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Senate leaders offer dour take on 'cliff' talks

By Alan Fram and Andrew Taylor

Associated Press

LAST UPDATED: 10:55 a.m. HST, Dec 30, 2012

WASHINGTON >> The top Senate negotiators on the effort to prevent the government from going over the "fiscal cliff" offered a pessimistic assessment today barely 24 hours before a deadline to avert tax hikes on virtually every worker.

Senate Republican leader Mitch McConnell said he's yet to receive a response to an offer he made on Saturday evening to Majority Leader Harry Reid, D-Nev., the top Democratic negotiator. The Kentucky Republican said he's reached out to Vice President Joe Biden in hopes of breaking the impasse and a McConnell spokesman confirmed the two have spoken.

Despite indications of progress in the negotiations, Democrats said Republicans were proposing to slow future cost of living increases for Social Security recipients as part of a compromise to avoid the cliff. Democrats rejected the idea.

"I'm concerned with the lack of urgency here. There's far too much at stake," McConnell said. "There is no single issue that remains an impossible sticking point — the sticking point appears to be a willingness, an interest or courage to close the deal."

Reid said he has been trying to come up with a counteroffer but has been unable to do so. He said he's been in frequent contact with President Barack Obama, who in a televised interview blamed Republicans for putting the nation's shaky economy at risk.

"We have been talking to the Republicans ever since the election was over," Obama said in the interview on NBC's "Meet the Press" that aired Sunday. "They have had trouble saying yes to a number of repeated offers."

The pessimistic turn came as the House and Senate returned to the Capitol for a rare Sunday session. The fate of the negotiations remained in doubt, two days before the beginning of a new year that would trigger across-the-board tax increases and spending cuts that leaders in both parties have said they want to avoid.

Reid said he is not "overly optimistic but I am cautiously optimistic" but reiterated that any agreement would not include the less generous inflation adjustment for Social Security.

"We're willing to make difficult concessions as part of a balanced, comprehensive agreement, but we'll not agree to cut Social Security benefits as part of a small or short-term agreement," Reid said.

McConnell and Reid were hoping for a deal that would prevent higher taxes for most Americans while letting rates rise at higher income levels, although the precise point at which that would occur was a major sticking point.

Also at issue were the estate tax, taxes on investment income and dividends, continued benefits for the long-term unemployed and a pending 27.5 percent cut in payment levels for doctors who treat Medicare patients.

As the Senate opened a rare Sunday session, Chaplain Barry Black offered a timely prayer for lawmakers.

"Lord, show them the right thing to do and give them the courage to do it," Black said. "Look with favor on our nation and save us from self-inflicted wounds."

Senate negotiators were haggling over what threshold of income to set as the demarcation between current tax rates and higher tax rates. They were negotiating over estate limits and tax levels, how to extend unemployment benefits, how to prevent cuts in Medicare payments to doctors and how to keep a minimum income tax payment designed for the rich from hitting about 28 million middle class taxpayers.

Hopes for blocking across-the-board spending cuts were fading and Obama's proposal to renew the two percentage point payroll tax cut wasn't even part of the discussion.

Obama pressed lawmakers to start where both sides say they agree — sparing middle-class families from looming tax hikes.

"If we can get that done, that takes a big bite out of the fiscal cliff. It avoids the worst outcomes. And we're then going to have some tough negotiations in terms of how we continue to reduce the deficit, grow the economy, create jobs," Obama said in the NBC interview.

Gone, however, is the talk of a grand deal that would tackle broad spending and revenue demands and set the nation on a course to lower deficits. Obama and Republican House Speaker John Boehner were once a couple hundred billion dollars apart of a deal that would have reduced the deficit by more than $2 trillion over ten years.

Republicans have complained that Obama has demanded too much in tax revenue and hasn't proposed sufficient cuts or savings in the nation's massive health care programs.

Obama upped the pressure on Republicans to negotiate a fiscal deal, arguing that GOP leaders have rejected his past attempts to strike a bigger and more comprehensive bargain.

"The offers that I've made to them have been so fair that a lot of Democrats get mad at me," Obama said.

Boehner disagreed, saying Sunday that the president had been unwilling to agree to anything "that would require him to stand up to his own party."

