It's all up to the House

STORY HIGHLIGHTS

• If it's not done by noon Thursday, a new Congress will have to start from scratch


• A statement from House leadership made no promises, members meet to review proposal


• Under the Senate package, taxes would stay the same for all but a sliver of the U.S. population


• It leaves a range of big issues unaddressed

With the fiscal cliff deal in limbo, what's your New Year's message to Washington? Go to CNN iReport to share your video.

(CNN) -- If a Senate deal to avert the fiscal cliff becomes law, all but a sliver of the U.S. population will avoid higher tax rates, some key issues will be put off for two months, and all sides in the battle will emerge with a mixed record: winning key points, while ceding ground on others.

The deal, which passed the Democratic-controlled Senate in an overwhelming 89-8 vote in the early hours of Tuesday, would maintain tax cuts for individuals earning less than $400,000 and couples earning less than $450,000. Technically, it would reinstate cuts that expired at midnight.

It would raise tax rates for those over those levels -- marking the first time in two decades the rates jump for the wealthiest Americans.

Blog: Latest updates

The bill faces an uncertain future in the Republican-controlled House where GOP members gathered Tuesday afternoon.

"The purpose of this meeting is to review what the Senate has passed, discuss potential options, and seek member feedback. No decision on the path forward is expected before another member meeting that will be held later today," one GOP leadership aide said.

Vice President Joe Biden, meanwhile, met with House Democrats. A longtime senator, he helped broker the Senate deal.

The House faces a deadline. On Thursday at noon, a new Congress will be sworn in. A bill passed by the previous Senate would no longer apply, so both chambers would have to start from scratch.

Some Republican lawmakers, including Reps. Phil Gingrey of Georgia and Tim Huelskamp of Kansas, told CNN they would not support the bill as written.

"It's taxing, and still taxing, small businessmen and women, and I don't like that at all," Gingrey said, referring to some small business owners who would be among those whose tax rates rise.

It's the opposite argument of some Democrats who oppose the bill. Sen. Tom Harkin, D-Iowa, complained that the deal "makes tax benefits for high-income earners permanent, while tax benefits designed to help those of modest means and the middle class are only extended for five years."

The bill temporarily extends certain tax breaks, such as the one for college tuition, while making new tax rates permanent.

Read more: 5 things to know about the fiscal cliff

While the deal gives President Barack Obama bragging rights for raising taxes on the wealthiest Americans, it also leaves him breaking a promise.

Obama had vowed to raise tax rates for the top-earning 2% of Americans, including those with household income above $250,000, and individuals earning more than $200,000.

"What I'm not going to do is to extend Bush tax cuts for the wealthiest 2% that we can't afford and, according to economists, will have the least positive impact on our economy," the president said at a news conference in November, after being asked by CNN why Americans should believe he would not "cave again this time" by allowing those Bush-era tax cuts to be extended.

When asked whether closing loopholes instead of raising rates would be satisfactory, the president responded, "when it comes to the top 2%, what I'm not going to do is to extend further a tax cut for folks who don't need it, which would cost close to a trillion dollars. And it's very difficult to see how you make up that trillion dollars, if we're serious about deficit reduction, just by closing loopholes in deductions. You know, the math tends not to work."

The deal passed by the Senate would cap itemized deductions for individuals making $250,000 and for married couples making $300,000.

Raising the threshold for higher tax rates to $400,000 shrinks the number of Americans affected. While nearly 2% of filers have adjusted gross incomes over $250,000, only 0.6% have incomes above $500,000, according to the Tax Policy Center.

Going over the fiscal cliff: Messages to Washington

Still, in a written statement early Tuesday, the president held on to the 98% figure he has so often touted.

The deal "protects 98% of Americans and 97% of small business owners from a middle class tax hike," he said. "While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay."

The president also acknowledged, "There's more work to do to reduce our deficits, and I'm willing to do it. But tonight's agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans."

However, many Americans are still likely to see their paychecks shrink somewhat, due to a separate battle over payroll taxes.

Senate vote 'sends a strong message'

"Glad it's over," said Senate Majority Leader Harry Reid, D-Nevada, after the vote on the fiscal cliff deal, just a couple of hours after the East Coast rang in the new year. "We'll see if the Republicans in the House can become functional instead of dysfunctional."

A statement from House leadership made no promises.

"Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members -- and the American people -- have been able to review the legislation," the statement said.

Sen. John Hoeven, R-North Dakota, was hopeful the House will follow suit.

"The vote was 89 to 8. Bipartisan vote. 89 votes," he said. "I think it sends a strong message and I think it will be approved by the House."

What the package proposes

Read the bill (pdf)

Under the Senate package:

-- Taxes would stay the same for most Americans. But they will increase for individuals making more than $400,000 and couples making more than $450,000. For them, it will go from the current 35% to the Clinton-era rate of 39.6%.

-- Itemized deductions would be capped for those making $250,000 and for married couples making $300,000.

-- Taxes on inherited estates will go up to 40% from 35%.

-- Unemployment insurance would be extended for a year for 2 million people.

-- The alternative minimum tax -- a perennial issue -- would be permanently adjusted for inflation.

-- Child care, tuition and research and development tax credits would be renewed.

-- The "Doc Fix" -- reimbursements for doctors who take Medicare patients -- will continue, but it won't be paid for out of the Obama administration's signature health care law.

