U.S. Senate Minority Leader Mitch McConnell
U.S. Senate Minority Leader Mitch McConnellReuters

U.S. lawmakers missed their deadline to avoid the so-called "fiscal cliff" Monday but said they were near to finding a deal to ease the worst impact of the crisis by heading off tax hikes, AFP reported.

Top political leaders appeared on the verge of a last-gasp deal to resolve the tax side of the showdown, but they fell short of an agreement on slashing spending cuts, which are also due to come into force on Tuesday.

Despite rising hopes, the economy will technically go over the cliff at midnight (Eastern time) after the aides to Republican leaders in the House of Representatives said no vote on a pact could be scheduled before Tuesday.

While automatic spending cuts and tax hikes will come into force, global stock markets will be closed on Tuesday for New Year's Day, giving lawmakers a few more hours of breathing room before panic over the U.S. economy sets in.

"We don't have anything to vote on," a senior Republican source told AFP, noting that no bill containing a deal had so made it to the Senate floor.

The source said there was "no chance they pass something early enough that we could (vote) before midnight, even if we wanted to."

Another House Republican source sought to downplay the fact that lawmakers were on course to miss their self-imposed deadline.

"If a deal is reached, there's little difference between a vote tonight or tomorrow to give members a chance to review," the source told AFP.

The framework of a possible deal to head off the automatic tax increases due to kick in with the turn of a year appeared to be in place after marathon talks between Vice President Joe Biden and top Senate Republican Mitch McConnell.

President Barack Obama hinted, however, that the proposed pact would not deal with complementary and punishing cuts to government spending also due to take place in the New Year, which he said would have to be resolved down the line.

As he tried to sell the emerging deal to his Democratic Party's liberal base, he said it would extend tax credits for clean energy firms and also unemployment insurance for two million people due to expire later Monday.

It was also expected to include an end to a temporary two percent cut to payroll taxes for Social Security retirement savings and Medicare health care programs for seniors and changes to inheritance and investment taxes.

Republicans have dropped their demand for a new way of calculating inflation that would have cut the level of benefits for Social Security recipients, but they were reportedly maintaining their insistence that estate inheritance tax rates stay at current levels.

The two sides remained bitterly at odds over the $109 billion in automatic spending cuts set to hit the Pentagon as well as other federal agencies beginning in early January.