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Senate leaders pessimistic on fiscal talks

 President Barack Obama pauses during a statement on the fiscal cliff negotiations with congressional leaders in the briefing room of the White House ...
 Senate Majority Leader Harry Reid, D-Nev., retreats to a closed-door meeting with fellow Democrats as he and Senate Minority Leader Mitch McConnell, ...
 Senate Minority Leader Mitch McConnell of Kentucky, arrives at his office in the Capitol as he and Senate Majority Leader Harry Reid of Neveda try to...

Obama Fiscal Cliff

President Barack Obama pauses during a statement on the fiscal cliff negotiations with congressional leaders in the briefing room of the White House ...

Fiscal Cliff

Senate Majority Leader Harry Reid, D-Nev., retreats to a closed-door meeting with fellow Democrats as he and Senate Minority Leader Mitch McConnell, ...

Fiscal Cliff

Senate Minority Leader Mitch McConnell of Kentucky, arrives at his office in the Capitol as he and Senate Majority Leader Harry Reid of Neveda try to...

The top Senate negotiators trying to prevent the government from going over the "fiscal cliff" offered a pessimistic assessment Sunday barely 24 hours before a deadline to avert tax hikes on virtually every worker.
Senate Republican leader Mitch McConnell said he has yet to receive a response to an offer he made on Saturday evening to Majority Leader Harry Reid, the top Democratic negotiator. McConnell said he's reached out to Vice President Joe Biden, a former senator, in hopes of breaking the impasse, and a spokesman for the Senate minority leader confirmed the two have spoken.
Despite indications of progress in the negotiations, Democrats said Republicans were proposing to slow future cost of living increases for Social Security recipients as part of a compromise to avoid the so-called fiscal cliff of impending tax hikes and across-the-board spending cuts due to take effect in January. Republicans declined to
Democrats rejected the idea of slowing cost-of-living increases for seniors dependent on Social Security for a good portion of their retirement income. Republicans declined to confirm the assertion _ and one Republican official disputed it _ but noted that President Barack Obama said in a television interview broadcast earlier in the day he had advanced such a proposal in earlier talks with Republicans.
"I'm concerned with the lack of urgency here. There's far too much at stake," McConnell said. "There is no single issue that remains an impossible sticking point _ the sticking point appears to be a willingness, an interest or courage to close the deal."
Reid said he has been trying to come up with a counteroffer but has been unable to do so. He said he's been in frequent contact with Obama, who in the interview blamed Republicans for putting the shaky U.S. economy at risk.
"We have been talking to the Republicans ever since the election was over," Obama said in an interview on NBC television's "Meet the Press" that aired Sunday. "They have had trouble saying yes to a number of repeated offers."
The pessimistic turn came as the House and Senate returned to the Capitol for a rare Sunday session. The fate of the negotiations remained in doubt, two days before the beginning of a new year that would trigger across-the-board tax increases and spending cuts that leaders in both parties have said they want to avoid.
Reid said he is not "overly optimistic but I am cautiously optimistic" but reiterated that any agreement would not include the less generous inflation adjustment for Social Security.
"We're willing to make difficult concessions as part of a balanced, comprehensive agreement, but we'll not agree to cut Social Security benefits as part of a small or short-term agreement," Reid said.
The U.S. faces the so-called "fiscal cliff" in January because tax rate cuts dating back to President George W. Bush's tenure expire on Dec. 31. The pending across-the-board reductions in government spending, which will slice money out of everything from social programs to the military, were put in place last year as an incentive to both parties to find ways to cut spending. That solution grew out of the two parties' inability in 2011 to agree to a grand bargain that would have taken a big bite out of the deficit.
Unless Obama and Congress act to stop them, about $536 billion in tax increases, touching nearly all Americans, will begin to take effect in January. That will be coupled with about $110 billion in spending cuts, about 8 percent of the annual budgets for most federal departments. Economists predict that if allowed to unfold over 2013 this double whammy would result in a big jump in unemployment, financial market turmoil and a slide back into recession.
