Little sense of urgency despite nearness of 'fiscal cliff' disaster

AT STARBUCKS branches in Washington, employees have been told to write ''come together'' on coffee cups to encourage US politicians to reach a compromise. In letters to investors, analysts urged calm.

But in a letter to congressional leaders, the US Treasury Secretary, Timothy Geithner, admitted he would take ''extraordinary measures'' to postpone a US default on its loan obligations which would otherwise fall due on New Year's Eve.

The Treasury will use accounting measures to create about $US200 billion clearance under the debt limit - a sum that would normally last the government about two months.

''However, given the significant uncertainty that now exists with regard to unresolved tax and spending policies for 2013, it is not possible to predict the effective duration of these measures,'' Mr Geithner said.

His warning came as the President, Barack Obama, and members of the Senate returned to Washington in a last-ditch effort to avert automatic tax increases and spending cuts of more than $US600 billion. Yet even with so much at stake, there appeared to be little sense of urgency.

Aides say most senators are not likely to be back on Capitol Hill before Thursday night, US time. And, while the House may technically be in session, Republican leaders told members last week they would have 48 hours' notice before they should return, and that notice has not yet been given.

Senate Democratic and Republican leaders have not talked in days, according to aides on both sides. But legislators continue to say a deal is possible to avert the ''fiscal cliff'', when taxes leap to Clinton-era rates and $US100 billion in across-the-board cuts to military and domestic programs kick in.

''Nobody wants to go over this fiscal cliff. It will damage our economy. It will hurt every taxpayer. It will be the largest tax increase in history, affect everybody,'' a Republican congresswoman, Ileana Ros-Lehtinen, warned on CNN. ''And anyone who's watching who thinks, 'Oh, this isn't going to impact me,' you will find out that it will.''

Some of the consequences would be immediate, such as an end to some unemployment benefits. Others, such as huge cuts in government spending, would have a cumulative effect spread over 2013, analysts said.

Senate Republican leaders say Mr Obama should press the Democrats' leader in the Senate, Harry Reid, to take up legislation passed by the House that would extend all Bush-era tax cuts for a year, and another House bill that would cancel $US50 billion in military cuts and shift those cuts to domestic programs. Mr Obama and Senator Reid have repeatedly said that will never happen.

''At this point, all they're looking for is a fig leaf,'' said Stan Collender, a former staff member of the House ways and means committee and the House and Senate budget committees.

''At this point there's zero per cent chance of a big deal and maybe a 10 per cent chance of a small deal before January 1,'' Mr Collender said.

The New York Times, Bloomberg, McClatchy News

This story Little sense of urgency despite nearness of 'fiscal cliff' disaster first appeared on The Sydney Morning Herald.