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Continued: Approach of fiscal crisis stirs president, Congress to action

  • Article by: LORI MONTGOMERY and ROSALIND S. , HELDERMAN
  • Last update: December 27, 2012 - 10:37 PM

WASHINGTON - President Obama summoned congressional leaders to a Friday summit at the White House in a last-ditch effort to protect taxpayers, unemployed workers and the fragile U.S. economy from austerity measures set to hit in four days.

Also Thursday, House Speaker John Boehner said he would call the House back into session this weekend. And in perhaps the most significant development, Senate Minority Leader Mitch McConnell for the first time was engaged directly in talks with the White House. He signaled an interest in cutting a deal.

"The truth is, we're coming up against a hard deadline here ... and Republicans aren't about to write a blank check for anything Senate Democrats put forward just because we find ourselves at the edge of the cliff," McConnell said in a speech Thursday afternoon on the Senate floor. "We'll see what the president has to propose," McConnell said. "Hopefully, there is still time for an agreement of some kind that saves the taxpayers from a wholly preventable economic crisis."

With uncertainty about a solution producing volatility in the equity markets, aides in both parties expressed hope that legislation could be enacted before the New Year's Eve deadline. They cautioned, however, that quick action would require leaders in both chambers to rally firmly around a specific set of proposals.

One option that could potentially win broad support, aides said, was allowing taxes to rise on household income over $400,000 a year -- Obama's latest offer in negotiations with Boehner -- rather than the lower threshold of $250,000 a year, as Obama proposed during the presidential campaign.

Publicly, there was little sign of such a thaw on Thursday. Instead, a sense of gloom pervaded the Capitol. Senate Majority Leader Harry Reid, D-Nev., openly speculated on the Senate floor that there may no longer be time to avoid more than $500 billion in tax increases and spending cuts scheduled to take effect next week.

In preparation for that possibility, each party stepped up its efforts to deflect blame.

Reid urged the House to take up an "escape hatch" bill adopted by the Senate in July that would forestall the worst of the cliff's economic consequences by extending tax breaks adopted under President George W. Bush for income under $250,000.

He charged that Boehner is running a "dictatorship" in the House, refusing to bring forward the legislation because it might pass with broad Democratic support and a handful of Republican votes. "Nothing can move forward in regards to our budget crisis unless Speaker Boehner and Leader McConnell are willing to participate in coming up with a bipartisan plan," Reid said.

McConnell retorted that Republicans have been eager to work with Obama. After one-on-one talks between Obama and Boehner failed to produce a broad deficit-reduction package last week, McConnell said it is now the president's responsibility to put forward a new plan. "Republicans bent over backward," he said. "We wanted an agreement. But we had no takers. The phone never rang."

Boehner told Republican lawmakers in a conference call that the Senate must act first. He said the Senate should take up and amend a bill passed by House Republicans in August to extend tax breaks for Americans at all income levels and another approved in May that would shift military spending cuts set for next month to domestic programs.

Boehner's message was that "we were going to wait for the Senate to take up the bill that we passed six months ago," said one Republican lawmaker who was on the call. "Quit trying to do this leadership-negotiating thing."

Talks underway

The day was rife with rumors of behind-the-scenes movement, evidence of the anxious energy that has gripped Washington as the deadline approaches.

The first round of excitement came when McConnell sent an e-mail to Republican senators suggesting that Obama "would finally be proposing a package to avoid the cliff and I agreed to review it," according to a copy of the e-mail given to the Washington Post.

Sen. Scott Brown, R-Mass., posted a note on his Facebook page announcing the pending offer as he was boarding a plane from Boston to Washington, and a frenzied media scurried for details.

White House officials and Senate Democrats denied that a new proposal was forthcoming. But McConnell continued to insist throughout the day that he was eager to review the new offer. Ultimately, both parties confirmed that quiet talks were underway between aides to McConnell and senior White House officials but that the details were in flux.

The scope of the package under discussion appeared to follow the contours Obama laid out Friday in a news conference where he urged Congress to extend expiring tax cuts for 98 percent of taxpayers and to keep benefits flowing to about 2 million long-term unemployed. In addition, aides said, talks were focused on preserving low tax rates for inherited estates and extending tax breaks for college tuition and the working poor adopted as part of Obama's 2009 economic stimulus package.

But aides said that time had probably run out for an agreement on significant spending cuts or to lift the legal limit on government borrowing.

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