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Fiscal cliff deal in peril as Senate negotiations enter standstill Fiscal cliff deal in peril as Senate negotiations enter standstill
(about 7 hours later)
Hopes of a last-minute deal to avert the fiscal cliff faded on Sunday when Senate leaders failed to meet a target for agreement and said they remained far apart on key issues. Brinkmanship in Washington took America into a final day scramble to avert the fiscal cliff, after talks between Senate leaders broke up with no deal in sight.
Harry Reid, the Democratic Senate majority leader, and Mitch McConnell, who heads the Senate's Republican minority, emerged from closed-door talks shortly before 3pm to inform colleagues in the chamber they remained deadlocked. Harry Reid, the Democratic Senate majority leader, and Mitch McConnell, who heads the chamber's Republican minority, ended more than a day of on-off talks on Capitol Hill without an agreement and with nothing for lawmakers to vote on. It brings closer the prospect that America could plunge off the so-called fiscal cliff at midnight on Monday, triggering swingeing spending cuts and across-the-board tax increases.
Talks were expected to resume on Monday, but with the clock ticking inexorably towards the new year deadline, few in Washington were optimistic about a deal.
McConnell said no single issue remained an "impossible sticking point" and blamed Democrats for not responding to a Republican offer made on Saturday evening.McConnell said no single issue remained an "impossible sticking point" and blamed Democrats for not responding to a Republican offer made on Saturday evening.
"It's now 2pm and we've yet to receive a response to our good-faith offer. I'm concerned at the lack of urgency here." He called vice-president Joe Biden, with whom he has worked before, to try to "jump start" negotiations. "I'm still willing to get this done but I need a dance partner."
He said he called vice-president Joe Biden, with whom he has worked before, to try to "jump start" negotiations. "I'm still willing to get this done but I need a dance partner." Reid said the Republicans had a made a good-faith proposal but that the two sides remained apart on some "pretty big issues" and the Democrats could not respond.
Reid said the Republicans had a made a good-faith proposal but that both sides remained apart on "pretty big issues" and that Democrats could not respond. "We've been negotiating now for 36 hours or thereabouts. We've been trying … but at this stage we're not able to make a counter-offer."
We've been negotiating now for 36 hours or thereabouts. We've been trying … but at this stage we're not able to make a counter-offer." Republican senators withdrew a demand over a new way of calculating inflation that would have cut social security and other social programmes, but the concession failed to bridge the gap between the two sides.
As such, the 3pm target for them to present a framework agreement to colleagues passed with no hint of a deal forthcoming. The deadlock cast gloom over the US just hours after Barack Obama tried to inject hope with a final pitch to Congress to act on the fiscal cliff.
Reid hoped McConnell and Biden might break the deadlock. "I wish them well." Senate Democrats may yet respond to the GOP offer, he said, "as the day wears on". In a rare foray on to the weekly round of political talk shows, the president sought to put the blame for the looming economic crisis firmly at the door of the Republican party, accusing his opponents of having "trouble saying yes" to any proposal put before them.
The announcements cast renewed gloom over Capitol Hill just hours after President Barack Obama made a final pitch to Congress to act on the fiscal cliff.
In a rare foray onto the weekly round of political talk shows, the president sought to put the blame for looming economic crisis firmly at the door of the Republican party, accusing his opponents of having "trouble saying yes" to any proposal put before them.
"They say that their biggest priority is making sure that we deal with the deficit in a serious way, but the way they're behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected. That seems to be their only overriding, unifying theme," Obama said."They say that their biggest priority is making sure that we deal with the deficit in a serious way, but the way they're behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected. That seems to be their only overriding, unifying theme," Obama said.
The pointed remarks came as lawmakers in Washington prepared for a rare Sunday session. The pointed remarks came as lawmakers in Washington prepared for a rare Sunday session, which convened only to break up hours later with no vote.
Congress has until midnight on Monday to find a solution to the current fiasco. That deadline will automatically trigger a series of fiscal measures that experts have said could plunge the US back into a recessionCongress has until midnight on Monday to find a solution to the current fiasco. That deadline will automatically trigger a series of fiscal measures that experts have said could plunge the US back into a recession
If no deal is done, 88% of Americans will see their taxes rise on 1 January, a wave of deep spending cuts will start to take effect, and 2 million long-term unemployed people will lose their benefits.If no deal is done, 88% of Americans will see their taxes rise on 1 January, a wave of deep spending cuts will start to take effect, and 2 million long-term unemployed people will lose their benefits.
