'Fiscal Cliff': Lawmakers Scramble for Last-Minute Deal

Taxes will go up for all Americans on New Year's Day without a compromise.
3:05 | 12/31/12

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Transcript for 'Fiscal Cliff': Lawmakers Scramble for Last-Minute Deal
Now to the latest on the fiscal cliff. Just a matter of hours until we officially go over the edge. Law maikers scrambling this morning to put together an 11th hour compromise or we'll be ringing in higher taxes with the new year. Jonathan karl is in washington. Reporter: Good morning, dan. The taxes are set to go up at the stroke of midnight. Talks went late into the night and will continue this morning. As washington teerts on the edge of the fiscal cliff, there is still no deal. As talks continued overnight, a voice of frustration erupted on the senate floor. Something has gone terribly wrong when the big es threat to our american economy is our american congress. Reporter: Leaders negotiated all weekend long. The talks hit a brick wall. Harry reid saying, he was unable to even counter the latest republican offer. At this stage, we're not able to make a counteroffer. It appears there are things that stop us from moving forward. Reporter: That prompted mitch McCONNELL TO CALL FOR A Lifeline. I placed a call to the vice president to see if he could help jump start the negotiations on his side. I want everyone to know I'm willing to get this done. But I need a dance partner. Reporter: With that, vice president biden is now impemersed as a key player, playing a direct role in the effort to strike a last-minute deal. The key sticking points remain the same. The white house wants taxes t go up on those making over $250,000 a year. Republicans want a higher information threshold. They want to keep the estate tax from going up. There's no agreement on what to do about the automatic spending cuts set to go into effect on JANUARY 2nd. Both sides have said the cost of failure is extremely high. If we're not able to reach an agreement, it will be dire. Probably at least another million jobs lost, an unemployment rate over 9% and putting us back into recession. Reporter: Vice president biden and republican leader McCONNELL HAD SEVERAL Conversations deep into the night. The conversations were good, said a spokes person for McCONNELL. Time is almost out. The cutoff is tomorrow. We hear in your piece about the dire consequences. Most americans might not feel the effects immediately, right? Reporter: Not right away, but was thing will be felt in their very first paycheck of 2013, the payroll tax that was cut by 2%. That goes back up. The income tax cuts, the treasury has not changed the withholding tables yet in anticipation of deal. If there is no deal, they'll have to do that. You'll see a big drop in one of your early pay checks. That's not the way anyone wants to ring in the new year. We turn to abc's ron claiborne with the other news.

This transcript has been automatically generated and may not be 100% accurate.

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