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ASSOCIATED PRESS
Senate Majority Leader Harry Reid of Nevada, left, and Senate Minority Leader Mitch McConnell of Kentucky attend a ceremony at the U.S. Capitol building on July 11, 2012, in Washington.
By Karoun Demirjian (contact) 
Sunday, Dec. 30, 2012 | 12:08 p.m.
Sun coverage
- Heller says he would consider deal with higher tax threshold (12-30-2012)
- Congressional leaders upbeat about deal to avert ‘fiscal cliff’ (12-28-2012)
- Fiscal cliff fix comes down to its designers: Reid, McConnell (12-28-2012)
- Reid offers little hope of averting ‘fiscal cliff’ (12-27-2012)
- Fiscal cliff: House, Senate leaders — minus Boehner — prepare to meet Obama (12-27-2012)
- Reid says Boehner wasted time with doomed ‘fiscal cliff’ plan (12-21-2012)
- More Sun political news
Sens. Harry Reid and Mitch McConnell were the last great hope for a "fiscal cliff" deal, and both pledged last week they would try to strike one by Sunday afternoon.
But now that it’s Sunday, things don’t look too promising.
Senate Democrats and Senate Republicans were scheduled to huddle in the Capitol today to discuss what everyone thought would be a budding deal at 3 p.m. EST. But with less than an hour before that meeting, Reid said that negotiations had stalled because his office couldn’t come up with a counteroffer to the Republicans.
“At this stage, we’re not able to make a counteroffer,” Reid said.
McConnell had submitted the Republicans’ latest offer to Reid around 7 p.m. Saturday night and were expecting a response by no later than 10 a.m. this morning.
“It’s now 2 p.m., and we’ve yet to receive a response to our good-faith offer,” McConnell said today on the Senate floor. “Now I’m concerned about the lack of urgency here. I think we all know we’re running out of time. There’s far too much at stake for political gamesmanship.”
McConnell noted that he’d even called Vice President Joe Biden “to see if he could help jump-start negotiations on his side,” McConnell said. The two have a longstanding relationship that dates to their days in the Senate. “I’m willing to get this done, but I need a dance partner.”
Reid didn’t question McConnell’s commitment to the negotiations but did throw water on the idea that they would yield fruit.
“I think the Republican leader has shown absolutely good faith,” Reid said, adding that he wished McConnell well in his conversations with Biden. “It’s just that we’re apart on some pretty big issues.”
Those sticking points might seem rather familiar to those who have been watching the fiscal cliff crisis unfold.
According to a Democratic aide with knowledge of the negotiations, the Republican offer McConnell made Saturday night echoed some elements of the plan President Barack Obama floated two weeks ago.
Like the president’s initial plan, McConnell suggested extending current, reduced tax rates up to income levels of $400,000, then allowing them to rise on income levels above that, and keeping unemployment benefits at their current levels. In exchange for those extensions, McConnell’s plan instructed the government to implement a cost-saving calculation of Social Security benefits, known as “chained CPI.”
Chained CPI, as opposed to the regular consumer price index, assumes that consumers make substitutions for various goods when they are on limited income. The result is that chained CPI inflates more slowly over time than the standard CPI, meaning the government pays out less in Social Security benefit checks over the long haul than they are presently anticipated to do.
But those two elements were part of a broader package under the president’s plan, which also included a deferral of sequestration cuts and increased authority for the president to raise the national debt limit. The country is perilously close to running up against that limitation on its borrowing authority.
Reid has never liked the idea of touching Social Security. After the election, Reid said Social Security was off-limits as part of a fiscal cliff deal. When the president raised the idea of linking a fiscal cliff deal to chained CPI two weeks ago, Reid held his tongue on Social Security, praising Obama for being “too generous” with his offer and refusing to comment specifically on the Social Security element of his proposal.
Today, Reid made plain, however, that if Social Security was part of the deal, he would not accept anything less than the president’s plan.
“We will not agree to cut Social Security benefits as part of a small or short-term agreement,” Reid said. “At some point in the negotiating process, it becomes obvious that the other side is demanding concessions the other side is unwilling to make. ... I hope we’re not there, but we’re getting real close.”
When asked why the Democratic counteroffer could not simply be to resuscitate the president’s full proposal, the aide said “we’re past that point.”
In the two weeks since Obama first floated his fuller, $400,000-threshold proposal to House Speaker John Boehner, there have been several developments. First, Boehner rejected the president’s offer. Then Boehner was unable to get his own counteroffer, a “Plan B” that would have extended current tax rates up to $1 million, past the House of Representatives.
In the days before Christmas, the president said he wanted to see Congress pass a limited package of fiscal remedies, including an extension of tax rates only up to $250,000 and an extension of unemployment benefits. Short of that, the president said Friday, Reid should bring up a bill to pass that combination and hope the Republicans don’t filibuster.
Reid already has queued up such a bill; it would be ready for a vote Monday, but there is no guarantee Republicans are ready to play along with something they see as a political gesture.
Earlier today, Obama indicated in a taped interview for "Meet the Press" that if that backup plan didn’t progress past Congress, Republicans would be at fault.
“Republicans will have to decide if they’re going to block it, which will mean that middle-class taxes do go up,” Obama said. “I don’t think they would want to do that politically, but they may end up doing it.”
