December 28, 2012

Obama to Urge Fiscal Vote in Senate if Two-Party Talks Fail


By  and n

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.

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.

“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.”

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.

“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.

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 be imperfect.”

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.

“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.”

Mr. Obama took steps to keep the pressure on throughout the weekend, scheduling an appearance on Sunday’s “Meet the Press” on NBC.

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.

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.

This was the first time in weeks that Mr. Obama met with the four Congressional leaders — Mr. Reid, Mr. McConnell, Mr. Boehner and Representative Nacy Pelosi, the Democratic leader.

The meeting started with the president reiterating his demand for an extension of tax cuts on incomes below $250,000.

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 “gelling” 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.

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.

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.

“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.

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.

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.”

“Hopefully there is still time for an agreement of some kind that saves the taxpayers from a wholly preventable economic crisis,” he added.

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.