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Senate deal forged in flurry of final negotiations

By Julie Pace

Associated Press

Published: Tuesday, Jan. 1 2013 7:33 p.m. MST

The president set the upper limit for the tax cut extension at family income of $450,000. The sequester must be dealt with, he said, and any delay must be offset through a combination of spending cuts and revenue increases. And Obama demanded that the jobless benefits be extended for one year without a way to make up the $30 billion cost.

Shortly after midnight, Biden had McConnell's consent on nearly all of the outstanding issues. Only the sequester was unresolved, though both men were open to a plan that called for a separate vote on the sequester, pending Reid's consent.

The president, vice president and senior staff met in the Oval Office until 2 a.m. to talk through the final details. Obama's legislative director, Rob Nabors, then headed to Capitol Hill to join Senate negotiators in drafting the outlines of a bill that could be moved on quickly Monday.

Nabors worked continuously throughout the final stages, stopping at home only to change his shirt after leaving the Capitol and before heading to the White House before 7 a.m. Monday.

By then, the White House had spoken to Reid, who rejected the notion of holding a separate sequester vote. Biden broke the news to McConnell in a pre-dawn phone call.

The sequester remained the sticking point throughout Monday, with Biden trading proposals with McConnell's office for much of the day. By early evening, discussions coalesced around delaying the automatic spending cuts by two months and paying for the move through a combination of new spending cuts and revenue increases. A hiccup over the estate tax was also resolved.

Shortly before 9 p.m., with three hours until the deadline, Biden and McConnell agreed to the final deal. After Obama called Reid and Pelosi to get their sign-off, the vice president headed up to Capitol Hill to sell the bill to Senate Democrats.

Lawmakers and staff rang in the new year in cramped offices in the West Wing and on Capitol Hill, surrounded by empty pizza boxes and the stray bottle of cheap champagne.

Midnight also marked the moment the government technically went over the "fiscal cliff," although financial markets were closed Tuesday for the holiday. But optimism ran high on both ends of Pennsylvania Avenue that the impact would be negligible. The Senate overwhelming approved the Biden-McConnell deal in the early hours of Tuesday morning and sent the bill to the House for final approval.

Follow Julie Pace at http://twitter.com/jpaceDC

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