White House and Senate Democratic officials say they have reached a deal with congressional Republicans after two days of marathon negotiations aimed at averting the so-called "fiscal cliff" that would institute tax hikes at the beginning of the year.
Vice President Joe Biden met with Senate Democrats at the Capitol late Monday as the news of a possible deal emerged.
Reports say the deal would delay the fiscal cliff deadline by two months and extend Bush-era tax cuts for households making less than $450,000.
The Senate called a recess late Monday, virtually ensuring no vote before the midnight deadline to avert the fiscal cliff. House members earlier left the Capitol without taking any action. They planned to reconvene at noon Washington time on Tuesday.
Senate Republican leader Mitch McConnell said earlier that members of both parties had agreed on all tax issues. At the White House, President Barack Obama said negotiators still had work to do to reach an accord on whether to delay significant, mandated government spending cuts. Analysts say that absent a compromise, the $500 billion in austerity measures eventually could plunge the U.S. economy into another recession.
Lawmakers and analysts say there is plenty of blame to go around for a situation that frustrates ordinary Americans.
Retiring Republican Congressman Steven LaTourette of Ohio said he still believes the U.S. system of government is the best in the world, but he faulted all sides for not trying to find common ground.
"Because no one, from the White House to either house of Congress has the political courage to do what everybody in town knows needs to be done, and that is to come up with a big deal that actually solves the nation's debt problem, supplies sufficient revenues to operate the government, while at the same time trimming spending," he said.
Democratic Congresswoman Gwen Moore of Wisconsin said the deal might have looked better to Democrats under the pressure of the midnight deadline than it will look later after taxes automatically go up on everyone. "And so, it may not be such a great deal, if they force us over the cliff. So we will have to wait and see," she said.
Steve Dennis of Roll Call congressional news agency says tax hikes have been the major stumbling block. "They have had two years to deal with this. I think the reality is that the Republican leadership had to be seen by their members and by Republicans and outside groups as doing absolutely everything they could, up until the end, to block any tax increase," he said.
New York resident Sarah Cunningham is frustrated by Congress' repeated inability to tackle problems. "I can't for the life of me figure out why they can't make things work. It doesn't make a benefit to anyone. It seems like a family squabbling within itself rather than getting to the real point," she said.
Virginia resident Jay Miller believes the legislation will have to be taken up by the new Congress, which will be sworn in January 3.
"There is more interest in having things go over the cliff than not. And with the new Congress being sworn in later this week, it will have to be sorted out then," he said.
Economists have warned that failure to avert the combination of tax hikes and spending cuts could plunge the U.S. back into recession. But most experts say that if Congress is able to take action quickly, any potential damage would be minimized, especially if it comes before the stock markets reopen after the New Year's Day holiday.
VIDEO: Related report by Michael Bowman