Don Stewart, a spokesman for McConnell, said Sunday: "While the president was taping those discordant remarks yesterday, Sen. McConnell was in the office working to bring Republicans and Democrats together on a solution."

The trimmed ambitions of today are a far cry from the upbeat bipartisan rhetoric of just six weeks ago, when the leadership of Congress went to the White House to set the stage for negotiations to come.

"I outlined a framework that deals with reforming our tax code and reforming our spending," Boehner said as the leaders gathered on the White House driveway on Nov. 16.

"We understand that it has to be about cuts, it has to be about revenue, it has to be about growth, it has to be about the future," House Democratic leader Nancy Pelosi said at the time. "I feel confident that a solution may be in sight."

Sen. Dianne Feinstein, D-Calif., said the 2.1 million Americans whose extended unemployment benefits ran out on Saturday are already feeling the pain of Congress' inaction.

"From this point on, it's lose-lose. My big worry is a contraction of the economy, the loss of jobs, which could be well over 2 million in addition to the people already on unemployment. I think contraction of the economy would be just terrible for this nation. I think we need a deal, we should do a deal," Feinstein said on "Fox News Sunday."

But the deal was not meant to settle other outstanding issues, including more than $1 trillion in cuts over 10 years, divided equally between the Pentagon and other government spending. The deal also would not address an extension of the nation's borrowing limit, which the government is on track to reach any day but which the Treasury can put off through accounting measures for about two months.

That means Obama and the Congress are already on a new collision path. Republicans say they intend to use the debt ceiling as leverage to extract more spending cuts from the president. Obama has been adamant that unlike 2011, when the country came close to defaulting on its debts, he will not yield to those Republican demands.

Lawmakers have until the new Congress convenes to pass any compromise, and even the calendar mattered. Democrats said they had been told House Republicans might reject a deal until after Jan. 1, to avoid a vote to raise taxes before they had technically gone up, and then vote to cut taxes after they had risen.


Associated Press writers David Espo, Julie Pace, Jim Kuhnhenn and Michele Salcedo contributed to this report.

