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US Economy - Page 17

President Barack Obama will send Congress a proposal for a scaled-back agreement to avoid some of the fiscal cliff, according to Republican and Democratic sources.

The president cut short his Christmas vacation in Hawaii and the U.S. Senate reconvened, with the deadline for going over the fiscal cliff of automatic tax hikes and spending cuts just four days away.

The House remains on Christmas break, but members say they could be called back on 48 hours' notice if needed. Ref. CNN

Economy US

Dismal holiday sales belie talk of US "Recovery":

US retail sales over the holiday shopping period grew at the slowest pace since the depths of the 2008 recession, according to a report released Tuesday by MasterCard Inc.'s SpendingPulse unit. Ref. Source 3

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A Democratic source familiar with the talks tells CNN they have hit a "major setback" because Republicans are now insisting that any fiscal cliff deal include "chained CPI."

Chained CPI, which Democrats consider a "poison pill,"would change the way Social Security benefits are adjusted for inflation, effectively meaning Social Security recipients would receive less money over the years.

The Democratic source's understanding is that the president offered this in talks with House Speaker John Boehner, but Democrats say that was in the context of a larger deal -- in exchange for changes to the way the debt ceiling is approached, which is not in the plan anymore.

This source did not want to be identified because of the closed nature of the talks, but was clearly giving the information to CNN to make public the Democrats" point of view and push the Republicans to give in on this high-stakes issue.

The source also told CNN that Democrats are currently "going outside their comfort zone" in these talks with regard to tax rates -- keeping tax rates in place for higher income households than the president wants. The source also said Democrats are negotiating with Republicans on extending the current lower estate tax rate, a big issue for many Republicans as well as moderate Democrats.

A Senate Republican leadership source responded by pointing to the president's comments in an interview that aired Sunday suggesting he is willing to look at chained CPI "in pursuit of strengthening Social Security for the long term." Ref. CNN

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Senate Majority Leader Harry Reid (D-Nev.) adjourned the Senate on Sunday evening with negotiations on the looming 'fiscal cliff' at a standstill. The House and Senate will meet again Monday morning to work toward a compromise to avert year-end tax hikes and spending cuts that threaten economic recovery. Ref. USAToday

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"It appears that an agreement to prevent" the fiscal cliff tax hike for Americans set to hit at midnight "Is within sight, but it's not done," President Barack Obama said today.

The agreement would extend tax credits for families with children, for tuition, and for clean energy companies, the president said, adding that it would also extend unemployment insurance.

The deal being discussed will ask the wealthiest 2% of Americans to pay higher taxes for the first time in two decades, Obama said. Ref. CNN

US Economy

The House of Representatives won't vote on any plans to avert the fiscal cliff on Monday, leaders have told members.

President Barack Obama said earlier in the day that an agreement to avert some of the automatic tax increases and spending cuts appeared to be "Within sight," and Senate Minority Leader Mitch McConnell said a deal was "Very, very close."

There would be little practical difference in settling the issue Monday versus Tuesday, sources said. One exception: If lawmakers approve a bill on Tuesday -- after tax rates have technically gone up -- they can argue they've voted for a tax cut to bring rates back down, GOP sources said. Ref. CNN

US Economy - Page 17

The Senate approved a last-minute deal to avert the feared fiscal cliff early Tuesday. The Senate package would put off budget cuts for two months and preserve Bush-era income tax cuts for individuals earning less than $400,000 or couples earning less than $450,000. The measure now goes to the House. Ref. CNN

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House Majority Leader Eric Cantor says he does not support a Senate deal to avert the fiscal cliff but that House GOP leaders have made no decisions on the bill's fate.

After a meeting with Vice President Joe Biden, House Minority Leader Nancy Pelosi called on Speaker John Boehner to bring the measure to the floor for an up-or-down vote.

Boehner's spokesman said that "The lack of spending cuts in the Senate bill was a universal concern" among GOP House members.

The deal passed the Democratic-controlled Senate with a 89-8 vote in the early hours of Tuesday; it would maintain income tax cuts for individuals earning less than $400,000 and couples earning less than $450,000. Ref. CNN