Finally, a "fiscal cliff" breakthrough

President Barack Obama gestures as he speaks about the fiscal cliff, Monday, Dec. 31, 2012, in the South Court Auditorium at the White House in Washington. The president said it appears that an agreement to avoid the fiscal cliff is "in sight," but says it's not yet complete and work continues. / AP

Updated 4:30 p.m. ET

Most of the world is counting down to a midnight New Year's celebration while Congress continues to watch the clock and count down to another deadline, despite the efforts of lawmakers to avert the "fiscal cliff."

Those efforts are inching closer to the midnight deadline, but leaders from both parties indicate that a deal is within reach.

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Obama: Deal to avert "fiscal cliff" is "within sight"

President Obama took to the stage with middle-class taxpayers standing behind him this afternoon to announce that Congress is making "progress" and that "it appears an agreement...is in sight."

Senate Minority Leader Mitch McConnell, R-Ky., described the status of the talks even more positively saying he and his main negotiating partner, Vice President Joe Biden, are "very, very close to an agreement."

While he didn't provide details, McConnell said on the Senate floor, "We've reached an agreement on all of the tax issues."

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McConnell: Senate "very, very close" to a "fiscal cliff" agreement

Multiple congressional sources tell CBS News that the two sides have agreed on a permanent income threshold for the expiration of the Bush-era tax cuts for the wealthiest Americans: $400,000 for individuals and $450,000 for families. For weeks, Democrats have pushed for letting the cuts expire for those making over $200,000 and families making over $250,000 while Republicans have wanted to renew the cuts for all Americans, including the wealthiest.

Additionally, agreement has been reached on the estate tax, which was set to increase from 35 percent to 55 percent in 2013. Instead, the compromise sets the new rate at 40 percent with the first $5 million exempt from being taxed.

Other likely components of the deal include an increase in capital gains and dividend tax rates, which would increase from 15 to 20 percent. There would also be an extension of the Earned Income Child Tax Credit, a permanent fix to the Alternative Minimum Tax and a one-year extension of tax credits for renewable energy development. And doctors would be shielded from a massive reimbursement gab for treating Medicare patients.

The entire tax deal would raise about $600 billion, aides said.

Also agreed to is a major sticking point for Democrats: an extension of unemployment benefits for two million Americans whose benefits expired over the weekend.

With negotiations still ongoing and the timing of a vote on a "cliff" deal still in flux, the House announced this afternoon that it is not likely to vote on any deal tonight.

What this means is that although the country will technically go over the "cliff" at midnight, the significant progress in the negotiations signals any detrimental impact from the "cliff" will be avoided, even if a vote happens after midnight - that is, unless a deal is eventually voted down in Congress or the talks collapse altogether before a vote.

Vice President Joe Biden and McConnell have been the key negotiators over the past 24 hours and the movement on taxes represents a huge step forward on this last day of talks before the cliff.

• "Fiscal cliff' deal rests with two old negotiating partners: Biden and McConnell
• Deal to avert milk price hike may not come up for vote

What has not been agreed upon is what to do with automatic budget cuts, known as the sequester. The $110 billion of cuts to defense and non-defense government programs are set to go into place in the new year. The president said he had hoped any deal would be more comprehensive and address the sequester and the deficit in "a balanced way."

Even though deficit reduction was the Republicans' top priority, the president used the possible exclusion of the sequester to take a swipe at Congress. "[W]ith this Congress that was obviously too much to hope for." He said.

Some congressional Republicans and aides didn't take very well the president's condescending remarks.

"So....I'm confused....does POTUS want a deal or not? Because all those jabs at Congress certainly sounded like a smack in the face to me," Erica Elliot, communications director for House Majority Whip Kevin McCarthy, wrote via Twitter.

Emphasizing the importance of deficit reduction to his fellow Republicans, McConnell urged his colleagues not to hold up a deal because the sequester might not be addressed today. He called the tax portion of the "fiscal cliff" the most important component as taxes are set to rise on every wage-earning American tomorrow. "Let's take what's been agreed to and get moving," he said.

