The nation will likely head over the so-called fiscal cliff Tuesday, though a deal to quickly undo tax increases for most income earners is imminent.
With just hours left until 2013, congressional talks slowed over how to deal with more than $1 trillion in looming automatic spending cuts known as the "sequester."
By late Monday, the parties appeared to have agreed to delay the sequester by two months and a late night vote in the Senate was possible.
The House, however, will not take up a measure until Tuesday at the earliest, the leadership announced Monday. That means the cuts and tax hikes will go into effect on Tuesday, the first day of 2013. But lawmakers say that any damage done by the delay can be undone retroactively if a bill is not signed into law in time.
Both sides have settled on a plan to extend expiring tax cuts for individuals earning less than $400,000 and couples earning $450,000 and say they are optimistic that Congress will soon vote to pass this proposal.
The deal would also include extension of federal unemployment insurance benefits, which expire tonight.
While lawmakers have been bickering for months about raising tax rates, Republicans and Democrats both gave ground on the final number, with the GOP agreeing to raise taxes on higher income earners and Democrats giving up their plan to raise taxes on families they define as "rich" - those who earn more than $250,000.
"In the case of the fiscal cliff, no deal is the worst deal because the government will go over the fiscal cliff and will take almost every American with it," Sen. Joseph Lieberman, I-Conn., warned Monday. "Almost every family that pays taxes now will pay higher taxes."
Republicans spent part of Monday evening venting their anger over President Obama's decision to give a televised address Monday afternoon, in which he appeared to boast about tax increases as part of a deal Congress was close to approving.
"What the president did this afternoon set us back in civility, leadership and in dealmaking," Sen. Johnny Isakson, R-Ga., said.
Sen. John McCain, R-Ariz., Obama's opponent in the 2008 election, angrily denounced the address, in which the president was flanked by middle class taxpayers.
McCain said it appeared that the president wanted to ridicule and antagonize Republicans for their anti-tax stance, even as they have signaled a willingness to increase tax rates.
"The presidential campaign is over," McCain said. "He won. Congratulations. Now let's get down to business governing this nation in a bipartisan fashion."
Sen. Minority Leader Mitch McConnell, R-Ky., announced earlier that the two parties have agreed on a threshold for preserving Bush-era tax cuts, reportedly to be set at $450,000 and below. But lawmakers cannot agree on the coming automatic spending cuts, known as the sequester, that Congress passed in the summer of 2011.
Democrats want to stop the cuts by using revenue from tax increases.
Republicans want alternative spending reductions to take their place.
McConnell told fellow Republicans in a memo sent earlier today that he has offered a proposal that would use $100 billion in cuts to postpone the sequester for two months.