The Charleston Gazette is a member of the Politico Network.
The tit-for-tat over avoiding the fiscal cliff slogged onward Sunday, as Senate leaders remained essentially stuck following ...
The tit-for-tat over avoiding the fiscal cliff slogged onward Sunday, as Senate leaders remained essentially stuck following a frantic day of horse-trading and bitter attacks by both Democrats and Republicans.
Both sides now have 48 hours to resolve their differences, or risk a double whammy of historic tax hikes and spending cuts that will make them even more unpopular outside-the-Beltway.
After every breakthrough, there seemed to be a new obstacle standing in the way of a deal, underlining the perception that the nation's lawmakers and the White House simply can't come to terms with each other. Vice President Joe Biden -- who had remained on the sidelines for much of the negotiations -- returned to Washington on Sunday after Senate Minority Leader Mitch McConnell (R-Ky.) requested it.
"Mr. President, I rise today frustrated, embarrassed and angry," said West Virginia Democratic Sen. Joe Manchin on the floor Sunday. "It is absolutely inexcusable that all of us find ourselves in this place at this time, standing on the floor of the Senate in front of the American people hours before we plunge off the fiscal cliff. With no plan and no apparent hope."
After loud Democratic protests on Sunday, Republicans agreed to take off the table a controversial provision that would have cut Social Security benefits. But more hurdles emerged, including over automatic spending cuts set to take place next year, and the rates for estate taxes that are set to balloon if no deal is reached by the new year.
With no deal at hand, Senate leaders were preparing alternative plans to avoid the cliff's full impact, including a fall-back option floated by Democrats to force through an extension of current tax rates for families who make less than $250,000, as well as new spending measures to extend jobless benefits for two million unemployed Americans. Republicans were still weighing whether they'd demand 60 votes for passage of even a limited measure, though the prospects for such a bill in the GOP-controlled House remained bleak.
The House Republican leadership moved Sunday night to give itself expedited authority to bring legislation to the floor in case there was an opening.
There is also clearly growing tensions between McConnell and Senate Majority Leader Harry Reid (D-Nev.), the pair who took over the fiscal cliff talks on Friday following weeks of fruitless discussions between President Barack Obama and Speaker John Boehner (R-Ohio).
Democrats are angry at McConnell, believing he's adopted the "majority of majority" standard Boehner has demanded in the House for the Senate. McConnell does not believe Reid is playing straight with him, saying the Nevada Democrats has shown little urgency by dragging his feet through the weekend of talks.
McConnell even called in Biden to help break the logjam, although the vice president has offered nothing different from Reid's position.
"There is still significant distance between the two sides, but negotiations continue," Reid said Sunday evening, announcing that the chamber would return to session Monday morning.
On Sunday afternoon, a new sticking point emerged over "turning off" the sequester, the tens of billions of dollars in spending cuts slated to hit the Pentagon and federal agencies beginning Jan. 2. Democrats want to use some of the revenue from the increased taxes of a cliff deal to postpone those cuts. Republicans, however, are objecting to that proposal, saying they want savings from other areas.
Democrats have floated a potential compromise to use a portion of the new revenue and other savings from a cliff deal -- a "50/50 split" -- to "turn off" the sequester, but it is unclear if GOP leaders will agree to that offer.
And Biden's inclusion in the negotiations -- similar to the role he played in previous legislative fights involving McConnell, an old Senate colleague -- sets up a "good cop, bad cop" scenario for Democrats, with Reid playing the heavy and Biden able to work more closely with GOP leaders on Capitol Hill.
But Democrats are not convinced McConnell or Boehner will be able to cobble together enough votes on their side of the aisle to support any bipartisan agreement the two sides reach.
Republicans, for their part, aren't sure Reid and Obama even want a deal, believing Democrats figure that they win politically if no agreement is reached and the country goes off the cliff.
Yet GOP senators later said the measure wasn't a must-have demand for them. And Vice President Joe Biden, at McConnell's request, has become directly involved in the negotiations, providing new impetus -- although not necessarily a decisive push -- to the talks.
If no deal is reached, Reid will push a proposal to raise taxes for families making over $250,000 in income, though Republicans say that stands little chance of passing both chambers before New Year's Day. With no deal, about $500 billion in tax hikes and spending cuts would take effect in 2013, a double-dose of austerity that could send the economy back into recession.
Republicans were still weighing their strategy if Reid moves forward with a fall-back plan. If they consent to a simple majority vote, the bill could pass the Senate, putting House leaders in a difficult position on the eve of the fiscal cliff. But if Senate GOPers demand 60 votes, they could be blamed for blocking a last-ditch deal to avert massive tax hikes.
"We'd like to be able to offer some amendments," said Sen. John Cornyn (R-Texas), the incoming GOP whip. "It depends on the majority leader."
Leaving an afternoon caucus meeting, Florida Sen. Marco Rubio said that many GOP senators were ready to allow a simple majority threshold, though he noted any individual senator could demand 60 votes for passage.
"By and large, members here, from what I've heard are willing to allow these things to be voted on in a simple majority fashion," Rubio said.
