Capitol Hill negotiations to avert a fiscal crisis before the New Year’s deadline appeared to falter Sunday in the Senate, with Republican leader Mitch McConnell saying he's still waiting for a response to the offer he made on Saturday evening.
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Capitol Hill negotiations to avert a fiscal crisis before the New Year’s deadline appeared to falter Sunday in the Senate, with Republican leader Mitch McConnell saying he's still waiting for a response to the offer he made on Saturday evening.
The stumbling block this time appeared to be a provision in the Republican proposal that would change the way Social Security benefits are calculated.
South Dakota Republican Sen. John Thune said Sunday his party added the provision to ensure that Democrats wouldn’t spend the revenue generated by ending tax cuts for some of the country’s highest earners.
“If Democrats don’t like that as an offset, they can come up with something else,” he said.
His comments were followed by those of Alabama Republican Sen. Jeff Sessions, who also argued spending remains the major issue for his party.
“The biggest obstacle we face is that President Obama and Majority Leader (Harry) Reid continue to insist on new taxes that will be used to fund more new spending, not for meaningful deficit reduction," said Sessions, the ranking Republican on the Senate Budget Committee.
Reid said late Sunday afternoon the provision -- knows as chained CPI -- never should have been added to what would now be a basic, final-hour deal that would include taxes increases and perhaps an extension for unemployment insurance and a promise to negotiate later on spending cuts.
Reid said later that he was gratified that Republicans had taken the provision off the table but added "there's still significant distance between the two sides."
A Reid staffer said Democrats have yet to make a counter offer.
Should Congress fail to reach a deal, a mix of $500 billion in tax increases and federal cuts in 2013 would start to kick in Jan. 1.
"We can't accept a bad deal just because we're here," said Sen. Patty Murray, D-Wash. "It's real disturbing we were thrown in a change to Social Security at the last minute.”
Signs that a deal was unraveling surfaced by mid-afternoon when Reid said his party could not make a counteroffer to Republicans. And Minority Leader Mitch McConnell said he had to call Vice President Joe Biden to "jump-start" the negotiations.
The Senate has been working on compromise plan since House Speaker John Boehner’s proposal in the Republican-controlled House collapsed less than two weeks ago.
Before Sunday, Hill lawmakers and staffers were working behind the scenes all weekend to craft a deal that would pass in both chambers.
Republican Sen. Lindsey Graham said earlier Sunday the chances of Congress cutting a deal before the deadline were “exceedingly good.” However, he sounded downcast about the process and the outcome.
“Whatever we accomplish, political victory to the president,” the South Carolina senator said on “Fox News Sunday.” “He's going to get tax rate increases. … And the sad news for the country is, that we have accomplished little in terms of not becoming Greece or getting out of debt.”
If Reid and McConnell cannot reach a deal, Reid purportedly will present President Obama’s bare-boned plan of tax increases for families making more than $250,000 annually and extending unemployment insurance.
Obama said on “Meet the Press” that Congress should “first and foremost” prevent taxes increases for the “vast majority” of Americans.
“We have been talking to the Republicans ever since the election was over,” the president said during the interview, taped Saturday. “They have had trouble saying yes to a number of repeated offers.”
Republicans immediately criticized Obama’s remarks.
“Americans elected President Obama to lead, not cast blame,” Boehner said.
Senate leaders worked off-stage Saturday to reach a final-hours deal to avert a fiscal crisis.
A House Democrat and a House Republican said Saturday they didn’t expect a vote until after the weekend.
Reps. Steve Stivers, R-Ohio, and John Yarmuth, D-Ky., both told Fox News they expected the Senate to work on a proposal through Sunday and perhaps into Monday morning before voting, then pass the legislation to the House for a final vote.
On Friday, Reid adjourned the chamber until Sunday so Democratic and Republican leaders could negotiate on a deal.
The Nevada Democrat was not seen on Capitol Hill on Saturday and staffers said he did not plan to work from his Senate office. However, Minority Leader Mitch McConnell was on the Hill.
McConnell spokesman Don Stewart said Sunday: "While the president was taping those discordant remarks yesterday, Senator McConnell was in the office working to bring Republicans and Democrats together on a solution. Discussions continue today."
Senate leaders from both sides of the aisle vowed late Friday to scramble over the weekend to produce a new bill, on the heels of a high-stakes White House meeting with Obama.
Several senior administration officials told Fox News late Friday night that McConnell, R-Ky., is showing strong signs that he will help seal a deal.
However, they acknowledge he will have a difficult time getting a deal passed in the Republican-controlled House, which has so far rejected any plan that includes allowing tax rates to increase for higher-earning Americans.
The pledge to work on a new bill is by no means a solution to the sweeping set of tax hikes set to hit Jan. 1, followed by steep spending cuts. Lawmakers still have to write the bill, and produce something that can pass both chambers.
Obama, speaking from the White House briefing room late Friday, voiced a dose of doubt about the Senate leaders' final push for a deal.
He said he's "modestly optimistic," but that if Reid and McConnell fail, the Senate should allow an up-or-down vote on a scaled-back proposal the president is pushing.
It's unclear what the a final bill would entail. The Senate appears to want to tweak the Obama plan, which would include an extension of current tax rates for most Americans, but potentially adjust it so fewer earners see a tax hike and add a provision dealing with a looming expansion of the estate tax.
The debt ceiling, which Obama wants increased, would not be part of this bill. And a senior White House official admitted it is unclear how a looming set of spending cuts would be addressed.
The president's plan is a far cry from the kind of "grand bargain" lawmakers were shooting for just a few weeks ago -- something that would narrow the deficit, overhaul the tax code and set the country on a course to curb its entitlement spending, all while averting massive tax hikes and spending cuts.
The immediate challenge for negotiators, though, will be to craft a plan that does enough to spare most Americans a big hike without doing so much as to complicate the bill's passage. There is a host of expiring provisions next year -- from Medicare rates to doctors to payroll tax cuts -- that some lawmakers hoped to address before the end of the month. The more items added to the bill, the trickier it gets to pass it.
Lawmakers have been hesitant to predict whether Congress will be able to arrive at any solution.