-- A spike in milk prices will be avoided. Agriculture Secretary Tom Vilsack said milk prices would have doubled to $7 a gallon because a separate agriculture bill had expired.

What's not addressed

While the package provides some short-term certainty, it leaves a range of big issues unaddressed.

It doesn't mention the debt ceiling, and temporarily puts off for two months the so-called sequester -- a series of automatic cuts in federal spending that would have taken effect Wednesday. It would have reduced the budgets of most agencies and programs by 8% to 10%.

This means that, come late February, Congress will have to tackle both those thorny issues.

"We're going to have to deal with the sequester, that's true," said Sen. Max Baucus, D-Montana, "but look, this is better than nothing."

Read more: 3 more fiscal cliffs loom

Reid said the agreement was a win for average Americans.

"I've said all along that our most important priority was to protect the middle class families," he said. "This legislation does that."

And maybe a bit more.

According to the U.S. Census Bureau, median household income in 2011 was $50,054, which is well below the tax cut threshold approved by the Senate.

Senate Minority Leader Mitch McConnell, R-Kentucky, praised the effort, but said it shouldn't have taken so long to get an agreement.

"We don't think taxes should be going up on anyone but we all knew that if we did nothing they would be going up on everyone today," he said. "We weren't going to let that happen."

If the bill doesn't pass

There's a lot at stake.

If the House doesn't act and the Bush administration's 2001 and 2003 tax cuts expire, broad tax increases will kick in, as will $110 billion in automatic cuts to domestic and military spending.

The nonpartisan Congressional Budget Office has predicted the combined effect could dampen economic growth by 0.5%, possibly tipping the U.S. economy back into a recession and driving unemployment from its current 7.7% back over 9%.

But if tax-averse House Republicans approve the bill Tuesday -- when taxes have technically gone up -- they can argue they've voted for a tax cut to bring rates back down, even after just a few hours. That could bring some more Republicans on board, one GOP source said.

But Gingrey, speaking Tuesday to CNN, said he does not believe his constituents will see it that way.

He's concerned they will see it as "just more smoke and mirrors, and Congress pulls these stunts all the time," Gingrey said. "Putting off the sequester for two months, kicking that can down the road yet again... this bill, as I see it so far, looks like it's all about raising revenue, but very little, if anything, about cutting spending."

Concerns persist

Read more: What if there's no deal on fiscal cliff

The White House budget office noted in September that sequestration was designed during the 2011 standoff over raising the federal debt ceiling as "a mechanism to force Congress to act on further deficit reduction" -- a kind of doomsday device that was never meant to be triggered. But Congress failed to substitute other cuts by the end of 2012, forcing the government to wield what the budget office called "a blunt and indiscriminate instrument."

In its place, the Senate plan would use $12 billion in new tax revenue to replace half the expected deficit reduction from the sequester and leave another $12 billion in spending cuts, split half-and-half between defense and domestic programs.

Read more: Medicare patients may suffer if country goes over fiscal cliff

Conservative lobbyist Grover Norquist, whose Americans for Tax Reform group pushes candidates to sign a pledge never to raise taxes, said the plan "right now, as explained" would preserve most of the Bush tax cuts and wouldn't violate his group's pledge.

"Take the 84% of your winnings off the table," Norquist told CNN. "We spent 12 years getting the Democrats to cede those tax cuts to the American people. Take them off the table. Then we go back and argue about making the tax cuts permanent for everyone."

But Robert Reich, who served as labor secretary in the Clinton administration, said the $450,000 threshold "means the lion's share of the burden of deficit reduction falls on the middle class, either in terms of higher taxes down the road or fewer government services." In addition, he said, the plan does nothing to raise the federal debt ceiling just as the federal government bumps up against its borrowing limit.

And that, Arizona GOP Sen. John McCain told CNN, is likely to be "a whole new field of battle."

"We just added 2.1 trillion in the last increase in the debt ceiling, and spending continues to go up," McCain said. "I think there's going to be a pretty big showdown the next time around when we go to the debt limit."

Read more: Fiscal cliff's new definition of rich

CNN's Matt Smith, Mike Pearson, Jessica Yellin, Dana Bash, Deirdre Walsh, Lisa Desjardins, Ted Barrett and Ashley Killough contributed to this report.

Read More..

The art of the "fiscal cliff" deal

Nobody said it would be easy.

Senators voted in the pre-dawn hours of New Year's Day to pass the long-sought agreement on the "fiscal cliff" and the House readies for its turn as soon as today, which, if the House passes it, would officially avert the tax hikes and spending cuts that technically took effect at midnight (the deal, when signed by the president, will make the new tax rates and spending retroactive to midnight).

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Biden advises not to predict outcome of "cliff" deal

How did the politicians involved get to their final agreement? Here's the rundown, according to officials familiar with the talks and with the White House's thinking:

Friday through Sunday: Senate Minority Leader Mitch McConnell's opening offer Friday night to Senate Majority Leader Harry Reid was a $750,000 income tax threshold and no jobless benefits and no extension of the earned-income tax credit and other low-income tax breaks, means-testing Medicare, and the Bush era estate tax rates. Offers bounced back and forth Saturday and on Sunday, Reid opted out and handed talks over to Vice President Joe Biden (at McConnell's suggestion). President Obama, Reid and House Minority Leader Nancy Pelosi were in tandem through the talks. Delaying the federal spending cuts, or sequester, fell out of the talks on Sunday but McConnell came down to $550,000 in income tax threshold and some estate tax concessions reflected in the final deal.

