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Obama to Urge Fiscal Vote in Senate if Two-Party Talks Fail Obama to Urge Vote in Senate if Parties Fail in Fiscal Talks
(about 2 hours later)
WASHINGTON — President Obama said Friday evening that progress had been made in make-or-break talks on the fiscal crisis and pronounced himself cautiously “optimistic,” as Senate leaders worked furiously toward an agreement to avert the worst of the economic punch from landing Jan. 1. WASHINGTON — At the urging of President Obama, the Democratic and Republican leaders of the Senate set to work Friday night to assemble a last-minute tax deal that could pass both chambers of Congress and avert large tax increases and budget cuts next year, or at least stop the worst of the economic punch from landing beginning Jan. 1.
But after a one-hour meeting with Congressional leaders at the White House, Mr. Obama warned that if the two sides did not agree on a bill, he would urge the Democratic-controlled Senate to put forward a measure anyway, in essence daring Republicans in the House and Senate to block a floor vote on tax cuts. After weeks of fruitless negotiations between the president and Speaker John A. Boehner, Mr. Obama turned to Senator Harry Reid, the majority leader, and Senator Mitch McConnell of Kentucky, the Republican leader — two men who have been fighting for dominance of the Senate for years — to find a solution. The speaker, once seen as the linchpin for any agreement, essentially ceded final control to the Senate and said the House would act on whatever the Senate could produce.
“I believe such proposals could pass both houses with a bipartisan majority as long as both leaders will allow it to come to a vote,” Mr. Obama said. “If members want to vote no, they can.” “The hour for immediate action is here. It is now,” Mr. Obama said in the White House briefing room after an hourlong meeting with the two Senate leaders, Mr. Boehner and Representative Nancy Pelosi, the House Democratic leader. He added, “The American people are not going to have any patience for a politically self-inflicted wound to our economy, not right now.”
Senators broke from a long huddle on the Senate floor with Senator Mitch McConnell of Kentucky, the Republican leader, to say progress had been made. Mr. McConnell, White House aides, and Senator Harry Reid of Nevada, the majority leader, were set to continue talks on Saturday aiming for a breakthrough as soon as Sunday. Senate Democrats want Mr. McConnell to propose an alternative to Mr. Obama’s final offer and present it to them in time for a compromise bill to reach the Senate floor on Monday and be sent to the House. Absent a bipartisan deal, Mr. Reid said Friday night that he would accede to the president’s request to put to a vote on Monday Mr. Obama’s plan to extend tax cuts for all income below $250,000 a year and to renew expiring unemployment compensation for as many as two million people, essentially daring Republicans to block it and allow taxes to rise for most Americans.
“We’re working with the White House, and hopefully we’ll come up with something we can recommend to our respective caucuses,” Mr. McConnell told reporters. Bipartisan agreement still hinged on the Senate leaders finding an income level above which taxes will rise on Jan. 1, most likely higher than Mr. Obama’s level of $250,000. Quiet negotiations between Senate and White House officials were already drifting up toward around $400,000 before Friday’s White House meeting. The two sides were also apart on where to set taxes on inherited estates.
Mr. Reid also said that there had been some progress but he warned that in assembling a measure that can win support from both parties, “what we come up with is going to be imperfect.” But senators broke from a long huddle on the Senate floor with Mr. McConnell on Friday night to say they were more optimistic that a deal was within reach. Mr. McConnell, White House aides and Mr. Reid were to continue talks on Saturday, aiming for a breakthrough as soon as Sunday.
For all the cautious optimism, the president also expressed exasperation that four days before a looming deadline, which lawmakers have known about for a year and a half, the two sides are still far apart. “We’re working with the White House, and hopefully we’ll come up with something we can recommend to our respective caucuses,” said Mr. McConnell, who has played a central role in cutting similar bipartisan deals in the past.
“This is déjà vu all over again,” he said. “America wonders why it is that in this time, you can’t get stuff done in an organized timetable. The American people are not going to have any patience for a politically self-inflicted wound to our economy.” The emerging path to a possible resolution, at least on Friday, appeared to mirror the end of the protracted stalemate over the payroll tax last year. In that conflict, House Republicans refused to go along with a short-term extension of the cut, but Mr. McConnell reached an agreement that permitted such a measure to get through the Senate, and the House speaker essentially forced members to accept it from afar, after they had left forChristmas recess.
