Despite deal, taxes will rise for most

WASHINGTON (AP) — While the tax package that Congress passed New Year's Day will protect 99 percent of Americans from an income tax increase, most of them will still end up paying more federal taxes in 2013.

That's because the legislation did nothing to prevent a temporary reduction in the Social Security payroll tax from expiring. In 2012, that 2-percentage-point cut in the payroll tax was worth about $1,000 to a worker making $50,000 a year.

The Tax Policy Center, a nonpartisan Washington research group, estimates that 77 percent of American households will face higher federal taxes in 2013 under the agreement negotiated between President Barack Obama and Senate Republicans. High-income families will feel the biggest tax increases, but many middle- and low-income families will pay higher taxes too.

Households making between $40,000 and $50,000 will face an average tax increase of $579 in 2013, according to the Tax Policy Center's analysis. Households making between $50,000 and $75,000 will face an average tax increase of $822.

"For most people, it's just the payroll tax," said Roberton Williams, a senior fellow at the Tax Policy Center.

The tax increases could be a lot higher. A huge package of tax cuts first enacted under President George W. Bush was scheduled to expire Tuesday as part of the "fiscal cliff." The Bush-era tax cuts lowered taxes for families at every income level, reduced investment taxes and the estate tax, and enhanced a number of tax credits, including a $1,000-per-child credit.

The package passed Tuesday by the Senate and House extends most the Bush-era tax cuts for individuals making less than $400,000 and married couples making less than $450,000.

Obama said the deal "protects 98 percent of Americans and 97 percent of small business owners from a middle-class tax hike. While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country."

The income threshold covers more than 99 percent of all households, exceeding Obama's claim, according to the Tax Policy Center. However, the increase in payroll taxes will hit nearly every wage earner.

Social Security is financed by a 12.4 percent tax on wages up to $113,700, with employers paying half and workers paying the other half. Obama and Congress reduced the share paid by workers from 6.2 percent to 4.2 percent for 2011 and 2012, saving a typical family about $1,000 a year.

Obama pushed hard to enact the payroll tax cut for 2011 and to extend it through 2012. But it was never fully embraced by either party, and this time around, there was general agreement to let it expire.

The new tax package would increase the income tax rate from 35 percent to 39.6 percent on income above $400,000 for individuals and $450,000 for married couples. Investment taxes would increase for people who fall in the new top tax bracket.

High-income families will also pay higher taxes this year as part of Obama's 2010 health care law. As part of that law, a new 3.8 percent tax is being imposed on investment income for individuals making more than $200,000 a year and couples making more than $250,000.

Together, the new tax package and Obama's health care law will produce significant tax increases for many high-income families.

For 2013, households making between $500,000 and $1 million would get an average tax increase of $14,812, according to the Tax Policy Center analysis. Households making more than $1 million would get an average tax increase of $170,341.

"If you're rich, you're almost certain to get a big tax increase," Williams said.

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Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

Deal moves US away from fiscal cliff - for nowWASHINGTON (AP) -- An emergency deal reached after weeks of rancorous negotiations will keep the U.S. from driving off the so-called fiscal cliff, but higher taxes and continued political bickering in Washington threaten to shake the fragile U.

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Gunmen kill 5 female teachers in Pakistan

PESHAWAR, Pakistan (AP) — Gunmen in northwest Pakistan killed five teachers and two aid workers from a non-governmental organization Tuesday as they were driving home from work. The group's director said they may have been targeted for their anti-polio work.

Militants in the past have accused health workers of acting as spies for the U.S., alleging the vaccine is intended to make Muslim children sterile. Last month, nine people working on an anti-polio vaccination campaign were shot and killed. Four of those shootings were in the northwest where Tuesday's attack took place.

The attack was another reminder of the risks to women educators and aid workers from Islamic militants who oppose their work. It was in the same conservative province where militants shot and seriously wounded 15-year-old Malala Yousufzai, an outspoken young activist for girls' education, in October.

