Last-Ditch Efforts to Avoid the Fiscal Cliff Under Way


The end game at hand, the White House and Senate leaders made a final stab at compromise Friday night to prevent middle-class tax increases from taking effect at the turn of the new year and possibly block sweeping spending cuts as well.

"I'm optimistic we may still be able to reach an agreement that can pass both houses in time," President Barack Obama said at the White House after meeting for more than an hour with top lawmakers from both houses.

Surprisingly, after weeks of postelection gridlock, Senate leaders sounded even more bullish.

The Republican leader, Sen. Mitch McConnell of Kentucky, said he was "hopeful and optimistic" of a deal that could be presented to rank-and-file lawmakers as early as Sunday, a little more than 24 hours before the year-end deadline.

Said Majority Leader Harry Reid: "I'm going to do everything I can" to prevent the tax increases and spending cuts that threaten to send the economy into recession. He cautioned, "Whatever we come up with is going to be imperfect."

House Speaker John Boehner, a Republican who has struggled recently with anti-tax rebels inside his own party, said through an aide he would await the results of the talks between the Senate and White House.

Under a timetable sketched by congressional aides, any agreement would first go to the Senate for a vote. The House would then be asked to assent, possibly as late as Jan. 2, the final full day before a new Congress takes office.

Officials said there was a general understanding that any agreement would block scheduled income tax increases for middle class earners while letting rates rise at upper income levels.

Democrats said Obama was sticking to his campaign call for increases above $250,000 in annual income, even though in recent negotiations he said he could accept $400,000.

The two sides also confronted a divide over estate taxes.

Obama favors a higher tax than is currently in effect, but one senior Republican, Sen. Jon Kyl of Arizona, said he's "totally dead set" against it. Speaking of fellow GOP lawmakers, he said they harbor more opposition to an increase in the estate tax than to letting taxes on income and investments rise at upper levels.

Also likely to be included in the negotiations are taxes on dividends and capital gains, both of which are scheduled to rise with the new year. Also the alternative minimum tax, which, if left unchanged, could hit an estimated 28 million households for the first time with an average increase of more than $3,000.

In addition, Obama and Democrats want to prevent the expiration of unemployment benefits for about 2 million long-term jobless men and women, and there is widespread sentiment in both parties to shelter doctors from a 27 percent cut in Medicare fees.

The White House has shown increased concern about a possible doubling of milk prices if a farm bill is not passed in the next few days, although it is not clear whether that issue, too, might be included in the talks.

One Republican who was briefed on the White House meeting said Boehner made it clear he would leave in place spending cuts scheduled to take effect unless alternative savings were included in any compromise to offset them. If he prevails, that would defer politically difficult decisions on curtailing government benefit programs like Medicare until 2013.

Success was far from guaranteed in an atmosphere of political mistrust - even on a slimmed-down deal that postponed hard decisions about spending cuts into 2013 - in a Capitol where lawmakers grumbled about the likelihood of spending the new year holiday working.

In a brief appearance in the White House briefing room, Obama referred to "dysfunction in Washington," and said the American public is "not going to have any patience for a politically self-inflicted wound to our economy. Not right now."

If there is no compromise, he said he expects Reid to put legislation on the floor to prevent tax increases on the middle class and extend unemployment benefits - an implicit challenge to Republicans to dare to vote against what polls show is popular.

The president also booked a highly unusual appearance on Meet the Press for Sunday, yet another indication of his determination to retain the political high ground that came with his re-election.

The guest list for the White House meeting included Reid, McConnell, Boehner and House Democratic leader Nancy Pelosi, D-Calif.

The same group last met more than a month ago and emerged expressing optimism they could strike a deal that avoided the fiscal cliff. At that point, Boehner had already said he was willing to let tax revenues rise as part of an agreement, and the president and his Democratic allies said they were ready to accept spending cuts.

Since then, though, talks between Obama and Boehner faltered, the speaker struggled to control his rebellious rank and file, and Reid and McConnell sparred almost daily in speeches on the Senate floor. Through it all, Wall Street has paid close attention, and the meeting was still going on at the White House when stocks closed lower for the fifth day in a row.

