a rare appearance on NBC's "Meet the Press" to pressure lawmakers into forging a deal.
Senators appearing on other Sunday morning shows expressed optimism that an agreement could be reached.
"Well, there are certainly no breakthroughs yet between Senator McConnell and Senator Reid, but there's a real possibility of a deal," Senator Charles Schumer, a Democrat from New York, said on the ABC program "This Week."
"I don't disagree with Chuck," said Senator Jon Kyl, a Republican from Arizona.
Another Republican senator, Lindsey Graham, conceded that an agreement would end up raising income taxes on the wealthy, thus sparing the rest of the country from the looming income tax hikes.
"President Obama is going to get tax rate increases. The president won," Graham tweeted, echoing earlier comments he made on "Fox News Sunday." He told the show that the chances of a bipartisan deal before the New Year's deadline were "exceedingly good."
Obama has alternatively offered Republicans a deal to increase income taxes for households earning over $250,000 a year, and over $400,000 a year.
A White House aide said the president and his staff had been in touch with congressional leaders throughout the weekend.
Any deal on taxes in the Senate might meet resistance in the House from conservative Republicans.
OBAMA JUMPS IN
On NBC, Obama warned of the fallout in financial markets if the two sides did not reach an agreement.
"If people start seeing that on January 1st this problem still hasn't been solved, that we haven't seen the kind of deficit reduction that we could have, had the Republicans been willing to take the deal that I gave them ... then obviously that's going to have an adverse reaction in the markets," Obama said, adding that he had offered Republicans significant compromises that had been rejected repeatedly.
He said he would avoid tax increases for most Americans, even if the talks fall apart.
"If Republicans do in fact decide to block it, so that taxes on middle class families do in fact go up on January 1st, then we'll come back with a new Congress on January 4th and the first bill that will be introduced on the floor will be to cut taxes on middle class families," Obama said.
John Boehner, the speaker of the House of Representatives, rejected Obama's accusations that Republicans were not being amenable to compromise.
"The president's comments today are ironic, as a recurring theme of our negotiations was his unwillingness to agree to anything that would require him to stand up to his own party," Boehner, who has had trouble convincing his Republican colleagues to support his own proposals, said in a statement.
"The president has continued to insist on a package skewed dramatically in favor of higher taxes that would destroy jobs. We've been reasonable and responsible. The president is the one who has never been able to get to ‘yes.'"
The Senate - where the Democrats hold sway - began a session beginning at 1 p.m. EST (1800 GMT), but it was not clear whether the chamber would have fiscal-cliff legislation to act upon.
The Republican-controlled House also returns on Sunday and can vote on any deal in the evening if need be.
(Additional reporting by Tabassum Zakaria, Fred Barbash and Richard Cowan. Writing by Alistair Bell, Editing by Jackie Frank)
With hours remaining, fiscal deal uncertain
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With hours remaining, fiscal deal uncertain