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RichardCory wrote:
We need a disaster involving a bus going off a cliff so the media will never be able to say "fiscal cliff" in good taste ever again. So sick of this.
on December 30,2012 | 08:17AM
kainalu wrote:
Entitlements like Social Security are PROMISED to us working-class stiffs - not by the Republicans, not by the Democrats, but by the "government of the people, by the people, and for the people". Republicans are always talking about cuts in spending, but NEVER when it comes to Defense, as we enter a new millineum where the future of military war will focus on robots, aka, drones, and Seal Team type strike forces. Meanwhile, the most recent polls show that the majority of Americans will hold the Republicans responsible for this pending train wreck.
on December 30,2012 | 05:55PM
CriticalReader wrote:
Hey, did all the GOP House Members arrive back in D.C.? Or are they still too hungover from their Tea Party? Whimps.
on December 30,2012 | 08:26AM
Jireton wrote:
Unbelievable. Kindergarten Congress.
on December 30,2012 | 09:43AM
jussayin wrote:
If this was a company, the CEO takes the lead and ultimate responsibility, e.g. CEOs at Research in Motion, Citigroup, Yahoo, etc. were replaced. Not saying Obama should be replaced as he just was re-elected. But he needs to get both parties together and privately negotiate this. It doesn't help when he goes to the public and air dirty laundry. Also not saying the republicans are any better. They're as stubborn as the democrats and president. They all should take a pay cut for their very poor performance. Ugh.
on December 30,2012 | 10:10AM
OldDiver wrote:
The President and Democrats have been compromising for the last four years while Republicans haven't given a inch in letting the Bush tax cuts for the most wealthy expire. This is not the time for more compromise, this is the time we start moving the country forward. According to the latest polls the public sides with the Democrats leaving Republicans to look like fools. Republicans know that if they don't give in they will take a beating in two years. They will give in.
on December 30,2012 | 11:41AM
CriticalReader wrote:
That's the problem, jussayin, the US Government IS NOT (I repeat, IS NOT) a company. It is a government. It is responsible not just to its stockholders and executives. It cannot simply dispense with people. It must care for everyone regardless of their ability to pay orcontribute, or produce. It is there to care for all Americans. You've just highlighted the ultimate problem with conservative, supposed "business-talk", self interested GOPdom. Ultimately, it is an immoral perspective that history will end up being very, very unkind to.
on December 30,2012 | 12:12PM
false wrote:
Good thing it is not immoral to promise people more programs that can possibly be paid for. The result of this is always inflation or war. When that happens the most vulnerable among us are the most negatively effected. Whats moral about that?
on December 30,2012 | 12:44PM
saywhatyouthink wrote:
So you're OK with 20% of the population (retirees) consuming all the tax income of the country? Medicare has to be cut one way or another, it's just not sustainable and has lead us to the current fiscal predicament. We cannot continue to borrow a trillion dollars every year to run our government. SS, medicare and medicaid consume just about every penny the government takes in each year, we borrow to pay for everything else.
on December 30,2012 | 02:39PM
64hoo wrote:
medicade dos'nt belong there ive been paying medicade every paycheck every body who works pays into medicade look at your paycheck so they don't need to borrow to pay for medicade
on December 30,2012 | 03:32PM
false wrote:
The good thing about polls is that you can have them say whatever you wan't.
on December 30,2012 | 12:26PM
CriticalReader wrote:
Boy o boy did the GOP ever learn that from the Romney campaign or what?
on December 30,2012 | 12:45PM
saywhatyouthink wrote:
You don't understand the problem OD. These tea party repubs will never vote to raise taxes, they come from ultra conservative districts that will replace them with even more conservative candidates come election time if they break their vow and vote to raise taxes. They have to wait until after taxes have already gone up before they can act. Then it will be a tax cut, not a tax increase. Middle class taxes will be reduced back after the new year for sure. The real fight will come over the debt limit increase, medicare will be on the chopping block as it should be. That's where all the money goes, we have 20% of the population(retirees) comsuming almost all of the tax revenue the country takes in, we borrow from investors to pay for everything else. That has to stop, it's either that or gut defense spending to the bone.
on December 30,2012 | 02:33PM
OldDiver wrote:
I am for calling the Republican bluff by going over the cliff. Medicare's problems arise from Medicare part D. This is the drug plan Republicans pushed through which made it illegal for Medicare to negotiate with the drug companies for lower prices. This is costing Medicare billions a year to the benefit of the drug companies.
on December 30,2012 | 05:12PM
AdmrVT wrote:
The President does not legislate. We have 3 branches of gov't. Congress is in disarray, and it is our fault. We keep putting the incumbents back in. We need to throw them all out. Do not vote any incumbent back in. No one who earns more than $200,000 should hold office. Those that feel the pain of their decisions can represent us a lot better than those currently in office. I'm an independent, but will NEVER vote for any Republican ever again.
on December 30,2012 | 02:36PM
Dawg wrote:
Congress are a bunch of adults behaving poorly, like spoiled brats!
on December 30,2012 | 11:10AM
saywhatyouthink wrote:
Republicans won't vote until after the new year because then it will be a tax cut, right now the deal would be a tax increase for the rich. Same deal just different timing is all. That's how warped congressional repubs are, they are so worried about being viewed as raising taxes that they will wait until taxes have gone up to vote. Boehner also wants to be reelected to the speakers post before any vote on taxes takes place. These people are more worried about themselves and their own interests than the country as a whole. Shame on all of them.
on December 30,2012 | 02:21PM
64hoo wrote:
when obama went on t.v. to meet the depress he says he tried getting this done after he won the election the problem was raise the tax on the rich but also to spend the money whereas the repubs want to cut spending. thats the sricking point. dems want to spend and the repubs want to cut spending.
on December 30,2012 | 03:27PM
Anonymous wrote:
You got it. Spend less and owe less vs. tax more, spend more, and owe more. And all of this flap over a tax increase that amounts to chump change compared to our national deficit and debt.
on December 30,2012 | 04:05PM
Highinthesierras wrote:
Hello, I told you, we are going off the cliff because it is Barry's plan. He designed the cliff, refused to compromise and is happy as a clam. He can blame Republicans, get tax increases, and cut military spending. Welcome trade off for benefit cuts in Barry World.
on December 30,2012 | 05:52PM
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