McConnell and Reid were hoping for a deal that would prevent higher taxes for most Americans while letting rates rise at higher income levels, although the precise point at which that would occur was a major sticking point.
Also at issue were the estate tax, taxes on investment income and dividends, extending benefits for the long-term unemployed, how to keep a minimum income tax payment designed for the rich from hitting about 28 million middle-class taxpayers, and a pending 27.5 percent cut in payment levels for doctors who treat Medicare patients. Medicare is the government program that provides health care coverage to the elderly.
Hopes for blocking across-the-board spending cuts were fading and Obama's proposal to renew the two percentage point payroll tax cut wasn't even part of the discussion.
As the Senate opened a rare Sunday session, Chaplain Barry Black offered a timely prayer for lawmakers.
"Lord show them the right thing to do and give them the courage to do it," Black said. "Look with favor on our nation and save us from self-inflicted wounds."
Obama, in the NBC interview that was taped Saturday, pressed lawmakers to start where both sides say they agree _ sparing middle-class families from looming tax hikes.
"If we can get that done, that takes a big bite out of the fiscal cliff. It avoids the worst outcomes. And we're then going to have some tough negotiations in terms of how we continue to reduce the deficit, grow the economy, create jobs," Obama said in the NBC interview.
Gone, however, is the talk of a grand deal that would tackle broad spending and revenue demands and set the nation on a course to lower deficits. Obama and Republican House Speaker John Boehner were once a couple of hundred billion dollars apart on a deal that would have reduced the deficit by more than $2 trillion over ten years.
Republicans have complained that Obama has demanded too much in tax revenue and hasn't proposed sufficient cuts or savings in the nation's massive health care programs.
Obama upped the pressure on Republicans to negotiate a fiscal deal, arguing that Republican leaders have rejected his past attempts to strike a bigger and more comprehensive bargain.
"The offers that I've made to them have been so fair that a lot of Democrats get mad at me," Obama said.
Boehner disagreed, saying Sunday that the president had been unwilling to agree to anything "that would require him to stand up to his own party."
Don Stewart, a spokesman for McConnell, said Sunday: "While the president was taping those discordant remarks yesterday, Sen. McConnell was in the office working to bring Republicans and Democrats together on a solution."
The trimmed ambitions of today are a far cry from the upbeat bipartisan rhetoric of just six weeks ago, when the leadership of Congress went to the White House on Nov. 16 to set the stage for negotiations to come. Both sides now are talking about a deal on a much-smaller scale.
Democratic Sen. Dianne Feinstein of California said the 2.1 million Americans whose extended unemployment benefits ran out on Saturday are already feeling the pain of Congress' inaction.
"From this point on, it's lose-lose. My big worry is a contraction of the economy, the loss of jobs, which could be well over 2 million in addition to the people already on unemployment. I think contraction of the economy would be just terrible for this nation. I think we need a deal, we should do a deal," Feinstein said on "Fox News Sunday."
But the deal was not meant to settle other outstanding issues, including more than $1 trillion in cuts over 10 years, divided equally between the Pentagon and other government spending. The deal also would not address an extension of the nation's borrowing limit, which the government is on track to reach any day but which the Treasury can put off through accounting measures for about two months.
That means Obama and the Congress are already on a new collision path. Republicans say they intend to use the debt ceiling as leverage to extract more spending cuts from the president. Obama has been adamant that unlike 2011, when the country came close to defaulting on its debts, he will not yield to those Republican demands.
Lawmakers have until the new Congress convenes to pass any compromise, and even the calendar mattered. Democrats said they had been told House Republicans might reject a deal until after Jan. 1, to avoid a vote to raise taxes before they had technically gone up, and then vote to cut taxes after they had risen.
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Associated Press writers Andy Taylor, Alan Fram, David Espo, Alan Fram and Michele Salcedo contributed to this report.


Updated : 2021-03-09 12:13 GMT+08:00