House Republicans -- who brought their chamber back to session Sunday -- are waiting for the Senate to pass a bill, and do not plan to move any bill on their own.
Some Republicans -- such as Nevada Sen. Dean Heller -- said they'd be willing to sign onto a deal with a tax-hike threshold at $400,000.
Administration officials predict the president will get what he wants on tax rates -- it's just a matter of how long Republicans want to stand in the way.
If Senate leaders are unable to reach a bipartisan compromise, the White House is confident that the Senate will pass the president's plan to extend the tax cuts on income below $250,000 either because McConnell will allow approval by a simple majority or because enough Republicans will help break a filibuster. They viewed several potential Republican defections, including Sen. Olympia Snowe of Maine and Sen. Dick Lugar of Indiana, who suggested that they could back the president's plan, as upping the pressure on McConnell to strike a more favorable deal for his party. Lugar said Sunday he didn't know how he'd vote on the Democratic plan.
It remains unclear what the president views as his tipping point. White House officials say Obama's willingness to accept a higher income threshold depends on what else is in the package, but he would expect greater concessions from Republicans.
But Democrats are not sure that McConnell will ultimately agree to raising taxes on any income group, even those making $400,000 or more.
"McConnell knows exactly what it is going to take" to get an agreement with Reid and the White House, said one Democratic insider. "The question is can he bring himself to do it."
"We are still left with the proposal they've given that protects the wealthy and not the middle class and I am not going to accept that," Reid told reporters late on Sunday afternoon.
Earlier in the day, negotiations between Reid and McConnell suffered a "major setback" after Republicans demanded the inclusion of a new method for calculating entitlement benefits as part of the cliff package, according to Democrats.
The provision, known as "chained CPI," is opposed by many liberals because it would result in lower payments for Social Security beneficiaries.
While Obama backed the chained CPI provision as part of a major deficit package just two weeks ago, Democrats are objecting to including this as part of negotiations on a scaled-down cliff deal.
Democrats insist they've already given ground on other issues, including raising the threshold for new taxes to around $400,000 annually, as well as showing flexibility on estate taxes, sources said.
But Republicans were calling for inclusion of the chained CPI provision in exchange for raising taxes.
On the Senate floor early on Sunday, Reid ruled out any cuts to Social Security as part of any agreement to avert the cliff.
"The one thing I do want to mention is we're not going to have any Social Security cuts at this stage. That just doesn't seen appropriate," Reid said.
Democrats later left a closed-door Democratic Caucus meeting on Sunday afternoon united, with many prepared to go over the cliff if no deal is reached that they would like.
"The world won't end -- remember Y2K?" said Sen. Tom Harkin (D-Iowa). "If this thing goes on, all of a sudden, the people find out there's a lot of revenue coming into the government - and we have a sequester that we can deal with in January and February, and I think we will. I think then perhaps - then Republicans won't have to vote to raise taxes, we'll all be voting to cut taxes."
Indeed, Republicans suspected Democrats were not acting in good faith given the feeling among many that falling off the cliff remained a viable option.
"The majority leader's staff informed us they would be getting back to us this morning at 10 a.m., despite the obvious time crunch we all have," McConnell said early Sunday. "It's now 2 p.m., and we have yet to receive a response to our good-faith offer. Now, I'm concerned about the lack of urgency here. I think we all know we're running out of time."
"There is no single issue that remains an impossible sticking point," McConnell added. "I'm willing to get this done, but I need a dance partner."
GOP senators confirmed that McConnell dropped the chained CPI measure from his list of demands, but now say they want to make sure Obama and Democrats don't use new revenue from higher taxes to boost government spending.
"We are negotiating in good faith so we have taken that off the table," Sen. Kelly Ayotte (R-N.H.) said of the chained CPI.
Ayotte acknowledged that there was opposition to the chained CPI in her own caucus, saying more than half of Senate Republicans supported excluding it from any deal.
Ayotte said a Republican sticking point now is that new taxes not be used for new spending. "Where we are now is raising taxes for new spending and that's an issue," Ayotte said.
After a high-stakes White House meeting Friday, Reid and McConnell have in these past couple days focused on a smaller-scale deal to prevent most income taxes from rising, stop the alternative minimum tax from hitting millions of middle-income earners and head off steep cuts in Medicare payments to doctors. Democrats are also pushing hard to extend jobless benefits for some two million people, while McConnell wants to block a significant expansion of the estate tax.
Gone are hopes for a sweeping deal: The proposals under consideration would do little to control the skyrocketing deficit. And it's exceedingly unlikely that a proposal would roll back the $109 billion in domestic and defense spending cuts set to take effect in 2013. Defense Secretary Leon Panetta has told senators he expects the defense cuts -- which he has long warned would devastate the military -- will begin to take effect in the new year.
Absent a deal, Democrats were preparing for a long week in Washington.
"My expectation is we will be here probably every day for the next week," said Sen. Chris Coons (D-Del.).
Seung Min Kim, Ginger Gibson, Kate Nocera, Carrie Budoff Brown and Jake Sherman contributed to this report.