No deal in sight as deadline for fiscal deal nears

Published 10:21 am Thursday, December 27, 2012

WASHINGTON (AP) — Progress toward avoiding the “fiscal cliff” seemed stalled Thursday, as the Senate’s top Democrat accused Republican House Speaker John Boehner of acting in dictatorial ways that prevent a solution to looming tax hikes and spending cuts.

Senate Majority Leader Harry Reid, speaking in the Senate chamber, said the nation appears headed over the cliff because of a lack of progress in negotiations as the Dec. 31 deadline nears. He blamed House Republicans, who last week opposed Boehner’s efforts to pass a narrowly crafted bill that would raise tax rates only on the very wealthiest Americans, prompting Boehner to cancel a vote on the bill.

Reid said the House is “being operated with a dictatorship of the speaker.”

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“John Boehner seems to care more about keeping his speakership than about keeping the nation on sound financial footing,” Reid said.

Reid said the GOP-controlled House easily could have passed a White House-approved plan with a majority of Democratic votes and a few dozen Republican votes. But House leaders generally avoid such tactics, because they might alienate the Republican caucus and jeopardize the speaker’s job.

Also Thursday, the White House said Obama, before leaving Hawaii, called Boehner, Reid, Senate Minority Leader Mitch McConnell and House Minority Leader Nancy Pelosi. The White House statement said the president got an update on the “fiscal negotiations,” but offered no detail on who, exactly, was negotiating and whether those talks were getting anywhere.

Obama was returning from vacation to the deadline showdown in the nation’s capital, with even a stopgap solution now in doubt.

The House has passed a Republican plan to avert the fiscal cliff, and the Senate has passed a Democratic version. Their deficit-reduction projections differ by hundreds of billions of dollars over 10 years. Many Washington insiders say the gap could be bridged if partisan positions were not so firmly entrenched.

Leaders of the two parties are essentially daring each other to let the year end without resolving the pending confluence of higher taxes and deep spending cuts that could rattle a recovering but still-fragile economy.

Adding to the mix of developments pushing toward a “fiscal cliff,” Treasury Secretary Timothy Geithner on Wednesday informed Congress that the government was on track to hit its borrowing limit on Monday and said he would take “extraordinary measures as authorized by law” to postpone a government default.

Still, he added, uncertainty about the outcome of negotiations over taxes and spending made it difficult to determine how much time those measures would buy.

In recent days, Obama’s aides have been consulting with Reid’s office. But Republicans have not been part of discussions, suggesting much still needs to be done if a deal, even a small one, is to be struck and passed through Congress by Monday.

At stake are current tax rates that expire on Dec. 31 and revert to higher rates in place during the administration of President Bill Clinton. All in all, that means $536 billion in tax increases that would touch nearly all Americans. Moreover, the military and other federal departments would have to cut $110 billion in spending.

But while economists have warned about the economic impact of tax hikes and spending cuts of that magnitude, both sides appear to be proceeding as if they have more than just four days left. Indeed, Congress could still act in January in time to retroactively counter the effects on most taxpayers and government agencies, but chances are that a large deficit reduction package would be put off.

House Republican leaders on Wednesday said they remain ready to negotiate but urged the Senate to consider or amend a House-passed bill that extends all existing tax rates. In a statement, the leaders said the House would consider whatever the Senate passed. “But the Senate first must act,” they said.

Aides said any decision to bring House members back to Washington would be driven by what the Senate does.

Reid’s office responded shortly thereafter, insisting the House act on Senate legislation passed in July that would raise tax rates only on incomes above $200,000 for individuals and $250,000 for couples. Obama has been pushing for a variant of that Senate bill that would include an extension of jobless aid and some surgical spending reductions to prevent the steeper and broader spending cuts from kicking in.

For the Senate to act would require a commitment from McConnell not to demand a 60-vote margin to consider the legislation on the Senate floor. McConnell’s office says it’s too early to make such an assessment because Obama’s plan is unclear on whether extended benefits for the unemployed would be paid for with cuts in other programs or on how it would deal with an expiring estate tax, among other issues.

What’s more, Boehner would have to let the bill get to the House floor for a vote. Given the calendar, chances of accomplishing that by Monday were becoming a long shot.