Sunday, 8 p.m. ET: Mr. Obama and senior staff met in the Oval Office to discuss their final counter-offer to McConnell. The president set the $400K and $450K income threshold with one-year of jobless benefits and some delay of the sequester. Biden and McConnell talked through the night. Their last call was at 12:45 a.m.

After that, Mr. Obama and Biden met in the Oval until 2 a.m. to go over final details. Mr. Obama sent his legislative liaison Rob Nabors to Capitol Hill at 2 a.m. to begin drafting a bill with Senate Democrats. Biden and McConnell spoke again at 6:45 a.m. The rest of Monday was devoted to resolving the sequester impasse.

Monday, 9 p.m. ET: Biden and McConnell sealed the deal by telephone (Biden spoke to McConnell after clearing final details with Mr. Obama). The president then called Reid and Pelosi for one final OK and the deal was announced/leaked/confirmed.

The officials also pointed out that to get to the final deal, moving Republicans from a position of no tax increases in debt ceiling debate to tax increases through tax reform after Mr. Obama's re-election to nothing more than $1 million in higher rates and now to $400,000 and $450,000 thresholds is a significant policy and political victory (worth $620 billion over 10 years).

When the big deal talks failed before Christmas, Mr. Obama's biggest goal was to get GOP buy-in on higher tax rates for the wealthy. It is regarded as one of the most significant policy victories in two decades, the officials said.

Compromising on the two-month sequester was difficult, the officials added. The White House wanted a full year of waiving the sequester but there was no time to negotiate the difficult policy details (the sequester talks took literally all of Monday).

As for the deal's effect on the deficit, it does not cut the deficit relative to what would have occurred if all the fiscal cliff tax cuts had been erased (meaning all Bush tax cuts expired) and the sequester kicked in full force. But, relative to a baseline that assumes all existing tax policy would have continued, the deal raises $620 billion in revenue. The Alternative Minimum Tax (AMT) fix is not counted by the WH, for example, because its extension was assumed in the existing policy baseline (that doesn't mean it won't cost anything; just that the White House doesn't count the cost).

The jobless benefit extension for one year cost $30 billion and that is not paid for. The Medicare "doc fix" is paid for by savings that will be taken from other provider payouts in Medicare. It costs $31 billion, meaning those provider cuts will pay for protecting doctors from a 27 percent automatic cut in premiums.

And $12 billion in new revenue comes from allowing 401Ks and other retirement instruments into Roth IRAs. This is the revenue that forms half of the offset of the two-month sequester delay. The other $12 billion will come from a 50-50 split of non-defense and defense cuts.

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New School for Sandy Hook Duplicated to the Crayons

The students and staff of Sandy Hook Elementary School will return to school on Thursday for the first time since the shooting rampage that left 20 young students and six adults dead. The students will be in a new building where their old classrooms have been completely recreated.

Instead of returning to the halls of Sandy Hook Elementary School in Newtown, Conn., they will be going to the building that used to be the Chalk Hill Middle School in Monroe, about six miles away.

Sandy Hook school was shut since Adam Lanza carried out his massacre shortly before Christmas.

Since principal Dawn Hochsprung was one of the victims of the shooting, the school will be led by interim principal Donna Page. Page was the school's prior principal who retired in 2010.

"Please know the inspiration you and your children have been to my staff and me as we connect with you at Chalk Hill," Page wrote in a letter posted on the school's website. "Be assured that the towns of Monroe and Newtown are working night and day to ensure the facility is safe, secure, and fully operational for our return," Page wrote.

The school will host a walk-through for families on Wednesday and "Opening Day" will be Thursday.

"I want to reassure you that we understand many parents may need to be near their children on their first day(s) of school and you will be welcome," Page wrote.

Don Emmert/AFP/Getty Images

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The school is encouraging students to take the bus in order to help them return to familiar routines and said parents may come to the school's classrooms or auditorium throughout the day after the 9:07 a.m. opening. They are asking that no more than one adult family member accompany each child in order "to ensure a safe and secure environment."

In addition to a parental presence at the school, comfort dogs will be returning to brighten the day. Small armies of golden retrievers spread out all over Newtown in the days following the shooting to comfort mourners young and old.

Chicago's Lutheran Church Charities' K-9 Parish Comfort Dogs were in Newtown after the shooting and are traveling back to Connecticut today. Nine dogs and their handlers gathered at their building at 1 a.m. this morning to board a caravan of one RV and two vans heading to Connecticut.

"The community of Newtown will be going through the healing process for a very long time," the group wrote on their website. "The LCC K-9 Comfort dogs will be returning to Newtown...They will be there to greet children as they return to school."

The rest of the Newtown school district resumes classes on Wednesday.

Furniture and supplies from Sandy Hook were moved to Chalk Hill in order to recreate the classrooms just as they were.

Teachers photographed their classrooms at Sandy Hook in order to replicate everything about them, from the pictures on the walls to the crayons left on the students' desks. This is all part of an effort to make the students feel as comfortable as possible.