There was no immediate claim of responsibility for the latest shootings.

In a separate attack in the southern city of Karachi, also likely to have been carried out by militants, four people were killed and dozens injured when a bomb went off just as a large political rally was dispersing.

The teachers and aid workers in the northwest were killed in Khyber Pakhtunkhwa province on their way home from a community center where they worked at a medical clinic and primary school.

The director of the group targeted Tuesday said he suspected that the workers were attacked because the non-governmental organization has been active in vaccination campaigns designed to wipe out polio.

Javed Akhtar, from Support With Working Solutions, said the clinic where the aid workers worked had helped vaccinate children, and many of the NGO's staff had taken part in vaccination campaigns.

That attack was in an area where Islamic militants often target women and girls trying to get an education or female teachers.

Militants in the province have blown up schools and killed female educators. They have also kidnapped and killed aid workers, viewing them as promoting a foreign agenda.

Khyber Pakhtunkhwa province, formerly called the Northwest Frontier province, borders the tribal areas of Pakistan along the frontier with Afghanistan to the west. Militant groups such as the Taliban have used the tribal areas as a stronghold from which to wage war both in Afghanistan and against the Pakistani government. Often that violence has spilled over into the mostly Pashtun province of Khyber Pakhtunkhwa.

In 2007, the Taliban led by Maulana Fazlullah took over the scenic Swat Valley, marking the height of their strength there. The Pakistani military later pushed the militant group from the valley but the Taliban has repeatedly tried to reassert itself.

The teachers were killed along with two health workers, one man and one woman. Their driver was wounded. They were on their way home from a community center in the town of Swabi where they were working at a primary school for girls and adjoining medical center.

The injured driver told investigators that the gunmen stopped the vehicle and removed a boy — the son of one of the women — before indiscriminately opening fire, said police officer Fazal Malik.

Swabi police chief Abdur Rasheed said most of the women killed were between the ages of 20 and 22. He said four gunmen who used two motorcycles fled the scene and have not been apprehended.

The gunmen on motorcycles opened fire with automatic weapons, said Akhtar. The NGO conducts programs in the education and health sectors and runs the community center in Swabi, he said. The group has been active in the city since 1992, and started the Ujala Community Welfare Center in 2010, he added. Ujala means "light" in Urdu.

The center is financed by the Pakistani government's Poverty Alleviation Program and a German organization, said Akhtar.

He said the NGO also runs health and education projects in the South Waziristan tribal area, as well as health projects in the cities of Tank and Dera Ismail Khan and the regions of Lower Dir and Upper Kurram. All of those cities and regions are in northwest Pakistan, the area that has been most affected by the ongoing fight with militants opposed to the current government.

Aid groups such as Support With Working Solutions often provide a vital role in many areas of Pakistan where the government has been unable to provide services such as medical clinics or schools. In some areas like the northwest, they have had to work to overcome community fears that they are promoting a foreign agenda at odds with local traditions and values.

But many local residents in Swabi said the school and medical center provided a vital service to the community and mourned those who were killed.

Murad Khan said his daughter was studying at the primary school, which provided free books and uniforms to students. He said many people in the area are now worried that the school and clinic will close.

"This school is like a gift for all of us, the poor people of the village," he said. "People in our area are sad."

The NGO director said he has directed staff at all projects to stop working for the time being until security measures are reviewed but vowed that they would resume their work soon.

He said that the NGO had not received any threats before the attack.

In Karachi, senior police officer Asif Ejaz Shaikh said the bomb that killed four was planted in a motorcycle parked amid a crowd of buses for political workers returning from the rally held by the Muttahida Qaumi Movement. The MQM is the dominant political party in Karachi.

There was no immediate claim of responsibility for the attack.

The provincial health minister Dr. Saghir Ahmed said four people were killed and 41 injured.

