US poised to go over fiscal cliff The Senate is nearing a compromise to avert the fiscal cliff with a deal to lift taxes on the wealthiest Americans after days of tense negotiations conducted in the shadow of the end-of-year deadline. But the House of Representatives is unlikely to vote on any deal before the midnight on Monday deadline, according to a spokesman for John Boehner, the Republican house speaker, meaning that the US will technically go over the cliff. A budget deal was "within sight" but not yet done, President Barack Obama said on Monday afternoon, a comment supported by Mitch McConnell, the Senate minority leader, who has been leading negotiations for Republicans. The tentative Senate deal lifts tax rates for households earning more than $450,000, marking the first time in about two decades that conservatives in Congress have agreed to higher taxes. It also extends jobless benefits and a number of taxes benefiting businesses and families with children, and lifts taxes on capital gains and dividends to about 24 per cent. But the tentative deal, which will also have to be approved by the Republican- controlled House of Representatives, only address the tax issues on the table in the talks, leaving a potentially more difficult negotiation ahead on spending cuts in early 2013. The two sides are still divided over how to handle the automatic cuts to government programs and defence spending, with Republicans wanting them delayed for only a few months and the White House a year. Republicans believe they will have greater leverage to force the administration and Democrats to reduce spending during the debate over lifting the US debt ceiling, likely sometime in February. The prospect of a deal to avert at least the middle-class tax rises buoyed equity markets. The US benchmark S&P 500 recovered almost all of last week's losses in its final trading session of the year, closing at 1,426.19, up 1.7 per cent, snapping a five-session losing streak. Trading has been hypersensitive to headlines emerging from Capitol Hill in a thin holiday market. At one point, the market jumped higher on Mr Obama's declaration that a deal was near, only to fall away as he promised to continue fighting for higher taxes as part of a debt ceiling deal in the coming weeks. Equities then rallied late in the day to close near the day's highs. "The debt ceiling may be another fiscal cliff that may weigh on consumer and business confidence and increasingly affect economic activity in the first quarter of 2013," said Jeff Kleintop, chief market strategist at LPL Financial. Mr Obama said the emerging deal was not the grand bargain that he has been pushing but "with this Congress, that was apparently a little too much too hope for," he said. All of the issues relating to the fiscal cliff - raising revenues as well as cutting spending - would not be resolved by the deadline, Mr Obama said, but "maybe we can do it in stages." In comments that angered Republicans, Mr Obama foreshadowed that in future negotiations with Republicans that he would demand more revenues to offset spending cuts. "If Republicans think I will finish the job of deficit reduction through spending cuts alone," Mr Obama said, they have "another thing coming." Some Republican lawmakers openly bristled at the president's language. "I know the President has fun heckling Congress," Senator Bob Corker of Tennessee told reporters, adding that "he probably lost some votes." His remarks came after negotiations continued past midnight on Sunday, between Joe Biden, the vice-president, and Mitch McConnell, the Republican leader in the Senate. The pair had taken over the negotiating lead after talks in Congress faltered over the weekend on a number of issues, including taxes on the wealthy and pensions. Lindsey Graham, the Republican senator from South Carolina, said he had been told by Leon Panetta, the defence secretary, that the Pentagon was readying 800,000 lay-off notices to send out early in the new year, although outside experts cast doubt on this figure. Additional reporting by Anna Fifield in Washington