Workers completely retrofitted the former middle school to fit the needs of its young students, including tearing out bathrooms that were made for teenagers and rebuilding them for elementary-aged kids.

New security systems are being installed at Chalk Hill school, and Newtown Councilman Steve Vavrek told ABC News that the school will be "the safest school in America."

For a school that has gone through so much, moving forward does not mean forgetting.

"I want parents and families enduring the loss of their precious children to know their loved ones are foremost in our hearts and minds as we move forward," Page wrote. "Your strength and compassion has been, and will continue to be an inspiration to me and countless others as we work to honor the memory of your precious children and our beloved staff."

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In-depth 2012: The best long reads of the year

Read more: "2013 Smart Guide: 10 ideas that will shape the year"

Dig deeper, look closer and think harder – these are the goals of New Scientist's in-depth articles. Each one is perfect for saving in your favourite read-it-later app and curling up in front of a glowing tablet for a good long read.

These are our editors' picks of our best features of the year, and all are prime examples of the amazing breadth of big ideas that were ripe for the tackling in 2012. When you have finished digesting these readable meals, visit our in-depth articles archive if you're hungry for more.

Richard Webb: "You might not have heard of the algorithm that runs the world." I certainly hadn't, or that its mathematical foundations are starting to look a little wobbly. An eye-opening examination of how seemingly abstruse mathematics is in fact deeply embedded in modern life: "The algorithm that runs the world"

Sally Adee: Gastric bypass surgery is the best surgery you're not getting, said Dr Oz on his popular medical advice show in the US. Because of enthusiasm from people like him, this operation has become massively popular – but by whimsically hacking at our stomach, might we might be messing with a system far more complicated than anyone really understands? Samantha Murphy had the surgery and began to realise that losing 45 kilograms could come with some profound neurological trade-offs: "Change your stomach, change your brain"

Michael Le Page: Nowadays most people either haven't heard of the 1970 book The Limits to Growth, or believe – wrongly – that the research it was based on has been discredited. But the main message of Limits is perhaps more relevant than ever – that a delayed response to mounting environmental problems leads to catastrophe further down the line: "Boom and doom: Revisiting prophecies of collapse"

Richard Fisher: This is a simple story about a scientific mystery. Strange rumbles, whistles and blasts have been reported all over the world for centuries. In New York state, they are called "Seneca guns"; in the Italian Apennines they are described as brontidi, which means thunder-like; in Japan they are yan; and along the coast of Belgium they are called mistpouffers – or fog belches. Yet the cause is often unexplained – what on Earth could be behind them? "Mystery booms: The source of a worldwide sonic enigma"

Valerie Jamieson: It's been a sensational year for particle physics, but the Higgs boson isn't the only fascinating particle in town. Meet 11 more particles that change our understanding of the subatomic world: "11 particles for 11 physics puzzles"

David Robson: What is the secret of the legendary "flow state" that seems to mark out genius in everyone from piano virtuosos to tennis champions? With the latest brain stimulation techniques, it may soon be within everyone's reach, and Sally Adee writes with panache as she describes her own use of the technology during a terrifying marksmanship training session. This has everything I want to read in a story – drama, a revolutionary idea and some practical advice for anyone to try at home: "Zap your brain into the zone: Fast track to pure focus"

Graham Lawton: The writer of this article, Christopher Kemp, is a self-confessed lover of marginalia – nooks and crannies of science that are often overlooked. But as this beautifully written story reveals, those nooks and crannies often contain rich and fascinating material. Material, in fact, like ambergris: "Heaven scent: The grey gold from a sperm whale's gut"

Ben Crystall: Many people may remember the wonder material Starlite from an episode of BBC TV's Tomorrow's World – it seemed to have a miraculous ability to withstand fire and heat. So what happened to it? In this feature Richard Fisher uncovers the strange tale of Starlite and its eccentric inventor Maurice Ward, and on the way reveals fascinating details about Ward and his creation. And though Ward is dead, the story may not be over – it now looks like Starlite could get a second chance… "The power of cool: Whatever became of Starlite?"

Clare Wilson: I enjoyed working on this feature the most this year because to me it truly represents the future of medicine. New Scientist often predicts that some new medicine or technology will be available in five years' time. When it comes to using gene therapies or stem cell therapies on babies in the womb – the subject of this feature – the timeline is probably more uncertain, yet I don't see how anyone can doubt that some day it will happen: "Fetal healing: Curing congenital diseases in the womb"

If you would like to reuse any content from New Scientist, either in print or online, please contact the syndication department first for permission. New Scientist does not own rights to photos, but there are a variety of licensing options available for use of articles and graphics we own the copyright to.

All comments should respect the New Scientist House Rules. If you think a particular comment breaks these rules then please use the "Report" link in that comment to report it to us.

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President Obama says deal in sight to avert fiscal cliff

WASHINGTON: President Barack Obama said on Monday a deal to avert the fiscal cliff budget crisis was in sight, as dramatic New Year's Eve negotiations went down to the wire ahead of a midnight deadline.

"It appears that an agreement to prevent this New Year's tax hike is within sight. It's not done. There are still issues left to resolve, but we're hopeful that Congress can get it done," Obama said at the White House.

