Updated Monday, September 22, 2014 as of 2:22 PM ET

McConnell Says Lawmakers ’Very, Very Close’ to Budget Deal

(Bloomberg) Senate Minority Leader Mitch McConnell said lawmakers in Congress are “very, very close” to a deal to avert $600 billion in tax increases and spending cuts set to start at midnight.

McConnell, a Kentucky Republican, on the Senate floor today called on lawmakers to ”pass the tax-relief portion” of a budget agreement being negotiated that would continue lower tax rates for all but the highest earners.

The Dow Jones Industrial Average rose 137.99 points, or 1.1 percent, to 13076.10 at 3:04 p.m. The Standard & Poor’s 500 Index gained 20.62, or 1.5 percent, to 1423.05.

President Barack Obama said before McConnell spoke that a deal to avert tax increases and spending cuts starting tomorrow is “within sight” though it hasn’t been completed.

“It appears that an agreement to prevent this New Year’s tax hike is within sight, but it’s not done,” Obama told a group of what the White House described as middle-class taxpayers. He urged people to “keep the pressure on over the next 12 hours or so; let’s get this thing done.”

Lawmakers are seeking to avert tax increases and spending cuts that make up the so-called fiscal cliff. Even if a deal is reached and can get through both chambers of Congress, it would be more limited than Obama and leaders of both parties sought and would set up another fight early in 2013 over the budget and the federal debt limit.

The president said the main sticking point was how to avoid the automatic federal spending cuts set to begin tomorrow. Those “may not always be the smartest cuts” and would affect defense as well as programs like Head Start, he said.

Under a proposed deal, income tax cuts would be extended for annual income up to $450,000, said an official who spoke on condition of anonymity, with rates rising to 39.6 percent on income above that. Expanded unemployment insurance would be continued through 2013.

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