The core issue is the same as it has been for more than a year, Obama's demand for tax rates to rise on upper incomes while remaining at current levels for most Americans. He made the proposal central to his successful campaign for re-election, when he said incomes above $200,000 for individuals and $250,000 for couples should rise to 39.6 percent from the current 35 percent.

Boehner refused for weeks to accept any rate increases, and simultaneously accused Obama of skimping on the spending cuts he would support as part of a balanced deal to reduce deficits, remove the threat of spending cuts and prevent the across-the-board tax cuts.

Last week, the Ohio Republican pivoted and presented a Plan B measure that would have let rates rise on million-dollar earners. That was well above Obama's latest offer, which called for a $400,000 threshold, but more than the speaker's rank and file were willing to accept.

Facing defeat, Boehner scrapped plans for a vote, leaving the economy on track for the cliff that political leaders in both parties had said they could avoid. In the aftermath, Democrats said they doubted any compromise was possible until Boehner has been elected to a second term as speaker when the new Congress convenes on Jan. 3.

Further compounding the year-end maneuvering, there are warnings that the price of milk could virtually double beginning next year.

Congressional officials said that under current law, the federal government is obligated to maintain prices so that fluid milk sells for about $20 per hundredweight. If the law lapses, the Department of Agriculture would be required to maintain a price closer to $36 of $38 per hundredweight, they said. It is unclear when price increases might be felt by consumers.


Associated Press writers Alan Fram and Andrew Taylor contributed to this report.

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December 31 2012 at 9:52 AM Report abuse +1 rate up rate down Reply
Tom Harrell

Gotta get them VOTES an keep your JOBS EH? ?
To Hel with what the people Need. It's all about Image and PARTY.

December 31 2012 at 9:24 AM Report abuse rate up rate down Reply

Productivity went up and so did salaries of all, and CEOs made 40 x what the average worker made, up until a two-bit actor took over and decided to crush the unions, support the laws that the rich wanted, raised taxes 8 times, and basically started the decline of the Middle Class. Today do to Ronald Reagan's (R) policies we have super high productivity that has outpaced the worker's salaries by nearly 2:1, and CEO salaries that are 400 x that of the average worker, so one has to ask WHY? WHY would any sane person still want to be a Republican?


Sane person? This is your typical liberal. Liberals claim to be compassionate tolerant, and respect the other persons point of view. Just another myth about liberals like this person. Liberals are only tolerant, compassionate, and respect your point of view, but only if you agree with them and their agenda.

December 31 2012 at 7:56 AM Report abuse rate up rate down Reply

So everyone that are so hostile toward Obama and the Democrats, what are your solutions to the Republicans in DC that refuse to compromise, refuse to consider your needs, and refuse to read the statements you post here?


You Obamites are hilarious and your comments shows just how one sided liberals are. Obama and the democrats are unwilling to compromise and stop their political games. If Obama was really serious about rolling tax rates back he and the democrats would have done so when they controlled both houses and the White House. Obama would like nothing better then to see the country go off the cliff and taxes go up on everyone and also see military spending be cut. After reading your posts it is evident that leftwing liberals like yourself don't care to much for our military.

December 31 2012 at 7:47 AM Report abuse rate up rate down Reply

Can anyone imagine this foot-dragging nonsense taking place in the boardrooms of ANY Fortune 500 corporation - resolving an issue for MONTHS and MONTHS?

Answer: no way!

Here's reality in the real world: The top brass issues an ultimatum whick will impact the entire corporation/subsidiaries (like spinning off businesses, closing plants, laying off workers, etc., etc).

The CEO/CFO/COO assembles 5-6 senior execs to make it happen and to work out the details and a timeline.

Guess when that project is due?

For th Overall Plan .. 30 days or less - that's it!

Failure to come up with a comprehensive plan by then: The original 5-6 get sacked znd replaced deadlins?

15 days or less ..................

That's how big business works

This entire fiscal cliff farce could (and should) have been resolved in April/May ... and would have if this were some corporate issue.

