* Obama due back Thursday morning to revive talks
* Lackluster holiday sales add to urgency
* Americans less optimistic of deal averting 'cliff'
WASHINGTON/HONOLULU, Dec 26 (Reuters) - The United States on
Wednesday edged closer to the "fiscal cliff" as Congress waited
for President Barack Obama to return from vacation in Hawaii and
make one final attempt to avoid huge tax hikes and spending cuts
in the New Year.
In the absence of Obama, there was no sign of either side in
Congress making an effort to strike a deal. The corridors of the
Capitol building were empty except for an occasional police
officer, and members' office doors stayed locked.
House of Representatives Speaker John Boehner has not yet
set a date for bringing House members back to Washington from
their Christmas break, an aide of the Republican leader said.
That makes the timing of a vote on any budget deal before Dec.
31 more difficult.
The Boehner aide also said there were no plans for new talks
between the top Republican in Congress and Obama, who flies
overnight and is due back in the White House on Thursday
The inaction notwithstanding, there was still just enough
time to prevent a fiscal crunch that would upset global
financial markets and likely push the United States into
Reports of lackluster retail holiday sales added to the
urgency for a deal. Shoppers might be spending less this holiday
season in fear of looming income tax increases. U.S. stocks fell
on Wednesday, dragged lower by shares of retail companies.
A modest, last-minute measure in Congress to avoid deep
spending cuts set for Jan. 1 and most of the tax hikes could
pass the Democratic-controlled Senate by the New Year, although
Republicans would need to agree not use a procedural roadblock
known as a filibuster.
But senators probably would not make the effort unless there
was a strong signal from Boehner that the House would find a way
to go along.
A Senate Democratic aide downplayed chances for votes this
week in the Senate, but suggested there could be legislative
movement at the weekend.
"We can't do anything until Republicans either give us the
60 votes," which are needed to advance legislation without long
procedural delays, or allow a short-cut that lets bills pass on
a simple majority vote in the 100-member chamber.
The focus in Congress is shifting from broad deficit
reduction to narrower efforts to avert the immediate shock of
the Dec. 31 cliff dive.
"This is the (emergency) scenario that we have long believed
would rise in probability the closer we go to December 31, which
essentially calls for extending all the rates for those
individuals making under $200K and households under $250K and
does not address the debt ceiling or the deficit," analyst Chris
Krueger of Guggenheim Securities wrote in a research note.
Republican Senator Kay Bailey Hutchison of Texas, who is
retiring at year's end, told MSNBC that $250,000 "is too low of
a threshold" for raising income taxes.
She said that in conversations she has had with some Senate
Democrats, "they are saying maybe more in the $400,000 to
Obama himself recently offered to raise the threshold to
$400,000, before negotiations with Boehner broke off.
But even if a handful of Senate Republicans support
Democrats on a measure to avoid the worst of the fiscal cliff,
time is short.
When the Senate returns on Thursday it is due to work on a
disaster aid bill to help New York and New Jersey recover from
Superstorm Sandy and other measures.
In the Republican-controlled House, any bill that raises
taxes on anyone would need a rare bipartisan vote to win
All 191 Democrats might have to team up with at least 26
Republicans to get a majority if the bill included tax hikes on
the wealthiest Americans, as Obama is demanding.
Some of those votes could conceivably come from among the 34
Republican members who are either retiring or were defeated in
the November elections and no longer have to worry about the
An alternative is for Congress to let income taxes go up on
everyone as scheduled. Then, during the first week of January,
lawmakers would strike a quick deal to reduce them except on
people in the highest brackets.
They would also pass a measure putting off the $109 billion
in automatic spending cuts that most lawmakers want to avoid.
Once the clock ticks past midnight on Dec. 31, no member of
Congress would have to vote for a tax increase on anyone - taxes
would have risen automatically - and the only votes would be to
decrease tax rates for most Americans back to their 2012 levels.
Americans' optimism that Obama and congressional leaders
will reach a budget agreement before Jan. 1 has waned in recent
days, according to a Gallup poll.
Fifty percent believe a deal will be reached, a drop of 7
percentage points from the previous week, and 48 percent are
doubtful. The poll was taken just after talks ran into trouble
Starbucks Chief Executive Howard Schultz is urging workers
in the company's roughly 120 Washington-area coffee shops to
write "come together" on customers' cups on Thursday and Friday
to send a message to politicians.
"We're paying attention, we're greatly disappointed in
what's going on and we deserve better," Schultz told Reuters.