The framework of a possible deal to head off automatic tax increases due to kick in with the turn of a year appeared to be in place after through the night negotiations between Democrats and Republicans on Capitol Hill.

But Obama hinted that the proposed pact would not deal with complementary and punishing cuts to government spending also due to take place in the New Year, which he said would have to be dealt with down the line.

The president said the deal would extend tax credits for clean energy firms and also unemployment insurance for two million people which are due to expire later Monday.

"For now, our most immediate priority is to stop taxes going up for middle class families, starting tomorrow. I think that is a modest goal that we can accomplish. Democrats and Republicans in congress have to get this done."

Even if the Democratic-controlled Senate does sign off on a deal Monday, avoiding the cliff could go down to the wire.

The bill must then go to the Republican-held House of Representatives.

The chamber is in session on Monday, but House Speaker John Boehner has struggled to control his party's restive conservatives, many of whom may balk at signing on to any Obama-approved deal that raises taxes.

The key areas of friction are the income threshold at which taxes should rise, Obama's insistence on extending unemployment benefits and Republican demands for increased federal spending cuts.

Reports said that the deal would see taxes rise for families earning more than $450,000 a year. Obama had originally campaigned for the threshold to kick in for those making $250,000 and above.

"There are a number of issues on which the two sides are still apart," Democratic Senate Majority Harry Reid conceded. "Negotiations are continuing as I speak, but we really are running out of time."

Days of last-gasp talks have produced no deal between US political leaders struggling for a compromise to head off a fiscal crisis that could roil global markets and plunge the United States back into a punishing recession.

Republicans have dropped their demand for a new way of calculating inflation that would have cut the level of benefits for Social Security recipients.

But they were reportedly maintaining their insistence that estate inheritance tax rates stay at current levels.

The two sides remained bitterly at odds over the $109 billion in automatic spending cuts set to hit the Pentagon as well as other federal agencies beginning in early January.

Democrats said they were pushing for a delay of the cuts, known as the "sequester," for about two years, while some Republicans, including Senator Roy Blunt, said it was inconceivable to allow a delay without imposing more targeted offsets to pay for such a postponement.

Don Stewart, McConnell's spokesman, said in a statement on Monday that the Republican leader and Biden had talked long into the night to try to hammer out a deal.

Democratic congressman Chris Van Hollen said there was better than a 50-50 chance of a pre-midnight agreement, but his Republican rivals were a question mark.

"One big question of course is whether an agreement put together by the senators on a bipartisan basis, whether that can pass the House of Representatives," he told CNN.

Republicans largely oppose raising taxes on anyone.

There may be a push by conservatives to let the economy slide off the cliff so that taxes rise on all Americans, only for lawmakers to quickly turn around and vote for a tax cut on the middle class.

- AFP/de

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Obama: Fiscal cliff deal 'within sight'

STORY HIGHLIGHTS

• NEW: House GOP sources say they're unlikely to vote on any deal until Tuesday


• Deal to avert "fiscal cliff" is "within sight," President Barack Obama says


• Possible agreement calls for increase in income, estate taxes


• The fiscal cliff triggers broad tax increases and an automatic $110 billion in spending cuts

As the fiscal cliff looms, what's your New Year's message to Washington? Go to CNN iReport to share your video.

(CNN) -- An agreement to avert the "fiscal cliff" of automatic tax increases and spending cuts appears to be "within sight," President Barack Obama said Monday.

The deal would prevent a tax increase for the overwhelming majority of Americans, extend the child tax and tuition credits for families as well as those for clean-energy companies and extend unemployment benefits for two million people, Obama said.

"There are still issues left to resolve, but we are hopeful Congress can get it done," Obama said.

Nevertheless, he did not sound hopeful a deal was imminent, saying he expected to remain at the White House for New Year's Eve while lawmakers used up every last second available to them.

"Keep the pressure on over the next 12 hours or so," he urged supporters. "Let's see if we can get this thing done."

Latest updates: Final fiscal cliff scramble

A GOP source told CNN negotiators are "very close" to a deal. The sticking point is $24 billion in spending cuts being sought by Republicans in place of deeper cuts that would automatically take effect at midnight, according to the source.

"It's like looking under the cushions at this point," the source said. "If we can't find that at this point, we should pack this place up."

A congressional Democratic source agreed that spending cuts are the main hold up now.

But House GOP sources told CNN that they think it increasingly unlikely they'll vote on the proposal before Tuesday.

There's little practical difference in settling the issue Monday night versus Tuesday, the sources said. One exception: if House Republicans approve the bill on Tuesday -- when taxes have technically gone up -- they can argue they've voted for a tax cut to bring rates back down, even after just a few hours, GOP sources said.

That could bring some more Republicans on board, one source said.

"I wouldn't overestimate it, but a handful may be the difference we need," the source said.

Read more: Why your paycheck is getting smaller, no matter what

The proposal under discussion Monday afternoon called for rolling back tax rates on the highest-income earners to Clinton-era levels, increasing the estate tax rate, extending unemployment benefits and potentially putting off the $110 billion in automatic spending cuts called for in the legislation that created the cliff, according to sources close to the process.

A source familiar with the negotiations said the proposal under discussion would generate $600 billion in revenues by ending the Bush-era tax cuts on individuals with incomes above $400,000 and families over $450,000. Their tax rate would be 39.6%, the same as it was in 2000 during President Bill Clinton's presidency. The top income rate is currently 35%.

