Fiscal cliff: deal in sight as US edges back from the brink The significant concession on taxes was likely to inflame the liberal wing of the president's own party and earlier in the day Left-wing senators signalled that they could try to sabotage the deal. No deal is better than a bad deal. And this looks like a very bad deal the way this is shaping up," said Senator Tom Harkin, a Democrat from Iowa. He added that for Mr Obama to sign off on the agreement would "lock in forever the idea that $450,000 a year is middle-class in America" when the country's average household income was about $50,000 (£31,000). Last night, the deal still needed to be finalised and passed by the Senate, where procedures allow even a single senator to derail a vote by "filibustering," before being sent to the House of Representatives. Sources told Reuters news agency that Republicans would back it. Senator Mitch McConnell, the Republican leader in the Senate, echoed Mr Obama's remarks, saying: "I can report that we've reached an agreement on all of the tax issues. We are very, very close. Mr Obama also sought to reassure Democrats that he would continue to fight for a more comprehensive deficit reduction plan based on a "balanced approach" between new revenues and spending cuts. If Republicans think I will finish the job of deficit reduction through spending cuts alone ... without asking also equivalent sacrifice from millionaires or companies with a lot of lobbyists, if they think that's the formula for how we solve this thing, then they've got another think coming. That's not going how it's going to work," Mr Obama said. Despite the tension across Washington and the cloud of uncertainty over the American economy, Mr Obama struck a surprisingly relaxed tone during his appearance at the White House, at one point joking about going to an audience member's house for New Year's celebrations. Republicans reacted furiously to the statement. Senator John McCain, the president's 2008 election opponent, accused Mr Obama of endangering the deal he had just called on Congress to pass. "I guess I have to wonder and I think the American people have to wonder whether the president really wants this issue resolved or whether it is to his short-term political benefit for us to go over the cliff?" the senator asked. Mr McCain said Mr Obama's remarks would "clearly antagonise" members of the Republican-controlled House of Representatives, where many members had signed pledges to reject tax rises even for the wealthiest Americans. The Republican leadership was bracing for a rebellion from the Right over the compromise and would likely be forced to rely on Democratic votes to move the deal through. Last month, House Republicans rejected a proposal by their own leaders that would have limited tax rises to only those making more than $1 million a year. Few details of the deal itself emerged last night but tax rates look likely to rise for the highest-income earners to about 39 per cent, the level they were at during the Clinton era. It also looked likely to delay a series of swingeing cuts that would fall on the military budget and domestic spending programmes. Unemployment benefits for two million out of work Americans would also be extended for another year. The talks comes more than a year after both parties agreed to design the "cliff" as a way of forcing themselves to compromise over a broad deal for deficit reduction. Mr Obama said last night that the hoped-for "grand bargain" had proved impossible "with this Congress, at this time" but expressed hope that the new Congress sworn in this week may be able to make more progress.