Biden, McConnell in Last-Minute Fiscal Cliff Negotiations

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by: Colorado Pols

UPDATE: At least a bungee-jump off the so-called “fiscal cliff” now likely, CNN:

The feared fiscal cliff was at hand Monday night, with nothing expected to pass Congress before a combination of tax increases and spending cuts starts to kick in at midnight.

A deal to avert that combination, which economists warn could push the U.S. economy back into recession, was “within sight” on Monday afternoon, President Barack Obama said. And in the Senate, Minority Leader Mitch McConnell told members that they were “very, very close” to a deal, having worked out an agreement on taxes…

In the House, GOP sources said there’s little practical difference in settling the issue Monday night versus Tuesday. But if House Republicans approve the bill on Tuesday — when taxes have technically gone up — they can argue they’ve voted for a tax cut to bring rates back down, even after just a few hours, GOP sources said. That could bring some more Republicans on board, one source said.

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As the clocks ticks down to midnight, Politico reports:

Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden engaged in furious overnight negotiations to avert the fiscal cliff and made major progress toward a year-end tax deal, giving sudden hope to high-stakes talks that had been on the brink of collapse, according to sources familiar with the discussion.

McConnell and Biden, who served in the Senate together for 23 years, are closing in on an agreement that would hike tax rates for families who earn more than $450,000, and individuals who make more than $400,000, according to sources familiar with talks…

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 soon 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.

[T]he talks hit a ditch on Saturday night when McConnell made a proposal that included switching the formula used to calculate Social Security benefit payments. Using the chained consumer price index, or “chained CPI,” would curb the growth of the program’s cost-of-living adjustments.

 Democrats slammed it as a poison pill and warned there would be no last-minute deal to avoid tax hikes if Republicans insisted on entitlement reform, which Democrats had assumed was off the table at this late stage.

The dwindling scope of any potential deal with Republicans is the biggest reason why Democrats have refused to include the so-called “chained CPI” reductions in the future growth of Social Security benefits–a concession President Barack Obama himself had offered at an earlier stage of negotiations in hope of a much larger agreement. Mitch McConnell’s quick retreat on that proposal shows which side has more to lose from the failure to reach an agreement, and (finally!) seems to acknowledge the tremendous public opposition to cutting Social Security.

It’s not even known at this point if the deal that’s ultimately reached–if any–will include rescinding, or at least delaying, major cuts set to go into effect tomorrow to a multitude of domestic and military programs known as the “sequester”–cuts mandated by the 2011 Budget Control Act compromise on raising the debt ceiling. Also unknown is the status of extending unemployment compensation, the so-called “doc fix” for Medicare reimbursement, the estate tax, and many other issues up against deadlines. And of course, whatever they cobble together in the Senate must pass the House, which is, as you know, a more or less dysfunctional body.

We’ll update throughout the day as (and if) necessary.

22 thoughts on “Biden, McConnell in Last-Minute Fiscal Cliff Negotiations”

Sir Robin says:

December 31, 2012 at 8:46 am

Don’t negotiate with hostage takers.

The country spoke, the Republicans should listen.

There is great indignity in caving. Show a backbone Democrats!

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Phoenix Rising says:

December 31, 2012 at 9:05 am

More accurately, I’d be surprised if McConnell and Biden can come up with something that the House will pass. McConnell has in the past every once in a while offered ideas that Democrats could support (usually ones that his caucus – or he himself – winds up filibustering, but still, it’s a step above what the House has been offering…)

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Meiner49er says:

December 31, 2012 at 9:09 am

but sadly, our Dems in Congress seem to be suffering from Stockholm Syndrome.

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Phoenix Rising says:

December 31, 2012 at 9:09 am

The House has agreed to put a 1-year extension of the 2008 farm bill up for a vote, and the Senate has said it will pass the extension and send it on to President Obama.

This was to avert a “dairy cliff” – with the expiration of the Farm bill, the government would revert to essentially 1920’s policy of buying milk at above-market prices, sending milk and dairy prices soaring ($7 per gallon – Libertad would have been right, as House Republicans failed to bring the Senate-passed Farm Bill of 2012 to the floor.)

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DaftPunk says:

December 31, 2012 at 10:43 am

Screws the Dems.

The Rs don’t want taxes going up on anyone. Over the cliff, the Dems have all the cards. Everyone is looking at their new higher tax rates, and the Dems bring a tax cut package for all income below $250K and dare the Republicans to oppose it. The court of public opinion is strongly on the Dems’ side to pass such a bill, so load it up with everything you want, and then start negotiating.

If you pass tax rates only and a few minor tinkers, now the debt ceiling debate begins and the hostage takers have shut the government down and the “it’s the spending” argument becomes the mantra and revenue appears “solved.”

There’s a lot more work to be done on the revenue side, not necessarily from a money point of view, but one of fairness that the president campaigned on. I’m writing specifically of the estate and capital gains/carried interest rates. These are sops to the rich that Grover Norquist and Frank Luntz have convinced working stiffs that they create jobs, when they are nothing more than giveaways to the investor class.

I’m a high-income wage earner. I expect to pay higher tax rates. I do not expect Social Security to support me in my retirement. I never expect to make any siginifican money off investment or to inheret an estate in the taxable range. I do however expect that the income of my fellow citizens who make many multiples of mine be taxed at no less a rate. This was an issue that Obama campaigned on, has huge public support, and the data shows that these rate cuts for the investor class have only increased the gap between rich and poor.

Reality has dealt us a winning hand, lets not fold holding a full house.

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dwyer says:

December 31, 2012 at 3:40 pm

He has adjourned the House. There will be no vote, today. This guarantees that the US will “go over the fiscal cliff.” It is not clear how soon all the provisions will begin to take effect.

Boehner sent House members home with the exact same statement he did last week. He said that the House had sent a bill to the Senate and it was up to the Senate to vote.

Personally, I think the President took a victory dance in the end zone that was inappropriate and premature.

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DavidThi808 says:

December 31, 2012 at 10:24 pm

What if the House votes it down? I’m guessing Boehner adjourned early because he’s not sure he has the votes. So it could fail.

Imagine the reaction of the voters if there’s a done bi-partisan deal from the Senate and the nut cases in the House kill it. Politically that could be the best outcome of all.

And that may be why Obama is tweaking them so hard.

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