The deal would also increase the estate tax to 40% from the current 35% level and cap itemized deductions for individuals with incomes above $250,000 and household income over $300,000, the source said.

Read more: What if there's no deal on fiscal cliff

In addition to the tax proposals, also under discussion is a proposal to delay the $110 billion in automatic cuts in domestic and military spending due over the next nine months, a draconian approach called sequester that was created by Congress to address the impact of high deficits and debt on the U.S. economy.

Republicans want a three-month delay while Democrats seek to forestall the cuts by one year, a Democratic source told CNN. Another Democratic source said the proposed three-month delay "can't pass."

Despite Obama's backing, one leading Senate Democrat warned the deal could run into trouble -- not only from House Republicans who have long opposed any tax increase, but also from liberals in the Senate who oppose allowing more high-income households to escape a tax increase.

"No deal is better than a bad deal, and this looks like a very bad deal the way this is shaping up," Sen. Tom Harkin, D-Iowa, said.

Read more: Medicare patients may suffer if country goes over fiscal cliff

If nothing gets done before Monday at midnight, broad taxes hikes will kick in as the Bush-era cuts expire and the deep spending cuts will begin to take hold.

The nonpartisan Congressional Budget Office has predicted the combined effect could dampen economic growth by 0.5%, possibly tipping the U.S. economy into a recession and driving unemployment from its current 7.7% back over 9%.

Graham on fiscal cliff: Obama wins 'hollow' political victory

CNN's Matt Smith, Jessica Yellin, Dana Bash, Deirdre Walsh, Lisa Desjardins, Ted Barrett and Ashley Killough contributed to this report.

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Lovie Smith fired as Bears coach after 9 seasons

LAKE FOREST, Ill. The Chicago Bears fired coach Lovie Smith on Monday after the team missed the playoffs for the fifth time in six seasons.

Smith was informed of the decision by general manager Phil Emery on the day after the Bears beat Detroit to finish 10-6 but still didn't make the playoffs.

10 Photos

NFL coaches, GMs sacked in firing frenzy

Smith led the Bears to a Super Bowl, but also saw his team collapse in the second half of the past two seasons. Hired in 2004, Smith led the Bears to three division titles, two NFC title games and a 2007 Super Bowl appearance in his nine seasons. His record is 81-63, and he leaves with one year left on his contract.

The Bears scheduled a news conference Tuesday to discuss the move.

Even though Chicago closed with a win, the Bears needed a loss by Minnesota to get into the playoffs. The Vikings, though, beat Green Bay to clinch a postseason spot, leaving Chicago as the second team since the postseason expanded to 12 teams to miss out after a 7-1 start. The other was Washington in 1996.

CBS Sports NFL Insider Jason La Canfora reported Sunday that Smith's tenuous hold on his job "would be further imperiled should his team fail to get into the postseason."

But Smith, who had one year remaining on his current deal, shouldn't have any trouble finding work. League sources told La Canfora that Smith should land head-coaching interviews with other NFL teams.

Smith's record ranks third on the Bears' all-time list, behind George Halas and Mike Ditka.

The highlight of his tenure was the run to the title game that ended with a loss to the Indianapolis Colts. It was the first time two black coaches met for the championship, with Smith going against his mentor Tony Dungy.

The Bears made the playoffs just three times and posted three postseason victories under Smith. The 2010 team beat Seattle after the Seahawks won their division with a 7-9 record, but the Bears lost to Green Bay in the NFC title game at Soldier Field.

There was speculation Smith would be let go following the 2011 team's collapse, but he got one more year while general manager Jerry Angelo was fired.

Ultimately, the struggles on offense did him in.

Known for solid defenses, Smith oversaw a unit that was consistently effective and at times ranked among the league's best with stars such as Brian Urlacher, Lance Briggs and later Julius Peppers. Smith emphasized taking the ball away from the opposition, and no team did it more than the Bears with 310 during his tenure.

But on the other side, it was a different story.

Smith went through four offensive coordinators in Terry Shea, Ron Turner, Mike Martz and Mike Tice. He never could find the right formula, even as the Bears acquired stars such as quarterback Jay Cutler and receiver Brandon Marshall over the years.

The offensive line has struggled in a big way over the past few seasons after age took its toll on a group that was a strength during the 2005 and 2006 playoff seasons. The Bears were never able to replenish, spending first-round picks on Chris Williams (2008) and Gabe Carimi (2011) that did not pan out.

Williams had his contract terminated in October, ending a disappointing run, and Carimi struggled this season after missing most of his rookie year with a knee injury.

While Angelo took the fall after last season, Smith was not without blame in the personnel issues over the years. He pushed to bring in former Rams offensive lineman Orlando Pace and safety Adam Archuleta, players who succeeded in St. Louis when Smith was the defensive coordinator there but were busts with the Bears.

He had no bigger supporter than team matriarch Virginia McCaskey, but the fans seemed split on him. To some, he was a picture of calm, a coach who never lost his composure and never criticized his players in public, the anti-Ditka if you will.

History suggests fans who are clamoring for a high-profile replacement such as Bill Cowher or Jon Gruden might be disappointed. The last time the Bears went with an experienced NFL head coach was when Halas returned to the sideline in 1958.