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[gabriel_a_king]

Political theater. "Solution" or none, the end result will be the same. Tax the hell out of everyone, EXEMPT themselves and the mega wealthy insiders, and laugh as the nation swirls into the derivative fraud blackhole to be swallowed up in wash of false flags and martial law.

Remaining copies of the US Constitution will be available for educational purposes only- available via Pay Pal or any remaining Bitcoins and stamped "MADE IN CHINA".

[dpattan]

I was hoping Congress would literally jump off the cliff.

[davidd5063]

No matter how many times you tell them how disgusting you find their self-serving rationalizations, the GOP garbage will NOT go away! Unbelievable! The debate is OVER garbage and YOU LOST! The whining and knashing of teeth is just making those of us who despise you really HAPPY at this point. LOL.

[davidd5063]

See don't get me wrong self-serving GOP garbage, you're welcome to go with a whine and a screech - just GO.

[Sawblades]

Silly partisan.

[californiadreaming]

It seems like a good compromise to me. I really wish they had addressed more spending concerns. We are going the way of Greece incredibly fast!

[melbatom]

You can't but wonder what this is really about. To set up Biden for Presidental election? To set up a grab of power by the Adminstration? To make an original deal acceptable? To force the cliff to raise taxes for you programs? We will find out soon whatbthisvis REALLY about ?

[realtimecoffee]

Jesus the milk bill doesn't have anything to do with this. That said, why should we not pay the true price of milk? Or oil, or steel?

[realtimecoffee]

Opps, one down.

[deniecey2]

Increasing the cost of things like milk and milk products are doing nothing but destroying our nation and it will start with our children.. look at statistics and see children drink 80% or more of milk in this nation. Oh dear Lord, why did people vote him back in office.. We are going to be poorer than a third world country by the end of his rein..

[realtimecoffee]

Jesus the milk bill doesn't have anything to do with this. That said, why should we not pay the true price of milk? Or oil, or steel?

[realtimecoffee]

Back one last time before the festivities overtake me, but steel was a panic choice. Health or education would have been better, among others, I just did not want to invite that fight. But never mind that, I cannot imagine a better outcome for 2013 than for Tennessee to end the year with bragging rights Slappy my friend. If I had been a Marine I'd say semper fi, but, do to circumstances beyond my control, and a very stubborn mother when I was still a minor, I was not. Goodness on you my friend.

[deniecey2]

I still think ALL of congress, the houose and the president and vice president should have to take even a 25% cut in pay, even at that.. they'd still have all the money they needed and then some, but the deficit would be dropping like a lead balloon!! Stop taking it all out on the little people.. and take some responsibility yourselves... geesh!!

[realtimecoffee]

Why should they get ANY pay until they learn to do a decent job?

[Lindag20]

You gotta love how the politicians go on and on about "cutting spending" but make sure THEIR district gets its pork.

[sickofwhiners]

Obama is right about one thing. Nothing is going to happen with this Congress. Vote all the bums out!

[Aussiebobbie]

maybe they could give a tax incentive to online retailers that ship internationally, which brings new money into the economy, and will probably grow if your dollar falls with this cliff thing, because of the exchange rate. you do have a good reputation with online retail, did you know. and that is a self-created job.

it sounds like they think they can still negotiate it/vote it back after the deadline, like there's not really a deadline at all. so what's all the fuss about then if they're right in thinking that. that's probably what the opposition are thinking, that it's not really happening.

[tryhonesty]

Boner and the House of RepubliCON Cowards doing everything they can to destroy this country. The working men and women built this country, defend this country and make this country great. NOT the RepubliCON millionaires and billionaires.

[realtimecoffee]

Milk, not destroy, just like the Democrats. Trouble is the tax junkies cannot see the end of the road.