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Congress in Sunday Session as Fiscal Cliff Talks Stall

4:47 PM, Dec 30, 2012   |    comments
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(CNN) -- Congress trooped back to work on Sunday to face a combination of spending cuts and tax increases set to kick in within hours and President Barack Obama pressuring congressional Republicans to cut a last-minute deal.

Both the House of Representatives and the Senate went back into session Sunday afternoon. But leaders hit what a Democratic source familiar with the talks called a "major setback" when Republicans insisted that changes to how Social Security benefits are adjusted for inflation be part of the deal.

Using what's known as "chained CPI" would change the way Social Security benefits are adjusted for inflation, effectively meaning that Social Security recipients would receive less money over time. The Democratic source said party members consider that a "poison pill."

In the Senate, Minority Leader Mitch McConnell, R-Kentucky, complained that he had received no response to a proposal he made Saturday night and has asked Vice President Joe Biden to help "jump-start" negotiations.

A source close to the process told CNN that McConnell and Biden had spoken twice by mid-afternoon Sunday. Meanwhile, Majority Leader Harry Reid conceded that "at this point, I don't have a counteroffer to make."

Reid, D-Nevada, said McConnell has shown "absolutely good faith" in the talks, but "it's just that we are apart on some pretty big issues."

Neither Reid nor McConnell disclosed any details of the GOP offer. But in an interview broadcast Sunday, Obama told NBC's "Meet the Press" that Republicans are responsible for the stalemate that brought lawmakers back to Capitol Hill on a weekend.




If nothing gets done before Monday night at midnight, the expiration of the Bush administration's 2001 and 2003 tax cuts will increase tax rates, damaging the economy and costing the average middle-class family about $2,000, he said, repeating the term "middle-class" numerous times throughout the interview.

At stake in the negotiations, according to numerous economists, is the fate of a still fragile U.S. economy that could be pushed back into a recession by the broad tax hikes and automatic $110 billion in cuts to domestic and military spending -- the result of the 2011 standoff over raising the federal debt ceiling. The nonpartisan Congressional Budget Office predicts the combined effect could dampen economic growth by 0.5% and drive unemployment back to 9.1% by the end of 2013.
Obama told NBC that he was willing to consider using chained CPI to adjust Social Security, even though it was "highly unpopular among Democrats" and opposed by the AARP, the powerful lobby for seniors.

A Senate Republican leadership source pointed to the president's comments Sunday. But the Democratic source, who did not want to be identified because of the closed nature of the talks, said members understand Obama proposed using chained CPI in earlier talks with Rep. John Boehner, the Republican speaker of the House, as an element of a larger deal that also would change how the federal debt ceiling is adjusted, which is no longer included in the plans.

Most Democrats oppose chained CPI, but many were willing to go along with it as part of a larger deal, said the source.


The Democratic source said party members are currently "going outside their comfort zone" in these talks with regard to tax rates -- keeping tax rates in place for higher income households than the president wants. The source also said Democrats are negotiating with Republicans on extending the current lower estate tax rate, a big issue for many Republicans as well as moderate Democrats.

"I've been a legislator for 37 years, and I've watched how these things work on these big, big agreements," Schumer said. "They almost always happen at the last minute. Neither side likes to give up its position. They eyeball each other till the very end. But then each side, realizing that the alternative is worse, comes to an agreement."



Many Republicans have opposed any increase in tax rates. Boehner, R-Ohio, suffered a political setback by offering a compromise -- a $1 million threshold for the higher rates to kick in -- that his GOP House colleagues refused to support.


"The House has passed legislation to avert the entire fiscal cliff, and the president has never called for the Senate to act on those bills in any way. He instead has simply allowed the Democratic-controlled Senate to sit on them and lead our economy to the edge of the fiscal cliff," Boehner said in a statement issued by his office. "I am pleased Senators from both parties are currently working to find a bipartisan solution that can finally pass that chamber. That is the type of leadership America needs, not what they saw from the president this morning."


"I think, whatever we accomplish, political victory to the president, hats off to the president. He stood his ground. He's going to get tax rate increases, maybe not (on people making) $250,000, but upper-income Americans," Graham said on "Fox News Sunday."


Other Republicans argued Sunday that the resistance to Obama's plan is based on his refusal to adequately limit spending.

Republican Rep. Darrell Issa of California echoed those remarks. "Even if you put back all the revenue you would get from those higher taxes, you still have a deficit. That's what we're trying to change," he said.

Obama rejected such complaints, telling NBC that he has cut more than a trillion dollars in spending.
"I offered over $1 trillion in additional spending cuts so that we would have $2 of spending cuts for every $1 of increased revenue," he said on NBC.

The president also emphasized that he had campaigned on "a balanced approach" that would increase taxes on the wealthy and that the majority of Americans have made clear they support such a plan.
The idea of maintaining tax cuts for 98% of Americans, while allowing tax cuts to expire for the wealthiest, was once part of "a pretty mainstream Republican agenda," he argued, adding that opposition "is an indication of how far certain factions inside the Republican Party have gone."

The interview, recorded Saturday, marked the president's first appearance on a political talk show in three years.


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