They might, however, go with an offensive-minded coach for the first time since Mike Ditka was fired after the 1992 season, given the issues in that area.

That the Bears would be in this spot seemed unthinkable after they ripped Tennessee 51-20 on Nov. 4. They were sailing along at 7-1 and eyeing a big playoff run after collapsing the previous season, with the defense taking the ball away and scoring at an eye-opening rate to compensate for a struggling offense, but the schedule took a tougher turn.

They dropped back-to-back games to Houston and San Francisco and five of six in all before closing out with wins at Arizona and Detroit. Injuries mounted along the way, and what looked like a playoff run slipped from their grasp, just as it did after a promising start in 2011.

That year, they won seven of their first 10 only to wind up at 8-8 after a monumental collapse sparked by a season-ending injury to Cutler.

While Angelo was fired, Smith got spared and Emery took the job with a mandate to keep the coach at least one more year.

He quickly went to work retooling the roster, landing Marshall in a blockbuster trade with Miami that reunited Cutler with his favorite target in Denver.

He also added depth in other areas, bringing in Jason Campbell as the backup quarterback after Caleb Hanie failed the previous season and teaming running back Michael Bush in the backfield with Matt Forte.

All those moves sent expectations soaring. The results were awfully familiar, though.

Now, Smith's out of a job.

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Time's Up: Sides Closing In on 'Fiscal Cliff' Deal

President Obama said an 11th-hour agreement to avert year-end tax hikes on 98 percent of Americans is "within sight" but not yet complete with just hours to go before the nation reaches the so-called fiscal cliff.

"There are still issues left to resolve but we're hopeful Congress can get it done," Obama said at a midday White House news conference. "But it's not done."

Congressional and White House negotiators have forged the contours of an agreement that would extend current tax rates for households making $450,000 or less; raise the estate tax from 35 to 40 percent for estates larger than $5 million; and prevent the Alternative Minimum Tax from hammering millions of middle-class workers, sources said.

The deal would also extend for one year unemployment insurance benefits set to expire Tuesday, and avert a steep cut to Medicare payments for doctors.

"There is an agreement to fix the tax problem; that is finalized," an aide to Senate Minority Leader Mitch McConnell told ABC News.

Both sides remained at odds over what to do about the other significant piece of the "fiscal cliff" -- the more than $1 trillion of automatic cuts to defense and domestic programs set to begin tomorrow.

The White House has proposed a three-month delay of the cuts to allow more time to hash out details for deficit reduction, while many Senate Democrats want a flat one-year delay. Republicans insist that some spending cuts should be implemented now as part of any deal.

Chip Somodevilla/Getty Images

'Fiscal Cliff': Lawmakers Scramble for Last-Minute Deal Watch Video

"In order to get the sequester moved, you're going to have to have real, concrete spending cuts," Rep. Mike Rogers, R-Mich., said. "[Without that], I don't know how it passes the House."

Vice President Joe Biden and McConnell, R-Ky., have been locked in behind-the-scenes negotiations for much of the day, sources said, following several "good" conversations that stretched late into Sunday night.

"We are very, very close," McConnell said in an afternoon speech on the Senate floor. "We can do this. We must do this."

If a deal is reached between Biden and McConnell, members in both chambers would still need to review it and vote on it later today. Passage is far from guaranteed.

"This is one Democrat that doesn't agree with that at all," Iowa Democratic Sen. Tom Harkin said of the tentative deal. "No deal is better than a bad deal, and this looks like a very bad deal the way this is shaping up."

"I don't see how you get something voted on today," Rogers said. "Even if they get a handshake deal today, you have to put the whole thing together and that's probably not going to happen before midnight. So it would make sense to roll into tomorrow to do that."

Failure of Congress to act on a tax measure by Tuesday morning would trigger income tax hikes on all Americans. The average family would pay an extra $3,446 in 2013 under the higher rates, according to the Tax Policy Center.

Regardless of the "cliff," virtually all workers are due to see less in their paychecks starting in January when the temporary 2 percent payroll tax cut will expire.

More than $1 trillion in automatic spending cuts to defense and domestic programs will also begin to take effect later this week unless Congress delays or replaces them.

"It is absolutely inexcusable that all of us find ourselves in this place at this time," Sen. Joe Manchin, D-W.Va., said Sunday night on the Senate floor.

"Something has gone terribly wrong when the biggest threat to our American economy is our American Congress," he said, echoing a frustration shared by many Americans.

Both sides say the cost of failure is high.

"If we are not able to reach an agreement, it will be dire," Sen. Jon Kyl, R-Ariz., said Sunday on ABC's "This Week." "Probably at least another million jobs lost, an unemployment rate over 9 percent, and putting us back into recession."

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2012 review: The year in health science

Read more: "2013 Smart Guide: 10 ideas that will shape the year"

The first half of 2012 will be remembered for the saga over whether or not to publish controversial research involving versions of the H5N1 bird flu virus engineered to spread more easily in mammals. In the end openness won out, and both contentious studies did finally see the light of day.

This was also the year that saw the battle to eradicate polio reach its crucial endgame – just as another problem, in the form of totally drug resistant tuberculosis, reared its head.

