Senate leaders pessimistic as ‘fiscal cliff’ talks stall
Published Sunday, December 30, 2012 10:51AM EST
Last Updated Sunday, December 30, 2012 9:15PM EST
Top Senate leaders working on a deal to prevent the U.S. government from going over the “fiscal cliff” remained at odds on Sunday as the New Year deadline loomed on automatic tax increases for nearly every American taxpayer.
With approximately 24 hours left to avoid the sweeping tax hikes and spending cuts, Senate Majority Leader Harry Reid and Senate Republican leader Mitch McConnell continued to disagree on a number of key issues, including the income threshold for higher tax rates and tax levels on large estates.
Other remaining issues central to the negotiations include:
- taxes on investment income and dividends;
- continued benefits for those on long-term unemployment;
- and a pending 27.5 per cent cut in payment levels for doctors who treat Medicare patients.
However, negotiations made some progress into Sunday evening as Republicans withdrew a proposal to slow cost of living increases for Social Security recipients, something the Democrats described as a “poison pill” that they would not accept.
"I was really gratified to hear that Republicans have taken their demand for Social Security benefit cuts off the table. The truth is they should never have been on the table to begin with," Reid told The Associated Press. "There is still significant distance between the two sides, but negotiations continue."
Meanwhile, the Republicans insist that the Democrats are not displaying a sense of urgency in the talks.
“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."
McConnell said he’s yet to receive a response to an offer made on Saturday evening to Reid, the top Democratic negotiator.
During a televised interview aired Sunday, U.S. President Barack Obama blamed the Republicans for continually rejecting a number of offers put forward by the Democrats.
"We have been talking to the Republicans ever since the election was over," Obama said during NBC's "Meet the Press" that aired Sunday. "They have had trouble saying yes to a number of repeated offers."
If a deal is not reached before the start of 2013, the U.S. economy would be sent over the so-called “fiscal cliff” and Americans would see across-the-board tax increase and government spending cuts.
McConnell and Reid were hoping to reach a deal that would prevent higher taxes for most Americans, which could send the still fragile U.S. economy back into recession.
Tax cuts enacted in 2001 and 2003 expire at midnight Monday, and $109 billion in across-the-board cuts in federal spending this year would also begin this week.
Speaking from Washington on Sunday, CTV’s Joy Malbon said negotiations will continue into Sunday night as both parties attempt to reach a deal.
“If they don’t get to some kind of deal virtually every worker in this country will face a tax hike come January 1,” Malbon told CTV News Channel.
Malbon said even if the two parties reach a deal on taxes, it would simply be a “Band-Aid” solution.
“The small little deal…would just deal with the tax hikes and not the spending cuts, which is what the Republicans wants,” she said, adding that a failure to reach a deal would have far-reaching effects.
“We’re already seeing the markets are slipping because of the uncertainty,” she said.
Patrick Basham, Director of the Washington-based Democracy Institute, said if both side are able to reach a deal before the clock strikes midnight on Dec. 31, much more work would need to take place to prevent the U.S. economy from weakening.
“They say at best it will be a Band-Aid solution, which means that within six, nine, or 12 months we’ll be back to where we started,” Basham said. “In fact, I think we will be in a worse position because the crisis of spending and debt in America will not have been addressed and so it will be déjà vu all over again.”
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, on the other hand, has argued that GOP 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 during the NBC interview.
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."
With files from The Assoicated Press