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Senate may be last, best hope for cliff deal

  • Article by: JONATHAN WEISMAN
  • New York Times
  • December 23, 2012 - 9:48 PM

WASHINGTON - With little more than a week for lawmakers to avert huge tax increases and spending cuts, attention is turning from the gridlocked House to the Senate, where some Republicans on Sunday endorsed President Obama's call for a partial deal to insulate most Americans from the tax hikes but defer a resolution on spending.

Sen. Kay Bailey Hutchison, R-Texas, and Sen. Johnny Isakson, R-Ga., implored Senate leaders to reach an accommodation with Obama when Congress returns on Thursday, even if that means that taxes would go up for those with high incomes but that spending cuts would be put off.

Hutchison, appearing on the CBS program "Face the Nation," said the tax cuts signed into law by President George W. Bush should be extended "at a reasonable salary level."

"We can't let taxes go up on working people in this country," she said, backing Obama's calls for a stripped-down temporary measure. "It is going to be a patch because, in four days, we can't solve everything."

The failed attempt on Thursday by House Speaker John A. Boehner to attract enough GOP support for legislation that would have prevented tax increases on income below $1 million left little chance for a "grand bargain" on deficit reduction.

It also shifted the action to the Senate as the last hope to stop more than a half-trillion dollars in tax increases and across-the-board spending cuts from kicking in on Jan. 1. The president urged senators to take up legislation extending the Bush-era tax cuts on income under $250,000 and preventing the expiration of jobless benefits, while delaying the defense and domestic spending cuts to allow negotiations on a deficit deal to continue.

"The fact that the House Republicans spent a week wasting time we didn't have has greatly exacerbated the problem," said Dan Pfeiffer, Obama's communications director.

Less polarized Senate

The hope is that the less polarized Senate will be different from the House. It is run by Democrats and includes several Republicans who are openly backing a deal.

"The president's statement is right," Isakson said Sunday on the ABC program "This Week." "No one wants taxes to go up on the middle class. I don't want them to go up on anybody, but I'm not in the majority in the United States Senate, and he's the president of the United States.

"The truth of the matter is, if we do fall off the cliff after the president is inaugurated, he'll come back, propose just what he proposed yesterday in leaving Washington, and we'll end up adopting it," Isakson continued. "But why should we put the markets in such turmoil and the people in such misunderstanding or lack of confidence? Why not go ahead and act now?"

Democratic leaders say they will move forward on legislation this week only if Republican Senate leader Mitch McConnell can assure them that it will not be filibustered, and that once it is passed, Boehner will bring it to a House vote.

McConnell has played the role of congressional deal closer before. Last year, he engineered a way to raise the nation's statutory borrowing limit that satisfied Republicans and Democrats alike. He also threw his weight behind an extension of the expiring 2-percentage point cut in the payroll tax, even after House Republicans tried to block it.

But in this case, neither he nor the junior members of his leadership have given any indication that they will intervene.

"It's hard to overstate how little is going on," said a senior Democratic leadership aide in the Senate, indicating what most lawmakers say in private: The country is likely to miss the Jan. 1 deadline.

Investors are anticipating a turbulent week in the markets if the White House and Congress continue their standoff. Last Friday, the Standard & Poor's 500-stock index fell nearly 1 percent as pessimism mounted over the prospect of any deal being reached.

Stymied by Tea Party

Republican leaders in both chambers of Congress appear stymied by a conservative wing that will not tolerate a vote on legislation that even tacitly allows taxes to rise. Don Stewart, a spokesman for McConnell, said the minority leader could not declare by fiat that a bill could be presented for a simple majority vote with no threat of a filibuster. That would require the consent of every Republican, and Stewart gave no indication that McConnell would seek it.

Besides, Stewart said, Democrats have yet to detail the legislation they want a vote on. The Senate passed legislation in July to extend expiring income tax rates on income under $250,000, but divided Democrats could not agree on a new level for the estate tax, which is also set to rise in January, nor did they include a provision to stave off $100 billion in across-the-board cuts to defense and domestic programs next year.

Obama, speaking to reporters on Friday, left critical details out of his description of the plan he wants Congress to pass. Although he favors allowing the current estate tax rate of 35 percent on inheritances over $5 million to rise to 45 percent on estate values over $3.5 million, for example, he did not say how such taxes should be treated as part of his stopgap fiscal plan. If nothing is done, the estate tax will jump to the Clinton-era level, 55 percent, on estate values over $1 million.

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