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Associated Press writers Zarar Khan in Islamabad and Adil Jawad in Karachi contributed to this report.

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No surprise: YouTube, Angry Birds, Instagram and Facebook among 2012′s top apps

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Pasadena's Rose Parade kicks off on a cold morning

PASADENA, Calif. (AP) — The 124th Rose Parade in Pasadena kicked off on a chilly New Year's morning with the theme "Oh the Places You'll Go!" named in honor of the Dr. Seuss book.

Led by this year's grand marshal, British primatologist Jane Goodall, the parade features 42 floats covered with flowers and plant material, 23 marching bands and 21 equestrian units from across the country.

An estimated 700,000 spectators are lining the streets to view the 5-mile-long spectacle, which is broadcast around the world. This year's parade features the first-ever float entered by the Defense Department and a couple getting married on a float.

The $247,000 military float is a replica of the Korean War Veterans Memorial in Washington to commemorate the veterans from that conflict.

The float that scooped up the parade's grand "Sweepstakes" prize for the most beautiful floral presentation and design was "Dreaming in Paradise" by fruit and vegetable producer Dole.

Die-hard parade fans staked out their spots early Monday with folding chairs, hammocks and portable barbeque grills.

They brought in the new year by throwing marshmallows, shaving cream and tortillas, and then hunkered down to stay warm in sleeping bags during a particularly cold night for Southern California.

The wave of under-40-degree temperature spurred a number of cold-weather exposure calls to emergency personnel, police department spokeswoman Lisa Derderian told City News Service.

As of 8 a.m. Tuesday, police had made a total of 22 arrests along the parade route since 6 p.m. Monday, said police Lt. Rick Aversan.

All but one arrest were for public intoxication. The other was for possession of burglary tools that could have been used to break into cars, police said.

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House faces test on ‘fiscal cliff’ deal

Vice President Joe Biden gives two thumbs up following a Senate Democratic caucus meeting about the fiscal cliff …The Republican-held House of Representatives faced a tough vote Tuesday on a last-minute “fiscal cliff” compromise to cut taxes on all but the richest Americans and stall some painful spending cuts.  The deal, cut in secret weekend talks and passed by the Senate by a lopsided 89-9 margin shortly after 2 a.m. New Year's Day, could face stiff opposition from conservatives who hoped it would contain more spending cuts and liberals who wanted to raise more taxes.

Financial markets were closed for the holiday, but lawmakers were keenly aware of the potential impact of failing to address the so-called cliff, which some experts warned could plunge the still-fragile economy into a new recession.

Vice President Joe Biden, who took the lead for Democrats in negotiating the deal over the weekend with Republican Senate Minority Leader Mitch McConnell, was scheduled to join House Democrats at a behind-closed-doors meeting at 12:15 p.m. Biden paid a similar call on Senate Democrats late Monday.

House Republicans were also slated to huddle behind the scenes to discuss what to do about the Senate-passed measure. The anti-tax Club for Growth warned lawmakers to oppose the compromise because “this bill raises taxes immediately with the promise of cutting spending later.”

Under the compromise arrangement approved by the Senate, taxes would rise on income above $400,000 for  individuals and $450,000 for households, while exemptions and deductions the wealthiest Americans use to reduce their tax bill would face new limits. The accord would also raise the taxes paid on large inheritances from 35% to 40% for estates over $5 million. And it would extend by one year unemployment benefits for some two million Americans. It would also prevent cuts in payments to doctors who treat Medicare patients and spare tens of millions of Americans who otherwise would have been hit with the Alternative Minimum Tax.

The middle class will still see its taxes go up: The final deal did not include an extension of the payroll tax holiday. And the overall package will deepen the deficit by an estimated $3.9 trillion dollars by extending the overwhelming majority of the Bush tax cuts. Many Democrats had opposed those measures in 2001 and 2003. Obama agreed to extend them in 2010.

