WASHINGTON -- Democrats and Republicans on Capitol Hill moved closer to a compromise to avert part of the so-called fiscal cliff, but theyremained unable to close a deal during an unusual Sunday session of negotiations punctuated by rounds of political finger-pointing.
After talks hit a standstill early in the day, the administration answered a plea from Senate Republican Leader Mitch McConnell of Kentucky to send Vice President Joe Biden to broker the negotiations.
“I’m willing to get this done, but I need a dance partner,” McConnell said on the Senate floor.
Biden and McConnell talked by phone throughout the afternoon as the two sides appeared to close in on a potential compromise.
Republicans have said they are willing to raise taxes on wealthier households, and their latest offer pushed the threshold for tax increases to roughly $550,000 in taxable income for couples and $450,000 for single households. The most recent offer from Democrats had set the tax level slightly lower, around $450,000 for couples and $360,000 for singles.
But Republicans were also seeking to preserve inheritance taxes at current rates and keep automatic spending cuts in place, which Democrats oppose. Democrats also want to continue long-term unemployment benefits as part of the year-end package.
“We understand taxes are going up on the wealthy, baked in the cake, that's going to happen,” said Sen. Bob Corker (R-Tenn.). But Corker said Democratic proposals to use the revenue gained as a way of delaying the looming automatic spending cuts were out of bounds. “That’s outrageous,” he said.
Other sticking points remain over adjustments to the rates Medicare pays doctors and a fix to the tax code to protect middle-income Americans from the alternative minimum tax, which was designed to prevent tax avoidance by the wealthy. Both provisions involve laws that are not indexed for inflation and require annual adjustments by Congress.
President Obama made clear the line of attack that the White House would use against Republican leaders if Congress could find a resolution to the fiscal cliff – the automatic spending cuts and tax hikes that are scheduled to begin rippling across the economy at the start of the new year.
“They have had trouble saying yes to a number of repeated offers,” Obama said in an interview on “Meet the Press,” which was taped on Saturday.
“If they can't do a comprehensive package of smart deficit reductions, let's at minimum make sure that people's taxes don't go up and that 2 million people don't lose their unemployment insurance.
“The pressure's on Congress to produce.”
The president’s fallback proposal, which would allow tax hikes on those with incomes above $250,000 and include other must-pass year-end measures, remains a last-ditch option that could come to a vote Monday. Republicans would probably launch a filibuster to block that bill, which would put them in the politically difficult position of preventing a tax cut for the vast majority of Americans.
The negotiations between McConnell and Majority Leader Harry Reid of Nevada suffered a major setback at midday Sunday when Republicans demanded – and Democrats rejected -- a move to trim cost-of-living increases for Social Security recipients.
“We're not going to have any Social Security cuts,” Reid said.
An aide speaking anonymously in order to discuss the talks said the Democratic leader “was taken aback and disappointed” by the Republican proposal. “We feel we are further apart than we were 24 hours ago.”
Adjusting the cost of living for recipients of government benefits, including Social Security, had once been offered by Obama in previous talks with House Speaker John A. Boehner (R-Ohio) when the two were negotiating a broader deficit reduction deal. But Democrats have rejected inclusion of the idea in the more limited package now under discussion.
Republican senators distanced themselves from McConnell’s proposal soon after it became public.
“I'm not a fan,” said retiring Sen. Olympia Snowe (R-Maine), emerging from a closed meeting of GOP senators. “I don't think it should be part of it, and I think there are others who shared that view.”
Sen. John McCain (R-Ariz.) spelled out the public relations challenge the proposal posed for his party. “What [Democrats] are saying now is, ‘Republicans want to preserve tax breaks for rich people and give up seniors’ Social Security,’” he said. “It should be off the table. And I think most Republicans believe it should be off the table.”