Why do we - the taxpayers - put up with such inept, incompetent, foot-dragging, do nothing representatives in Congress .. and the Administration - in general?

Replace John, Mitch, Harry, Nancy and yes, Barry ... with STRONG corporate business decision makers and leaders known for getting results ... it's obvious that Congress is incapable of resolving anything - except maybe what to order for lunch!

What pityful performance ... and these people are on OUR payroll !!

December 31 2012 at 6:17 AM Report abuse +1 rate up rate down Reply

The Blamber-in-Chief needs to go back to community rabble rousing. We desperately need a leader.

December 30 2012 at 6:53 PM Report abuse +5 rate up rate down Reply

No jobs? No problem
New York Mayor Michael Bloomberg sought Tuesday to ignite debate over immigration among the presidential contenders, saying there was no faster or cheaper way to fix the nation's economic problems than by abandoning "self-defeating" immigration policies.

In an editorial published Tuesday and at appearances before business leaders in Chicago and Boston, Bloomberg laid out some of his ideas, saying immigrants and the businesses they create are engines for America's economic recovery.

Plus they send all their extra money back to Mexico to bring more here to help us out..
$60 billion dollars are earned by illegal aliens in the U.S. each year. One of Mexico's largest revenue streams (after exports and oil sales) consists of money sent home by legal immigrants and illegal aliens working in the U.S. Economists say this will help Mexico reduce its $17.8 billion defecit and may bolster the peso. $10 billion dollars (as of 2003) are sent back to Mexico annually, according to the Pew Hispanic Center, reported in an Associated Press article, up $800 million from the previous year. ($9 billion dollars were previously sent back annually, according to a September 25, 2002 NPR report). That figure equals what Mexico earns annually from tourism. This is a massive transfer of wealth from America - essentially from America's displaced working poor - to Mexico.

December 30 2012 at 5:36 PM Report abuse +2 rate up rate down Reply

The illegal's hate America as we stole their land from them. But they have no remorse in stealing your identify or having Americans pay for the births of their many anchor babies.
Then we have the refugees who make more money than most middle class for just being Refugees..
Refugee access to welfare on the same basis as a U.S. citizen has made the program a global magnet.

The federal programs available to them include:

∙ Temporary Assistance for Needy Families (TANF) formerly known as AFDC
∙ Medicaid
∙ Food Stamps
∙ Public Housing
∙ Supplemental Security Income (SSI)
∙ Social Security Disability Insurance
∙ Administration on Developmental Disabilities (ADD) (direct services only)
∙ Child Care and Development Fund
∙ Independent Living Program
∙ Job Opportunities for Low Income Individuals (JOLI)
∙ Low-Income Home Energy Assistance Program (LIHEAP)
∙ Postsecondary Education Loans and Grants
∙ Refugee Assistance Programs
∙ Title IV Foster Care and Adoption Assistance Payments (if parents are ⌠qualified immigrants – refugees, asylees, ect)
∙ Title XX Social Services Block Grant Funds

7. Welfare use is staggering among refugees. Welfare usage is never counted by officials as part of the cost of the program. Yet when it is included, the total cost of the refugee program soars to at least 10 billion a year. See item 23 below for more detail and links to government reports on welfare usage.

8. As some Americans are pushed off of time-limited welfare programs many refugees are going on to life-time cash assistance programs. For instance 15.3% of refugees are on SSI – a lifetime entitlement to a monthly check / Medicaid for elderly or disabled. This rate of usage is at least 5 times higher than the rate of usage for SSI among the native-born population.

Permanent and intergenerational welfare dependence has been allowed to take hold to a significant degree in the refugee population

December 30 2012 at 1:04 PM Report abuse +7 rate up rate down Reply

If you Republicans won't leave me alone I'm taking Michelle and were going to run away on another 4 million dollar vacation. That'll fix you guys.


December 30 2012 at 12:44 PM Report abuse +6 rate up rate down Reply

It's everyone else's fault. It's never mine.


December 30 2012 at 12:42 PM Report abuse +6 rate up rate down Reply