Mr. Obama took steps to keep the pressure on throughout the weekend, scheduling an appearance on Sunday’s “Meet the Press” on NBC. This time, the consequences are more significant, with more than a half-trillion dollars in tax increases and across-the-board spending cuts just days from going into force, an event most economists warn would send the economy back into recession if not quickly mitigated. With the House set to return to the Capitol on Sunday night, Mr. Boehner has said he would place any Senate bill before his chamber and let the vote proceed and the chips fall. The House could also change the legislation and return it to the Senate.
The emerging path to a possible resolution, at least Friday, appeared to mirror the protracted stalemate over the payroll tax cut last year. In that conflict, House Republicans refused to go along with a short-term extension of the cut, but Mr. McConnell struck a deal that permitted such a measure to get through the Senate, and Speaker John A. Boehner essentially forced members of the House to accept it from afar, after members had left for Christmas recess. If the Senate is able to produce a bill that is largely bipartisan, there is a strong belief among House Republicans that the same measure would easily pass the House, with a large number of Republicans. While Mr. Boehner was unable to muster enough votes for his own alternative bill that would have protected tax cuts for income under $1 million, that was because the measure lacked Democratic support, and was roughly a few dozen votes shy of passage with Republicans alone.
This time, the consequences are even more significant, with more than a half-trillion dollars of tax increases and across-the-board spending cuts just days from going into force, an event most economists warn would send the economy back into recession if not quickly reversed. With the House set to return to the Capitol on Sunday, Mr. Boehner has said he would place any Senate-passed bill before his chamber — perhaps amended — and let the chips fall, with or without Republicans on board.
“I’ve got a positive feeling now,” said Senator Kay Bailey Hutchison, Republican of Texas, who said a burst of deal-making talk broke out as soon as the leaders returned to the Capitol.“I’ve got a positive feeling now,” said Senator Kay Bailey Hutchison, Republican of Texas, who said a burst of deal-making talk broke out as soon as the leaders returned to the Capitol.
This was the first time in weeks that Mr. Obama met with the four Congressional leaders — Mr. Reid, Mr. McConnell, Mr. Boehner and Representative Nancy Pelosi, the Democratic leader. Despite the new optimism, it was clear that any deal in the next three days would only alleviate the worst aspects of the “fiscal cliff” while leaving big decisions on taxes and spending to the next showdown, most likely by February when Congress must raise the government’s debt limit. A Republican aide briefed on the meeting said the speaker told the other negotiators that House Republicans would not turn off $100 billion in automatic military and domestic spending cuts in 2013 without equivalent cuts elsewhere. Also likely to be left out of a deal is any agreement to raise the debt limit.
The meeting started with the president reiterating his demand for an extension of tax cuts on incomes below $250,000. But Mr. Boehner appeared to recognize that he was no longer dictating terms. According to the aide, the speaker said repeatedly, “Let us know what you come up with, and we’ll consider it — accept it or amend it.”
That opening offer lowered expectations on Capitol Hill that a breakthrough could be pending, but behind the scenes, talks continued, focusing on a possibly higher threshold of $400,000. Senator Max Baucus of Montana, chairman of the Senate Finance Committee, said sentiment is “jelling” around a new offer, and a source familiar with the negotiations said the president would ask Republican and Democratic leaders what proposal could win majority support in the House and Senate. Even before the meeting, Senator Max Baucus of Montana, chairman of the Finance Committee, said “things are starting to gel” around a deal. According to aides familiar with the talks, the plan, in its early stages, centered on a deal that would extend all the expiring Bush income tax cuts up to $400,000 in income.
The source said that the president would use the opportunity to make the case for a proposal that he believed could pass both the House and Senate, one that included extending lower tax rates for household income of $250,000 or less and an extension of unemployment insurance for two million Americans who are about to lose their benefits. Some spending cuts would pay for a provision putting off a sudden reduction in payments to medical providers treating Medicare patients. The deal would also prevent an expansion of the alternative minimum tax to keep it from hitting more of the middle class. It would extend a raft of already expired business tax cuts, like the research and development credit, and would renew tax cuts for the working poor and the middle class included in the 2009 stimulus law.