The task of reaching a compromise has fallen on Reid and McConnell. Both men were summoned to the White House on Friday, alongside House speaker John Boehner and minority leader Nancy Pelosi. Treasury secretary Timothy Geithner was also in attendance. The task of reaching a compromise had fallen on Reid and McConnell. Both men were summoned to the White House on Friday, alongside House speaker John Boehner and minority leader Nancy Pelosi. Treasury secretary Timothy Geithner was also in attendance.
After that meeting, Obama said he remained "modestly optimistic" that a deal could be achieved.After that meeting, Obama said he remained "modestly optimistic" that a deal could be achieved.
But since then there has been no firm indication that a grand compromise was indeed obtainable.But since then there has been no firm indication that a grand compromise was indeed obtainable.
"I was modestly optimistic yesterday, but we don't yet see an agreement. And now the pressure's on Congress to produce," Obama told NBC's Meet the Press on Sunday. "I was modestly optimistic yesterday, but we don't yet see an agreement. And now the pressure's on Congress to produce," Obama told NBC's Meet the Press on Sunday, ahead of news that the talks had indeed broken down.
Boehner responded saying Americans elected the president to lead, not cast blame. "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," Boehner said. "We've been reasonable and responsible. The president is the one who has never been able to get to 'yes'."Boehner responded saying Americans elected the president to lead, not cast blame. "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," Boehner said. "We've been reasonable and responsible. The president is the one who has never been able to get to 'yes'."
Hours later, with the clock ticking towards 3pm, Reid and McConnell made their announcement about remaining far apart. Reid and McConnell had been tasked with coming up with a solution by 3pm Sunday. But little more than an hour until that deadline, both men took to the Senate floor to announce that both side's position remained far apart.
The main sticking point is the threshold for raising income taxes on households with upper-level earnings. The main sticking point has been the threshold for raising income taxes on households with upper-level earnings.
Obama wants all earners of $250,000 a year and above to shoulder a greater tax burden. Analysts believe that any deal could be anchored on raising taxes for households earning more than $400,000 or $500,000 a year.Obama wants all earners of $250,000 a year and above to shoulder a greater tax burden. Analysts believe that any deal could be anchored on raising taxes for households earning more than $400,000 or $500,000 a year.
But many Republicans in the House have indicated that they will vote against any increase in tax.But many Republicans in the House have indicated that they will vote against any increase in tax.
Not only could this scupper the chances of a grand deal, it could also see the blocking of the White House's back-up plan to avert the fiscal cliff.Not only could this scupper the chances of a grand deal, it could also see the blocking of the White House's back-up plan to avert the fiscal cliff.
Obama has indicated that if Reid and McConnell fail to produce an agreement by the end of Sunday, he will strong-arm Congress into a vote on scaled-back measures that would avert the immediate cost of America heading over the fiscal cliff.Obama has indicated that if Reid and McConnell fail to produce an agreement by the end of Sunday, he will strong-arm Congress into a vote on scaled-back measures that would avert the immediate cost of America heading over the fiscal cliff.
That simple "up-or-down vote on a basic package" would stop tax hikes for middle-income Americans, while "laying the groundwork for future progress on more economic growth and deficit reduction", Obama said on Saturday.That simple "up-or-down vote on a basic package" would stop tax hikes for middle-income Americans, while "laying the groundwork for future progress on more economic growth and deficit reduction", Obama said on Saturday.
But even that may have difficulty passing through the House, given the entrenched position of some Tea Party-backed Republicans.But even that may have difficulty passing through the House, given the entrenched position of some Tea Party-backed Republicans.
Obama appeared to prepare for that eventuality on Sunday.Obama appeared to prepare for that eventuality on Sunday.
"If all else fails, if Republicans do in fact decide to block it, so that taxes on middle class families do in fact go up on 1 January, then we'll come back with a new Congress on 4 January and the first bill that will be introduced on the floor will be to cut taxes on middle class families," he said. "If all else fails, if Republicans do in fact decide to block it, so that taxes on middle-class families do in fact go up on 1 January, then we'll come back with a new Congress on 4 January and the first bill that will be introduced on the floor will be to cut taxes on middle-class families," he said.
But he warned that missing the deadline would still result in "adverse reaction in the markets" and would "hurt our economy badly".But he warned that missing the deadline would still result in "adverse reaction in the markets" and would "hurt our economy badly".