December 29, 2012

Obama, Senate leaders on verge of deal to avoid 'fiscal cliff'

But questions remain about the House action if the deal passes the Senate.

By LORI MONTGOMERY PAUL KANE The Washington Post

(Continued from page 1)

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President Obama speaks to reporters in the Brady Press Briefing Room at the White House in Washington on Friday after meeting with congressional leaders regarding the fiscal cliff.

The Associated Press

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By the end of the meeting, according to a House Republican briefed on the session, "it was clear that the sequester is not likely to be addressed in any immediate agreement."

Many Republicans are alarmed by the prospect of deep cuts to the military, which outgoing Defense Secretary Leon Panetta has said would be devastating to national security. Sen. John McCain, R-Ariz., said Friday that many Republicans would find it difficult to support a fiscal-cliff package that let the cuts take effect.

"I don't see how you could do a deal without sequestration being part of it," McCain said. "Too many of us care too much about it."

Obama and Senate leaders have also concluded that time is too short to work on a package of significant cuts to federal health and retirement programs, the top priority of many Republicans. Without major changes to those programs, the deal will not include an agreement to raise the legal limit on government borrowing, setting up another fierce battle over the debt limit in the next two months.

Threading all the legislative needles now falls to Reid and McConnell, who pledged to work together to craft a package that can win significant bipartisan support.

"I believe such a proposal could pass both houses with bipartisan majorities as long as those leaders allow it to actually come to a vote," Obama said. "If members of the House or the Senate want to vote no, they can. But we should let everybody vote. That's the way this is supposed to work."

If that effort fails, Obama said, he has asked Reid to press ahead with a bare-bones bill that would keep the president's campaign promise to raise taxes on income over $250,000 and extend emergency unemployment benefits for the long-term unemployed.

Either way, the wheels are now in motion for the Senate to vote on New Year's Eve, Senate aides said. If that vote were successful, the Republican-controlled House would have mere hours to decide whether to approve the legislation or take the blame for letting taxes rise next month for nearly 90 percent of Americans -- and for potentially sparking a new recession.

Financial markets are already churning over the situation in Washington. On Wall Street, a week-long selloff continued Friday with investors growing increasingly pessimistic that Congress would take action to avoid the fiscal cliff. The Dow Jones industrial average dropped 158 points, or 1.2 percent.

On Friday, Boehner offered few hints about how he will respond to the new flurry of activity. Since a humiliating House rejection last week of an alternative plan, Boehner has said it is the responsibility of the Senate to act.

At the White House, according to the House Republican briefed on the meeting, Boehner repeatedly deferred to Senate leaders on policy details, saying only: "Let us know what you come up with, and we'll consider it -- accept it or amend it."

By New Year's Eve, however, there would be no time before the year-end deadline for House amendments, which would require yet another vote in the Senate. Boehner would have a choice: Go over the fiscal cliff, or bring a bill to the floor that might win the support of a majority of Democrats and only a fraction of his own Republican caucus.

Rank-and-file House members, who won't return to the Capitol until Sunday evening, were anxiously awaiting word on the developments from afar. Many had hoped for a package that would cut trillions of dollars from the federal deficit, a goal that would not be met by the stripped-down package under construction in the Senate.

Rep. Jason Chaffetz, R-Utah, said he has an "open mind" about a last-minute deal, but sounded a skeptical note. "Our No. 1 priority is cutting spending," he said. "The problem is that we're not actually solving the problem."

But Rep. Steven LaTourette, R-Ohio, a close friend of Boehner's, said he could offer his support for a limited deal if the speaker requested it.

"A small-ball bill would be horribly disappointing to me," said LaTourette, who has repeatedly said he'd be willing to raise taxes only as part of a far-reaching deficit-reduction agreement. But, he said, "I'm a Team Boehner guy, and I will support the speaker."

 

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