Obama Presses GOP on Deal As Cliff Deadline Nears
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The Fiscal Times
December 30, 2012

Once known as the world's greatest deliberative body, the U.S. Senate in recent years has evolved into a legislative quagmire, where bills and nominations can languish for months or even years. But in those rare moments when the political stars align and Democrats and Republicans find it in their best interest to cooperate, the creeky Upper Chamber erupts like a juggernaut, and passes complicated measures in the blink of an eye.

That's what President Obama and congressional Democratic and Republican leaders are hoping for today, as a Jan. 1 deadline looms for enactment of a measure to avert the worst of the fiscal cliff. Nearly $600 billion worth of tax increases and govenment spending cuts will take effect later this week — potentially jarring the economy back into recession — unless Congress intervenes.

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While Sens. Lindsey Graham, R-S.C., and Dianne Feinstein, D-Calif., declared optimistically on Fox News Sunday that a compromise in the Senate was all but a certainty, a less optimistic-sounding Obama used a rare Sunday morning appearance on NBC's "Meet the Press" to make the case again for his tax policies that would raise rates on those earning more than $250,000 a year while berating Republicans who "have trouble saying yes" to any reasonable deal.

"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," Obama said. "That seems to be their only overriding, unifying theme."

If Senate leaders fail to strike a compromise that can pass Congress, the White House will gamble on its backup strategy — that enough Republican lawmakers will consider it politically foolhardy to prevent a vote on Obama’s plan to extend tax cuts on income up to $250,000.

"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."

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By contrast, Graham predicted the Senate would unveil a compromise package later today that will include an increase in tax rates on the wealthiest, while putting off major decisions on spending cuts and entitlement reform until next year. "It will be a political victory for the president," Graham said. "Hats off to the president. He won."

Graham said he would reluctantly support the compromise because "the country has a lot at stake here," but warned that he and other Republicans would refuse to support another increase in the debt ceiling early next year unless the action is tied to major reforms of entitlement programs to avoid long term debt crisis like the one in Greece.

Feinstein said that Obama ran for reelection on a pledge to raising tax rates on Americans making more than $250,000 a year, and that Democrats generally believe that $250,000 "is an appropriate threshold." However, she said she would be willing to go as high as $400,000 in order to gain support of the Republicans. "I could certainly live with that," she said.

Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., two wily veteran deal makers, spent much of Saturday haggling over a plan that would extend Bush-era tax cuts for all but the wealthiest taxpayers. It would also extend unemployment benefits set to expire in January for 2 million people and prevent about 30 million Americans from having to pay the alternative minimum tax for the first time.

Should Senate Democrats and Republicans agree to and pass a deal by late tonight or early Monday morning that will leave a sorely divided House until midnight New Year's Eve to either accept it or allow the country to go over the fiscal cliff.

Polls show that voters are more likely to blame the Republicans than the president if Congress fails to address the fiscal cliff before the start of the new year. If tax rates rise on all Americans, whatever Congress does in the new year will be considered a tax cut, opening a path for agreement with Republicans. That means Obama is likely to get what he wants on tax rates regardless of what happens before the deadline.

Obama signaled in his interview with NBC's David Gregory that he would wait until the next Congress convenes later in the week to reopen the debate . Even if a compromise is reached before New Year's Day, there will be much left unresolved, including business tax credits, $100 billion of across-the-board budget cuts known as sequestration,and a rate cut for doctors who serve Medicare beneficiaries.

"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 January 1st, then we’ll come back with a new Congress on January 4th and the first bill that will be introduced on the floor will be to cut taxes on middle-class families," Obama said. "And I don’t think the average person’s going to say, ‘Gosh, you know, that’s a really partisan agenda on the part of either the president or Democrats in Congress.’ I think people will say, ‘That makes sense, because that’s what the economy needs right now.’"

While political feelings run high, time is quickly running out for immediate action. Reid and McConnell have set a deadline of about 3 p.m. on Sunday for cinching a deal, according to The Washington Post. That’s when they’re planning to convene caucus meetings of their respective members in separate rooms just off the Senate floor.

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At that point, the leaders will brief their rank and file on whether there has been significant progress and will determine whether there is enough support to press ahead with a proposal. If all goes according to plan, the leaders would roll out the legislation Sunday night and hold a vote by at least midday Monday, giving the House the rest of New Year’s Eve to consider the measure, The Post reported.

House passage of any agreement at this point is highly problematic. Boehner told Obama and congressional leaders Friday that he could commit only to considering a Senate-passed bill and suggested that the House may amend that bill and send it back to the Senate.

But that would be tantamount to throwing in the towel again, since the Senate would be unlikely to take up the amended measure unti after the Jan. 1 deadline. Absent congressional action by New Year's Day, the economy will be jolted by roughly $600 billion of tax increases and spending cuts that experts warns will undercut the recovery, lead to massive layoffs and roil the global markets.

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.