Efforts to modify the first installment of $1.2 trillion in cuts to domestic and defense programs over 10 years -- the other portion of the “fiscal cliff,” known as sequestration -- had proved a sticking point late in the game. Democrats had sought a year-long freeze but ultimately caved to Republican pressure and signed on to just a two-month delay while broader deficit-reduction talks continue.

That would put the next major battle over spending cuts right around the time that the White House and its Republican foes are battling it out over whether to raise the country's debt limit. Republicans have vowed to push for more spending cuts, equivalent to the amount of new borrowing.

Obama has vowed not to negotiate as he did in 2011, when a bruising fight threatened the first-ever default on America's obligations and resulted in the first-ever downgrade of the country's credit rating. Biden sent that message to Democrats in Congress, two senators said.

“This agreement is the right thing to do for our country and the House should pass it without delay,” President Barack Obama said in a written statement shortly after the Senate vote.

There were signs that the 2016 presidential race shaped the outcome in the Senate. Republican Senator Marco Rubio, widely thought to have his eye on his party’s nomination, voted no. Republican Senator Rand Paul, who could take up the libertarian mantle of his father Ron Paul, did as well. Observers were watching to see how Republican Rep. Paul Ryan, the Budget Committee chairman and his party's failed vice presidential nominee in 2012, would vote Tuesday.

In remarks just before the Senate adopted the compromise, McConnell repeatedly called the agreement “imperfect” but said it beat allowing income tax rates rise across the board.

“I know I can speak for my entire conference when I say we don’t think taxes should be going up on anyone, but we all knew that if we did nothing they’d be going up on everyone today,” he said. “We weren’t going to let that happen.”

“Our most important priority was to protect middle-class families. This legislation does that,” Democratic Senate Majority Leader Harry Reid said. But Reid cautioned that “passing this agreement does not mean negotiations halt. Far from it.”

The House’s Republican leaders, including Speaker John Boehner, hinted in an unusual joint statement that they might amend anything that clears the Senate – a step that could kill the deal.

“Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members -- and the American people -- have been able to review the legislation,” they said.

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Pakistan releases 8 Afghan Taliban prisoners

ISLAMABAD (AP) — Pakistan released eight members of the Afghan Taliban from prison on Monday, including the former justice minister under the Taliban, in a bid to boost the peace process in neighboring Afghanistan, the government said.

Pakistan is seen as a lynchpin in efforts to bring about peace in Afghanistan as foreign troops plan to depart the country in 2014. Kabul has been pressing its neighbor to release more prisoners who they hope would bring the Taliban to the negotiating table before the U.S. troops go home.

The Pakistanis appear to have an interest in promoting peace across the border, as a resumption of the civil war there could bring harsh consequences on its side as well.

"We have released some more Taliban prisoners today as our help in the peace process in Afghanistan," Pakistan Foreign Office spokesman Moazzam Khan said.

In a statement, the Ministry of Foreign Affairs said eight detainees were released, including Nooruddin Turabi, the justice minister under the Taliban.

Mohammad Azeem, a former guard of Taliban leader Mullah Omar, was also among those released, according to a Taliban official. He spoke on the condition of anonymity because he was not authorized to speak to reporters about the sensitive subject.

It was not clear what role the eight released prisoners might play in bringing Taliban leaders to the negotiating table or what links they have to the group's current leadership.

Pakistan has longstanding ties to the Taliban and its support is key to any future reconciliation, just as its opposition would likely block any progress. For example, Pakistan could facilitate travel for Taliban leaders — many who are believed to reside in or travel to Pakistan frequently — to third countries for peace talks.

Last month, Pakistan released 18 prisoners at the request of the Afghan High Peace Council, the Pakistani Foreign Ministry said in its statement. In early December it promised to release more members of the group.

Both developments were seen as signs that Pakistan, long accused of backing militants, was supporting a new push to bring peace to a country with which it shares a long border and tumultuous history. The Afghan and U.S. governments accuse Islamabad of backing insurgents — an allegation Pakistan denies — and say many militant leaders are hiding in the country.

