Politics

December 28, 2012

Obama calls for last-ditch fiscal cliff discussions

Congressional leaders say they'll talk to the president, but some wonder if there is still time to agree on a deal.

By LORI MONTGOMERY and ROSALIND S. HELDERMAN The Washington Post

WASHINGTON - President Barack Obama summoned congressional leaders to a Friday summit at the White House in a last-ditch effort to protect taxpayers, unemployed workers and the fragile U.S. recovery from severe austerity measures set to hit in just four days.

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President Barack Obama walks past a Marine honor guard as he steps off the Marine One helicopter and walks on the South Lawn at the White House in Washington, Thursday, Dec. 27, 2012, as he returned early from his Hawaii vacation for meetings on the fiscal cliff. (AP Photo/Charles Dharapak)

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House Minority Whip Rep. Steny Hoyer of Md. gestures during a news conference in Washington, Capitol Hill, Thursday, Dec. 27, 2012, where he urged House Republicans to end the pro forma session and call the House back into legislative session to negotiate a solution to the fiscal cliff. (AP Photo/ Evan Vucci)

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Also Thursday, House Speaker John Boehner, R-Ohio, announced that he would call the House back into session this weekend. And in perhaps the most significant development, Senate Minority Leader Mitch McConnell, R-Ky., for the first time was engaged directly in talks with the White House. He signaled an interest in cutting a deal.

"The truth is, we're coming up against a hard deadline here ... and Republicans aren't about to write a blank check for anything Senate Democrats put forward just because we find ourselves at the edge of the cliff," McConnell said in a speech Thursday afternoon on the Senate floor.

"We'll see what the president has to propose," McConnell said. "Hopefully, there is still time for an agreement of some kind that saves the taxpayers from a wholly preventable economic crisis."

This marks just the fifth time since the 1930s that members of Congress have been dragged back from holiday break to a post-Christmas session in Washington.

With uncertainty about a solution producing volatility in the equity markets, aides in both parties expressed hope that legislation could be enacted before the New Year's Eve deadline. They cautioned, however, that quick action would require leaders in both chambers to rally firmly around a specific set of proposals.

Democratic U.S. Rep. Mike Michaud of Maine told the Press Herald that negotiators should have stayed in Washington last week until a deal was complete.

Michaud had planned to vote against Boehner's "Plan B" had it been brought to the floor last week and has supported the Democratic plan to extend the tax cuts only for families earning less than $250,000 a year.

"The lack of progress so far and the last-minute maneuvering not only makes Washington look incompetent, it could also damage our economy and impact millions of people," Michaud said in a prepared statement. "Both sides need to work together, and the finger-pointing and excuses must end."

Rep. Chellie Pingree was among Democrats calling on the House Republican leadership to allow a vote on the Senate-passed plan to extend tax cuts for those earning $250,000 or less.

"If Republican leaders would give us the chance to vote on that, I think it would pass and we could avert this crisis," Pingree said in a statement. "Unfortunately, again and again the roadblock is a group of extremist Republicans in the House who wouldn't even support a deal that gives millionaires a huge tax break."

Pingree is married to S. Donald Sussman, majority share owner of the Portland Press Herald.

One option that could potentially win broad support, aides said, was allowing taxes to rise on household income over $400,000 a year -- Obama's latest offer in negotiations with Boehner -- rather than the lower threshold of $250,000 a year, as Obama proposed during the presidential campaign. Publicly, there was little sign of such a thaw Thursday.

Instead, a sense of gloom pervaded the Capitol. Senate Majority Leader Harry Reid, D-Nev., openly speculated on the Senate floor that there may no longer be time to avoid more than $500 billion in tax increases and spending cuts scheduled to take effect next week.

In preparation for that possibility, each party stepped up efforts to proactively deflect blame.

Reid urged the House to take up an "escape hatch" bill adopted by the Senate in July that would forestall the worst of the cliff's economic consequences by extending tax breaks adopted under President George W. Bush for income under $250,000.

He charged that Boehner is running a "dictatorship" in the House, refusing to bring forward the legislation because it might pass with broad Democratic support and a handful of Republican votes.

"Nothing can move forward in regards to our budget crisis unless Speaker Boehner and Leader McConnell are willing to participate in coming up with a bipartisan plan," Reid said. "So far, they are radio-silent."

McConnell retorted that Republicans have been eager to work with Obama. After one-on-one talks between Obama and Boehner failed to produce a broad deficit-reduction package last week, McConnell said it is now the president's responsibility to put forward a new plan.

"Republicans bent over backwards," he said. "We wanted an agreement. But we had no takers. The phone never rang."

McConnell said the Senate's bill was not a viable option because it was approved with only Democratic votes and because measures dealing with revenue are required by the Constitution to originate in the House.

Boehner also told Republican lawmakers in a conference call that the Senate must act first. He said the Senate should take up and amend a bill passed by House Republicans in August to extend tax breaks for Americans at all income levels and another approved in May that would shift military spending cuts set for next month to domestic programs.

The day was rife with rumors of behind-the-scenes movement, evidence of the anxious energy that has gripped Washington as the deadline approaches.

The first round of excitement came when McConnell sent an email to Republican senators suggesting that Obama "would finally be proposing a package to avoid the cliff and I agreed to review it," according to a copy of the email given to The Washington Post.

White House officials and Senate Democrats denied that a new proposal was forthcoming. But McConnell continued to insist throughout the day that he was eager to review the new offer. Ultimately, both parties confirmed that quiet talks were under way between aides to McConnell and senior White House officials.

The scope of the package under discussion appeared to follow the contours Obama laid out Friday in a news conference where he urged Congress to extend expiring tax cuts for 98 percent of taxpayers and to keep benefits flowing to about 2 million long-term unemployed. Also, aides said, talks were focused on preserving low tax rates for inherited estates and extending tax breaks for college tuition and the working poor.

But aides said that time had probably run out for an agreement on significant spending cuts or to lift the legal limit on government borrowing, which will have to be done within the next two months.

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