WASHINGTON – After a tortured day of bargaining, setbacks and speech-making Sunday, Republicans and Democrats had yet to reach agreement to avert the fiscal cliff. That left them barely a day to strike a deal, and then pass it through both the Senate and the House.
If that doesn’t happen, a set of painful tax hikes will begin to kick in Tuesday, followed soon after by deep cuts in government spending.
On Sunday, there were some small reasons for hope. Negotiations shifted to the capital’s two unofficial closers – Vice President Biden and Senate Minority Leader Mitch McConnell, R-Ky., who together had resolved past crises over tax hikes and the limit on federal borrowing.
And Republicans also dropped a demand that had briefly become a major sticking point: that Democrats agree to a cost-saving, but politically sensitive, reduction in Social Security benefits. The demand, which involved using a less generous measure of inflation called chained CPI, would effectively reduce the cost-of-living increases in Social Security benefits over time.
Previously, the GOP had demanded it in exchange for President Obama’s request to extend emergency unemployment benefits and cancel deep cuts to the Pentagon and other agency budgets. A Democratic aide close to the talks described the request as a poison pill.
Even after that demand was set aside, the broader talks remained hung up over the same issues that had stalled them for months. Republicans and Democrats could not agree on how many taxpayers should see their tax rates go up, or about whether to put off a massive $100 billion spending cut called the sequester.
By the evening, the best thing that Senate Majority Leader Harry Reid, D-Nev., could say about the talks was that there were still talks going on.
There’s still time left to reach an agreement, and we intend to continue negotiations, Reid said on the Senate floor. The chamber will be back in session at 11 a.m. today.
It is a time-honored congressional tradition that any deal must be preceded by hours of doomsaying and pessimism. It’s easier to sell a deal, of course, if you’ve first conditioned your colleagues and the public to fear there will be no deal at all.
On Capitol Hill on Sunday, even lawmakers seemed confused about whether they were watching another round of that familiar late-stage political theater – or whether, this time, the pessimism was genuine.
The two parties are so close that they can’t afford to walk away, said Sen. Mike Johanns, R-Neb., calling the fits and starts of this weekend just normal posturing in high-level negotiations. I continue to be optimistic.
But, as optimistic as Johanns was, other senators were gloomy.
I think we’re going over the cliff, Sen. Lindsey Graham, R-S.C., wrote on Twitter.
It just looks like we can’t govern, Sen. Kay Bailey Hutchison, R-Texas, said on the Senate floor. She said she was horrified that the last few days before her retirement would be spent on a complete meltdown.
The fiscal cliff includes the expiration of Bush-era tax cuts, plus the sequester that Congress set up during the 2011 debt-ceiling fight. Lawmakers believed, back then, that these cuts were so big, and so broad, that even this gridlocked Congress would have to come back and figure out a better solution.
On Sunday, it looked as if they were wrong.
On Capitol Hill, Sunday’s events revealed a new – and troubling – dynamic in these negotiations. It had been assumed, beforehand, that the most difficult part of averting the fiscal cliff would not be striking a deal. Instead, it would be passing that deal through the fractious, GOP-led House.
On Sunday, however, it seemed that the Senate, and the Democrats, would also be an obstacle. Reid said in the afternoon that Democrats were unwilling to respond to an offer that McConnell had delivered to Reid’s office Saturday evening – nearly 19 hours earlier.
McConnell, then, reached out to Biden – with whom he brokered deals to end standoffs over tax hikes in late 2010, and over the debt ceiling in August 2011.
President Obama has sought to keep the pressure on Congress to act, including taping his appearance for Meet the Press.
What Congress needs to do, first and foremost, is to prevent taxes from going up for the vast majority of Americans, Obama said on the show.
Failing to reach a deal for funding the government will slow the economy and harm most families, he said. He has advocated a plan that would raise taxes on the wealthiest 2 percent.
There is a basic fairness that is at stake in this whole thing that the American people understand and they listened to an entire year’s debate about it. They made a clear decision about the approach they prefer, which is a balanced, responsible package.
They rejected the notion that the economy grows best from the top down. They believe that the economy grows best from the middle class out. And at a certain point, it is very important for Republicans in Congress to be willing to say, We understand we’re not going to get 100 percent. We are willing to compromise in a serious way in order to solve problems.’
McConnell’s spokesman Don Stewart responded Sunday by saying, 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.