Senate Majority Leader Harry Reid said negotiators could reach a U.S. budget deal today that would protect all but top earners from a tax increase at midnight.

"Negotiations are continuing as I speak," Reid, a Nevada Democrat, said as the Senate reconvened in Washington. "Americans are still threatened with a tax hike in just a few hours." Earlier, asked as he entered the Capitol whether he thought a deal could be reached today, Reid said, "I really hope so. We're not there yet, though."

The biggest sticking point in the final hours before the deadline is how to cancel or delay more than $600 billion in automatic spending cuts to defense and domestic programs, said two congressional aides familiar with the talks. Lawmakers also were narrowing the annual income level at which tax rates would increase in 2013 to between $400,000 and $500,000.