The plan was in its early stages and far from being accepted. But Congressional officials say staff-level talks between the White House and the Senate Republican leader centered around a deal that would extend all the expiring Bush income tax cuts up to $400,000 in income.
Some spending cuts would pay for a provision putting off a sudden cut in payments to medical providers treating Medicare patients. The deal would also prevent an expansion of the alternative minimum tax to keep it from hitting more of the middle class. It would extend a raft of already expired business tax cuts, like the research and development credit, and would renew tax cuts for the working poor and the middle class included in the 2009 stimulus law. The estate tax would stay at current levels.
It would not stop automatic spending cuts from hitting military and domestic programs beginning on Wednesday, nor would it raise the statutory borrowing limit, which will be reached on Monday. Congressional aides said those issues would be dealt with early next year in yet another showdown.
White House officials denied that any such offer was developing and said that the president was sticking with his insistence that household income only up to $250,000 would be protected from tax increases.
While neither side was confident of any agreement, some top lawmakers said there was still a chance of a breakthrough that could at least avoid the most far-reaching economic effects. “I am hopeful that there will be a deal that avoids the worst parts of the fiscal cliff; namely, taxes’ going up on middle-class people,” Senator Charles E. Schumer, the No. 3 Senate Democrat, said Friday on the “Today” show on NBC. “I think there can be. And I think the odds are better than people think that they could be.”
Democrats from high-tax, high-wealth states have pressed the White House and their leaders to accept a threshold higher than the president’s $250,000, but they appear ready to accept anything that can pass.Democrats from high-tax, high-wealth states have pressed the White House and their leaders to accept a threshold higher than the president’s $250,000, but they appear ready to accept anything that can pass.
“I have a very practical standard to apply: whatever threshold we need to avoid the fiscal cliff,” said Senator Joseph I. Lieberman, a Democrat-turned-independent from Connecticut. “I have a very practical standard to apply: whatever threshold we need to avoid the fiscal cliff,” said Senator Joseph I. Lieberman, a Democrat turned independent from Connecticut.
Much of the legislative attention was focused on Mr. McConnell as Democrats pushed him to provide assurances that Republicans would not use procedural tactics to block any measure that the Senate might consider. House Republican leaders have already said they would be willing to consider whatever legislation the Senate could pass when the House convenes beginning Sunday afternoon. If Republicans chose to erect hurdles to any legislation, Congress might not have sufficient time to advance a measure before the deadline on Tuesday. After the meeting, Mr. Obama and officials at the White House appeared visibly optimistic. The president was cheerful with his aides before he walked into the Brady Press Briefing Room to deliver his remarks before assembled reporters. A source familiar with the meeting described a “give and take” atmosphere.
Mr. McConnell was well aware of the Democratic efforts to put the onus on him. “Make no mistake: the only reason Democrats have been trying to deflect attention onto me and my colleagues over the past few weeks is that they don’t have a plan of their own that could get bipartisan support,” he said on Thursday. “They could have just sat there,” the source said. “But they didn’t; they were going back and forth, which is a pretty good sign.”
But he also said he was willing to review any proposal that would come from the White House and then “we’ll decide how best to proceed.” In an effort to keep the pressure on for an agreement, Mr. Obama, for the second time in his presidency, has agreed to appear on NBC’s “Meet the Press” on Sunday, giving him a forum to push for a deal and to provide his view of the state of the negotiations.
“Hopefully there is still time for an agreement of some kind that saves the taxpayers from a wholly preventable economic crisis,” he added. Hoping to stave off the expiration of dozens of farm programs and the carrying out of a 1949 farm law that could double the price of milk, Senate and House leaders were also working on legislation to extend the current farm bill. The most recent farm bill, passed in 2008, expired on Sept. 30. If a new farm bill is not passed or the current one extended, farm programs would lose billions in financing and revert to the 1949 law. The old law would reintroduce higher government price supports for milk, corn, rice, wheat and other crops and could lead to higher consumer prices and federal spending.
As it awaited a proposal on tax and spending issues, the Senate did make some progress on other legislation, sending the president a renewal of antiterrorism surveillance laws and advancing some relief for states and communities hit by Hurricane Sandy this year.

Helene Cooper and Ron Nixon contributed reporting.