Away from infectious disease, 2012 brought us a theory on the link between Tutankhamun, epilepsy and the first monotheistic religion, and an insight into the perils of premature ageing in Italy's ominously named Triangle of Death. Here are 10 more of the year's memorable stories.

Babies are born dirty, with a gutful of bacteria
Far from being sterile, babies come complete with an army of bacteria. The finding could have implications for gut disorders and our health in general

Forensic failure: 'Miscarriages of justice will occur'
Our survey of UK forensic scientists reveals that many are concerned that closure of the Forensic Science Service will lead to miscarriages of justice

Scandal of an underfunded and undertreated cancer
Lung cancer in those who have never smoked is on the rise – but they face the same stigma as their smoking counterparts

Ovarian stem cells discovered in humans
Stem cells capable of forming new eggs could promise limitless eggs for IVF treatments, and the rejuvenation of older eggs

Paralysis breakthrough: spinal cord damage repaired
An implant helping paralysed people stand unaided suggests the spinal cord is able to recover function years after severe damage

A real fMRI high: My ecstasy brain scan
Graham Lawton reports the highs, lows and psychedelic purple doors involved in taking MDMA while having his brain scanned

You may carry cells from siblings, aunts and uncles
Male cells found in the umbilical cord blood of baby girls with older brothers suggests fetal cells cross between mother and baby more than once thought

Can we deter athletes who self-harm to win?
The Paralympics may encourage a debate on a dangerous practice – and potential ways to prevent it

First non-hormonal male 'pill' prevents pregnancy
A non-hormonal drug that temporarily reverses male fertility appears to have few side effects in mice

Mining MRSA genetic code halts superbug outbreak
Whole genome sequencing of an MRSA outbreak has identified the person who unwittingly spread the bacteria around a hospital, stopping further infection

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C. Africa's pressured leader open to unity government

BANGUI: The president of the Central African Republic was on Sunday said to be ready to make important concessions to a rebel coalition that has easily pushed its way across the impoverished country and was within striking distance of the capital Bangui.

After meeting with President Francois Bozize, African Union chief Thomas Boni Yayi said Bozize was ready to take part in talks to end the crisis, and that he would not run for president in 2016.

The talks "should lead to a national unity government", Boni Yayi said, adding that Bozize, who seized power in a 2003 coup and then won two elections, would not run for re-election in 2016 and would "respect constitutional provisions".

Opposition figures have criticised the president, whom they suspect wants to modify the constitution to enable a third term in office.

Rebels from a coalition known as Seleka, who took up arms December 10 near the Chad border and have met little resistance from government troops, on Sunday warned they could enter Bangui.

The rebels, now controlling five regional capitals in the centre and north of the country, faced no opposition as they entered the town of Sibut around 150 kilometres from Bangui on Saturday, a military official told AFP.

The country's armed forces had retreated to Damara, the last major town on the way to the capital, about 75 kilometres to the southwest.

Rebel spokesman Eric Massi on Sunday had said rebels would enter Bangui "if the situation demands it" but later said he had "taken note" of Bozize's pledges.

"A meeting shall be held with (Boni Yayi) to study in detail President Bozize's proposals and together create a plan to end the crisis," he told French radio.

With the rebels closing in, the Economic Community of Central African States (ECCAS), which has troops in the country, warned both sides Sunday that Damara must remain in government control.

"The ECCAS forces are on maximum alert, and the city of Damara is the line not to be crossed. We ask the FACA (government forces) and the rebels not to advance from their current positions and to give talks a chance," said Antonio Di Garcia, head of the regional bloc's mission, on national radio.

The rebels have been insisting on Bozize's departure.

"That issue must be discussed with the African Union," Massi told AFP. "President Bozize must recognise his military defeat on the ground ... and draw the necessary conclusions".

Officials on both sides said the rebels had also repelled army soldiers trying to recapture Bambari, a former military stronghold in the landlocked country, one of the world's poorest despite vast mineral wealth.

The coalition of three rebel movements in Seleka -- or the "alliance" in the Sango language -- launched their offensive claiming the government failed to meet the terms of peace pacts signed in 2007 and 2011, which include providing for disarmament, pay and social reintegration for insurgents.

Bozize on Sunday asked for a meeting with French President Francois Hollande, but calls for help from former colonial power France, as well as from the United States, have so far not been heeded.

France has a military presence of about 580 troops in the country, 180 of whom arrived overnight Saturday, the French defence ministry said.

This contingent is on hand to help protect and evacuate French and European nationals, should the need arise.

Hollande late Sunday urged all sides involved in the conflict to end hostilities, and welcomed efforts to find a negotiated solution to the crisis.

Neighbouring Chad, which helped Bozize with rebellions in 2010, has sent a contingent to the country, but those troops too have retreated from the rebel advance.

In Bangui, the population was fearful of a rebel attack and the uncertainty has caused a sharp spike in food prices. Authorities have imposed a night-time curfew, resulting in an eerie quiet in the usually noisy city.

In the town centre, businesses had hired guards armed with machetes to stand watch and prevent looting.

"I'm afraid of the rebels coming," said vegetable vendor Euphrasie Ngotanga in the city's huge Sambo market. "We're not going to sell our produce if there's no peace. And then how we will feed our children?"

The landlocked Central African Republic, with a population of about five million, is notorious for unrest including coups, army mutinies and rebellions.

- AFP/jc

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