So far the militant group's former deputy leader, Mullah Abdul Ghani Baradar, has not been released, although Afghanistan has been pressuring Pakistan to set him free.

The Afghan peace process has made little headway since it began several years ago, hobbled by distrust among the major players, including the United States.

Part of the reason Pakistan is seen to be actively helping the process is that government and military officials are worried that if American troops leave without a plan in place, Afghanistan could deteriorate into another round of vicious infighting. After the Soviets pulled out in 1989, many of the militants who had helped best that superpower then turned on each other in what played out as a vicious war across the country.

A repeat of that scenario could have horrific consequences for Pakistan, such as a flood of Afghan refugees across its borders and increased fighting in Pakistan's tribal areas, where the military is already trying to suppress a stubborn insurgency.

Pakistani intelligence officials said Monday that they found the bodies of nine militants dumped in the North Waziristan tribal region.

The men were shot several times in the head and chest, said three Pakistani intelligence officials. Their bodies were found Monday off a road in Pir Kili village. The officials said the dead men were linked to the Pakistani Taliban, a militant group affiliated with the Taliban in Afghanistan but focused on fighting the Pakistani government.

The officials spoke on condition of anonymity because they are not authorized to speak to reporters.

North Waziristan is a hub of militant activity near the Afghan border.

The militants' bodies were found one day after 21 tribal police personnel who had been abducted were found dead in another tribal region.

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Associated Press writers Kathy Gannon and Rebecca Santana in Islamabad and Rasool Dawar in Peshawar contributed.

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Angry Birds, YouTube among top apps of 2012

TORONTO (Reuters) – Angry Birds, Instagram and Facebook continued to be among the most downloaded apps of the year but rising stars also earned coveted spots on smartphones and tablets.

This year consumers spent on average two hours each day using mobile applications, an increase of 35 percent over last year, according to analytics firm Flurry. The number is expected to continue growing in 2013.

“2012 was a transformative tipping point in the way consumers use apps,” said Craig Palli, a vice president at mobile marketing company Fiksu, adding that the biggest shift is in consumers’ eagerness to turn to apps for a broad range of day-to-day tasks.

Categories such as social networking, media and entertainment, photo editing, and games, continued to captivate consumer interest, with YouTube and Angry Birds being the top free and paid apps respectively at Apple’s App Store.

Meanwhile, several apps released this year quickly joined the ranks of the top downloaded and revenue grossing apps of the year.

The game Draw Something for iPhone and Android quickly gained widespread popularity when it was released in February, and despite dropping off, is still the second most downloaded paid app of the year Android and Apple devices.

“It had a big run and other multi-player puzzle-oriented games like newcomers LetterPress and ScrambleWithFriends proved popular, too,” Palli said. “But in many respects these titles were inspired by the more revolutionary Words With Friends.”

Songza, a music-discovery app for iPhone, Android and Kindle Fire, saw significant growth in both the United States and Canada, where it is now one of the top free apps on the App Store.

Paper, a sketchbook app for the iPad, is estimated to be one of the top grossing apps released this year according to Distimo, an app analytics company. It was named by Apple as the iPad app of the year.

But the real revolution, according to Palli, is among consumers who are eager to turn to apps for their day-to-day tasks, such as finding a taxi or hotel, following current events or increasingly, making payments.

“It is really consumers who are turning to apps first and traditional methods second,” said Palli.

Uber and Hailo, which allow users to book limos and taxis, and AirBnB and HotelTonight, for finding accommodations, began to move mainstream in 2012, Palli said.

Payment apps such as Square, and Apple’s introduction of the Passbook has further positioned the smartphone as a digital wallet.

This year, during major events such as the Olympics, Hurricane Sandy and the U.S. presidential election, the top apps on the App Store reflected those events, said Palli, showing the demand for keeping up with current events through apps.