Boehner released a statement a few hours after it aired decrying the president for pointing fingers.
“Americans elected President Obama to lead, not cast blame,” it read. “The president’s comments today are ironic, as a recurring theme of our negotiations was his unwillingness to agree to anything that would require him to stand up to his own party.”
Obama added that if the venture fails, Democrats would introduce new legislation to extend tax rates up to $250,000 and unemployment benefits on the first day of the next Congress, which is Thursday.
Republican support for such a plan may be far more likely in the next Congress than the current one. On Tuesday, if Congress does not enact a plan to avert the fiscal cliff, tax rates rise — eviscerating the argument that the offers and counteroffers that have been proposed will raise taxes on any subsection of the population. After Tuesday, those same plans become tax rate reducers.
If Congress takes a few days past Tuesday's deadline to iron out the fiscal cliff, it is unlikely that the country would feel any adverse economic impact. It would take months for the full effect of the fiscal cliff to take effect; in the meantime, it still would take weeks before higher tax rates are reflected in 2013 paychecks. Finally, the increased revenue-on-paper that a technical “fall” off the fiscal cliff will bring to the federal government ought to extend the government’s projected borrowing ability under the current debt ceiling threshold.
Forget about the tax increases. If there's no deal people with stock market holdings will likely lose in one day what they would pay extra over the course of the year in extra taxes. Dumb politicians.
We're in a sad, sad time... our federal government is incapable of governing and we re-elected 90+% of the incumbents. I don't really blame congress though, as they're just representing what has become a dysfunctional society. We talk nasty to and belittle each other (read the comments on articles from both sides). Everybody HAS to be 100% right!
75% of the House of Representatives come from gerrymandered "safe" districts, where being a centrist or compromiser is the kiss of death. You hoist a red flag or the blue flag... it's the Bloods and Crypts only with suits and ties. "Drive-bys" replace civil discourse... scoring political points is far more important than solving issues.
David Brooks:
"What's happening in Washington right now is pathetic. When you think about what the revolutionary generation did, what the civil war generation did, what the World War II generation did -- we're asking not to bankrupt our children and we've got a shambolic, dysfunctional process," Brooks said during an appearance on NBC's "Meet the Press."
"Most of the blame still has to go to the Republicans," he continued. "They've had a brain freeze since the election. They have no strategy. They don't know what they want. They haven't decided what they want."
Jeff, Harry Reid has shown himself to be just as horrendous as the Republicans. This is just a travesty. Disfunctional children having a territorial pissing contest. How sad.
Happy New Year, America! Our elected officials have shown just what they are made of. All of 'em.
Heretic is right about the pissing contest and we are all in the middle of it. Hope you all brought your umbrellas.
Yes! We MUST keep Social Security cuts on the table! If it comes down to Social Security cuts versus more taxes for the job creators the job creators MUST win out! We TeaPublicans MUST take care of the wealthy 2 percent simply because the wealthy ARE the ones that take care of the other 98 percent! These folks have got to realize that you can't bite the wealthy hand that feeds you! This is a battle of socialism versus Capitalism and Capitalism MUST win out!
MotorSports........
Great comments.
You're 100% on the mark.
Greedy, heartless republicans made ALL OF THIS
MESS.
These republican reptiles are trying to cut
Social Security in this fiscal deal.
THAT'S NOT GOING TO HAPPEN!
THIS IS ABOUT TAXES, PERIOD.
These horrible republicans need to keep their
greedy hands OFF OF OUR SOCIAL SECURITY!
PEROID!
That picture of Reid and McConnell - two old guys who look as if they shouldn't be driving any more and should have their drivers' licenses taken away.
@TeapublicanPatriot:
Can't figure out if you are being facetious in your post or you actually mean what you are saying. But, hey it's still early in the AM; maybe I just need more coffee!!
It looks to me the blame will fall on Harry, Not sure what medications he is on, the deal linking ss is a real one, and will hardly affect those getting payments as it represents only about 20% of their total income or benifits. If someone is living off SS entirely then I am sure there will be other options available for help if needed. Harry is grandstanding.
Obama has no worries about getting re-elected anymore, but Republicans in the House do.
Fall on your swords for the uber-rich Republicans!
I m watching with popcorn..
:-)
@petef....I live entirely on Social Security so these negotiations have the potential to impact how well I live. Perhaps you could suggest those "other" options available. There are, of course, the death panels. At the lesser extreme I could go from Dinty Moore stew to a high quality dog food except that the dog food is already better quality than Dinty Moore...and more expensive. Fortunately I realized that my $1250/month Social Security would be tight so I made sure that my land and Airstream were completely paid for, that I moved to a very rural, low tax environment and that I had not lost my farming and gardening skills. If I had to live in an urban area I would likely be trapped in some abysmal subsidized housing, eating wretched slop at the Senior Center and watching my peers slide slowly into the welfare state that you have planned for us.
It seems to me, that this "issue" should have been discussed before the election. It's not like they didn't know this was coming down the pike.
Maybe the results might have been a bit different.
To the person that mentioned how the Supreme Court and Congress are EXEMPT, that needs to change. Congress needs to be subject to everything that the pass for the "people"