President Barack Obama says immediate action is needed to avoid the fiscal cliff that's now just four days away. In a last-ditch effort he met with congressional leaders Friday at the White House. They didn't accomplish anything, but they did agree to keep talking.
There was no name calling today, but instead an attempt at coming to an agreement. It's clear that the Senate will lead the way on that agreement.
The president held a news conference Friday afternoon to announce his Plan A and B.
"I just had a good and constructive discussion here at the White House with Senate and House leadership about how to avoid this tax hike on the middle class," said Obama Friday. "And I'm optimistic we may still be able to reach an agreement that can pass both houses in time."
Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) and now have 24 hours to try to hammer out an agreement. If not, in four days the government starts slashing military and domestic spending and all Americans will be hit with higher taxes.
"We'll be working hard to try to see if we can get there in the next 24 hours, and so I'm hopeful and optimistic," said McConnell.
"I've gotten my confidence destroyed on other occasions so I hope it's not on this occasion," said Reid. "We're out of time, we've got to do it now. That's why I said the next 24 hours will be very important."
If the Senate leaders can't come to an agreement, President Obama is pushing a stop-gap measure that would stop tax increases on those earning less than $250,000 per year, and increase unemployment benefits.
"I believe such a proposal could pass both houses with bipartisan majorities, as long as those leaders allow it to actually come to a vote. If members of the House or the Senate want to vote no, they can, but we should let everybody vote," said Obama.
As time runs out, frustration is mounting.
"This is deja vu all over again," Obama said Friday. "American wonders why it is that in this town for some reason you can't get stuff done in an organized timetable, why everything always has to wait till the last minute. Well, we're now at the last minute."
Neither the Senate or the House of Representatives are in session Saturday. That will give Reid and McConnell some time to work something out. But there's no guarantee that conservative House Republicans would agree to a deal that their leaders endorse.
If a last-minute deal is reached, it is expected to be much smaller than the $2 trillion bargain President Obama and House Speaker Boehner had initially discussed.
Democrats are aiming to extend the Bush-era tax cuts to everyone except people who make more than $250,000 a year. Privately, both sides say such an agreement would likely extend tax breaks for the middle class while raising taxes on the wealthy.
Republicans still argue raising taxes on anyone will hurt the economy.
"I'm blaming the Democrats for the eat-the-rich ideological crusade that the CBO, as well as Ernst & Young, are warning will cost between 200 and 700,000 lost jobs," California Senator Tom McClintock said. "At the same time, I am blaming Republicans for not realizing that if we can't save everybody from these tax increases, we at least ought to save as many people as possible."
"The majority of rich people in our great country are willing to pay more," Senate Majority Leader Harry Reid said. "The only people who disagree with that are Republicans who work in this building."
So here is what happens if we go over the cliff:
If you are a school teacher with two kids making $43,000 a year, your taxes would go up $3,000.
A member of Congress making $174,000 will pay $7,500 in new taxes.
And as for those millionaires, take basketball great Lebron James who makes $53 million a year, his taxes would go up $2.4 million next year.
If a last minute deal to avoid the cliff, is reached House Speaker John Boehner has announced the House will meet Sunday and vote.
If no deal is reached, tax increases and deep spending cuts will take effect in the New Year.
The Associated Press contributed to this report.