(Editing by Patricia Reaney and Bill Trott)

Tech News Headlines – Yahoo! News

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Kanye West, Kim Kardashian expecting 1st child

ATLANTIC CITY, N.J. (AP) — A kid for Kimye: Kanye West and Kim Kardashian are expecting their first child.

The rapper announced at a concert Sunday night that his girlfriend is pregnant. Kardashian was in the crowd at Revel Resort's Ovation Hall with her mother, Kris Jenner, and West's mentor and best friend, Jay-Z. West told the crowd of more than 5,000 in song form: "Now you having my baby."

The crowd roared. And so did people on the Internet.

The news instantly went viral on Twitter and Facebook, with thousands posting and commenting on the expecting couple.

Most of the Kardashian clan also tweeted about the news, including Kim's sisters. Kourtney Kardashian wrote: "Another angel to welcome to our family. Overwhelmed with excitement!"

West, 35, also told concertgoers to congratulate his "baby mom" and that this was the "most amazing thing."

Representatives for West and Kardashian, 32, didn't immediately respond to emails about the pregnancy.

The rapper and reality TV star went public in March.

Kardashian married NBA player Kris Humphries in August 2011 and their divorce is not finalized.

West's Sunday-night show was his third consecutive performance at Revel. He took the stage for nearly two hours, performing hits like "Good Life," ''Jesus Walks" and "Clique" in an all-white ensemble with two bandmates.

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AP Writer Bianca Roach contributed to this report.

___

Follow Mesfin Fekadu on Twitter at http://twitter.com/MusicMesfin . Follow Bianca Roach at http://twitter.com/B__Roach

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FDA approves 1st new tuberculosis drug in 40 years

WASHINGTON (AP) — The Food and Drug Administration on Monday approved a Johnson & Johnson tuberculosis drug that is the first new medicine to fight the deadly infection in more than four decades.

The agency approved J&J's pill, Sirturo, for use with older drugs to fight a hard-to-treat strain of tuberculosis that has not responded to other medications. However, the agency cautioned that the drug carries risks of potentially deadly heart problems and should be prescribed carefully by doctors.

Roughly one-third of the world's population is estimated to be infected with the bacteria causing tuberculosis. The disease is rare in the U.S., but kills about 1.4 million people a year worldwide. Of those, about 150,000 succumb to the increasingly common drug-resistant forms of the disease. About 60 percent of all cases are concentrated in China, India, Russia and Eastern Europe.

Sirturo, known chemically as bedaquiline, is the first medicine specifically designed for treating multidrug-resistant tuberculosis. That's a form of the disease that cannot be treated with at least two of the four primary antibiotics used for tuberculosis.

The standard drugs used to fight the disease were developed in the 1950s and 1960s.

"The antibiotics used to treat it have been around for at least 40 years and so the bacterium has become more and more resistant to what we have," said Chrispin Kambili, global medical affairs leader for J&J's Janssen division.

The drug carries a boxed warning indicating that it can interfere with the heart's electrical activity, potentially leading to fatal heart rhythms.

"Sirturo provides much-needed treatment for patients who have don't have other therapeutic options available," said Edward Cox, director of the FDA's antibacterial drugs office. "However, because the drug also carries some significant risks, doctors should make sure they use it appropriately and only in patients who don't have other treatment options."

Nine patients taking Sirturo died in company testing compared with two patients taking a placebo. Five of the deaths in the Sirturo group seemed to be related to tuberculosis, but no explanation was apparent for the remaining four.

Despite the deaths, the FDA approved the drug under its accelerated approval program, which allows the agency to clear innovative drugs based on promising preliminary results.

Last week, the consumer advocacy group Public Citizen criticized that approach, noting the drug's outstanding safety issues.

