Lawmakers still at odds on last day before fiscal cliff

US lawmakers will work on New Year's Eve for the first time in more than 40 years in a last-ditch attempt to save the United States from a fiscal calamity that will result in stiff tax hikes and drastic spending cuts. Senate Democratic Majority Leader Harry Reid has ordered the Senate back into session at 11:00 am (1600 GMT) Monday, the last day before the deadline know as the "fiscal cliff." Two days of last-gasp talks produced no deal Sunday between US political leaders struggling for a compromise to head off a punishing package of spending cuts and tax hikes due to come into force on January 1 that could roil global markets and plunge the United States back into a punishing recession. "There is still time left to reach an agreement, and we intend to continue negotiations," Reid said. But "there is still significant distance between the two sides," he told the Senate, after huddling for nearly two hours with his Democratic caucus. Reid said Democrats were unwilling to brook talk of social security cuts. "This morning, we have been trying to come up with some counteroffer to my friend's proposal," Reid told the Senate. "We have been unable to do that." Senate Republican Minority Leader Mitch McConnell also warned that, despite talks through the night, negotiators were still a long way from success. McConnell told AFP he received no response to a "good faith offer" to Senate Democrats and had spoken twice by telephone with his old friend and sparring partner Vice President Joe Biden in the hope of breaking the stalemate. If leaders fail to find agreement, President Barack Obama has demanded a vote on his fallback plan that would preserve lower tax rates for families earning less than $250,000 a year and extend unemployment insurance for two million people. Republicans admitted such an option could emerge on Monday. The already tense mood on Capitol Hill soured during Sunday's confusing hours, when some lawmakers tossed out varying versions of what may or may not be in Democratic and Republican offers. "I'm incredibly disappointed we cannot seem to find common ground. I think we're going over the cliff," Republican Senator Lindsey Graham said on Twitter. Moderate Democrat Clair McCaskill was also pessimistic. "This is definitely not a kumbaya moment," she said. Earlier, Obama accused Republicans of causing the mess, saying they had refused to move on what he said were genuine offers of compromise from his Democrats. In an interview with NBC's "Meet the Press" that was recorded on Saturday, Obama said it had been "very hard" for top Republican leaders to accept that "taxes on the wealthiest Americans should go up a little bit, as part of an overall deficit reduction package." Republicans were irked by Obama's tone. "I don't know if this is the president saying $250 (thousand) or 'Go to hell,'" Graham told reporters, referring to Obama's insistence that taxes rise on households income greater than a quarter million dollars per year. The Senate's number two Democrat, Dick Durbin, said Republicans want the tax threshold to be raised to $550,000 per household and that Democrats might counter with $450,000, considerably higher than the president's $250,000. But Reid warned: "We're still left with a proposal they've given us that protects the wealthy and not the middle class. I'm not going to agree to that." Any deal must pass the Senate before going to the House, where such is the power of the conservative bloc of the Republican Party that it is unclear whether any solution backed by Obama can win majority support. If no deal is reached, a package of tax cuts for all Americans that was first passed by then-president George W. Bush will expire on January 1. All American workers will see their paycheck hit, and the broader economy will suffer from massive automatic spending cuts across the government. The overall package being discussed would not stop $109 billion in federal government spending cuts set to start after January 1, or extend a two-percentage-point cut in the payroll tax, set to expire with the tax cuts passed under former president George W. Bush. It also would not increase the government's debt limit. Experts expect the US economy to slide into recession if the standoff is prolonged, in a scenario that could cause turmoil in stock markets and hit prospects for global growth in 2013.