Scramble to avoid 'cliff' is on

WASHINGTON

- The end game at hand, the White House and Senate leaders took a final stab at compromise Friday night to prevent middle-class tax increases from taking effect at the turn of the new year and possibly prevent sweeping spending cuts as well.

"I'm optimistic we may still be able to reach an agreement that can pass both houses in time," President Obama said at the White House after meeting for more than an hour with congressional leaders.

Surprisingly, after weeks of gridlock, Senate leaders sounded even more bullish.

The Republican Leader, Sen. Mitch McConnell of Kentucky, said he was "hopeful and optimistic" of a deal, adding he hoped a compromise could be presented to lawmakers as early as Sunday.

Said Majority Leader Harry Reid: "I'm going to do everything I can" to prevent the tax increases and spending cuts that threaten to send the economy into recession.

Officials said there was a general understanding that any agreement would block scheduled income-tax increases for middle-class earners while letting rates rise at upper income levels.

Democrats said Obama was sticking to his campaign call for increases above $250,000 in annual income, even though in recent negotiations he said he could accept $400,000.

The sides also confronted a divide over estate taxes.

Obama favors a higher tax than is currently in effect, but one senior Republican, Sen. Jon Kyl, of Arizona, said he's "totally dead set" against it.