"The fact that bedaquiline is part of a new class of drug means that an increased level of scrutiny should be required for its approval," the group states. "But the FDA had not yet answered concerns related to unexplained increases in toxicity and death in patients getting the drug."

The FDA said it approved the drug based on two mid-stage studies enrolling 440 patients taking Sirturo. Both studies were designed to measure how long it takes patients to be free of tuberculosis.

Results from the first trial showed most patients taking Sirturo plus older drugs were cured after 83 days, compared with 125 days for those taking a placebo plus older drugs. The second study showed most Sirturo patients were cured after 57 days.

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Harkin: 'No deal is better than a bad deal'

Vice President Joe Biden looks on as President Barack Obama announces the nomination of Senator John Kerry as Secretary …Merry Cliffmas Eve?

Vice President Joe Biden and Republican Senate Minority Leader Mitch McConnell on Monday pursued behind-closed-doors efforts to avoid the “fiscal cliff” with just hours to halt painful automatic income tax hikes from biting into American paychecks.

McConnell announced on Sunday that he had reached out to Biden to help “jump-start” stalled negotiations with Democratic Senate Majority Leader Harry Reid. The two veteran Washington deal-makers spoke at 12:45 a.m. and again at 6:30 a.m., a McConnell aide said.

“The Leader and the VP continued their discussion late into the evening and will continue to work toward a solution,” McConnell spokesman Don Stewart told reporters by email on Monday, promising “more information as it becomes available.”

Senate Majority Leader Harry Reid sounded a cautious note Monday morning while noting the urgency of the situation.

“We really are running out of time,” Reid said shortly after 11 a.m. as lawmakers began a highly unusual New Year’s Eve session. “There are a number of issues on which the two sides are still apart, but negotiations are continuing as I speak.”

The two sides were wrangling over how to extend massive tax cuts adopted in 2001 and 2003 and expiring at midnight. President Barack Obama campaigned on letting tax rates rise on income above $200,000 for individuals and $250,000 for households, but any final deal is expected to set the threshold considerably higher.

“I hope we can keep in mind – and I know we will – that our single most-important goal is to protect middle class families,” said Reid. “Whether or not we reach an agreement in the short time we have left, we’ll need cooperation on both sides to prevent taxes from going up tomorrow for every family in America.”

But media reports that Biden and McConnell were closing in on a deal setting the threshold at $400,000 for individuals and $450,000 for families faced a liberal insurrection that could threaten the final compromise’s chances.

“No deal is better than a bad deal, and this looks like a very bad deal the way this is shaping up,” Democratic Senator Tom Harkin of Iowa said in the chamber.  “So we go back to the tax system that we had under Bill Clinton. I ask: What’s so bad about that?”

Lawmakers were also battling over the estate tax paid on large inheritances. Republicans have fought to extend the current levels of what they call the “death tax” – exempting estates under $5 million and taxing transfers above that at 35%.  Absent a deal, the tax will hit estates above $1 million and impose a top tax rate of 55%.

The two sides were also struggling with the so-called sequester -- $1.2 trillion in automatic cuts to domestic and defense programs over ten years. Democrats suggested Sunday that they hoped to use some of the new tax revenues to postpone some proportion of those cuts. Republicans objected, saying that only new spending cuts could be used to offset the sequester.

And there was feuding over how to spare tens of million of Americans who otherwise would find themselves paying the Alternative Minimum Tax (AMT), and over how to prevent cuts in payments to doctors who treat Medicare patients.

Any deal would need to clear both the Democratic-led Senate and the Republican-held House of Representatives. Neither looked to be an easy effort.

And it was unlikely that the compromise would spare the country another bruising partisan battle over whether and how to raise the national debt limit. Republicans have signaled that they will hold the threat of a first-ever default as leverage to win more spending cuts from the Administration. President Barack Obama has signaled that he will not negotiate on the issue the way he did in 2011, when the partisan feuding over what had typically been a routine vote in the past led to the first-ever downgrade of America’s credit rating.

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