America is edging towards a deal that could avoid triggering a barrage of tax rises and spending cuts.
The move came after weeks of failed negotiations that have panicked markets and plunged the country's disillusionment with Washington to new depths.
According to the Telegraph, an exasperated President Barack Obama has set a deadline of Sunday for congressional leaders to reach an agreement to pull back from the so-called 'fiscal cliff'.
Going over the edge would probably doom the US economy to another recession and risk dragging much of the rest of the world down with it, the report said.
According to the report, the wheels are now in motion for the Senate to vote on a compromise package on Monday, the day before 607 million dollars worth of tax hikes and cuts would be automatically enacted.
Apart from a return for all Americans to higher tax rates which George W Bush reduced by several per cent in 2001, there would be a 100 billion dollars cut in the defence budget, the low paid would lose some child and income credits and long-term unemployed would lose their benefits, the report said.
The main sticking point between Democrats and Republicans remains tax rates for the wealthy.
The latter have insisted that only households with an annual income above one million dollars should return to higher tax levels of pre-2001.
But ever since coming to office, Obama has been committed to raising taxes on families earning more than 250,000 dollars a year, a stance his opponents describe as an attack on job-creating small businesses, the report said.
According to the report, a compromise figure of 400,000 dollars is now emerging as the centerpiece of the deal, which would also keep unemployment benefits flowing to two million people and preserve popular tax breaks for both businesses and individuals.
If that agreement were approved by the senate, it would then go for a vote to the Republican-controlled House of Representatives, which would only have hours in which to vote before the deadline, the report added. (ANI)