President Barack Obama waves to reporters as he steps off the Marine One helicopter and walks on the South Lawn at the White House, Thurs, Dec. 27, 2012, as he returns early from his vacation for meetings on the fiscal cliff. (AP Photo/Charles Dharapak)
WASHINGTON (AP) - President Barack Obama was preparing to present a
limited fiscal proposal to congressional leaders at a White House
meeting Friday, a make-or-break moment for negotiations to avoid
across-the-board tax increases and deep spending cuts at the first of
Lawmakers and White House officials held out a slim
hope for a deal before the new year, but it remained unclear whether
congressional passage of legislation palatable to both sides was even
The Friday afternoon meeting among congressional
leaders and the president - their first since Nov. 16 - was likely to
center on which income thresholds would face higher tax rates, extending
unemployment insurance, and preventing a cut in Medicare payments to
doctors, among other issues.
For Obama, the eleventh-hour scramble represented a
test of how he would balance strength derived from his re-election
against an avowed commitment to compromise in the face of divided
government. Despite early talk of a grand bargain between Obama and
House Speaker John Boehner that would reduce deficits by more than $2
trillion, the expectations were now far less ambitious.
Although there were no guarantees of a deal,
Republicans and Democrats said privately that any agreement would likely
include an extension of middle-class tax cuts with increased rates at
upper incomes, an Obama priority that was central to his re-election
A key question was whether Obama would agree to
abandon his insistence during the campaign on raising taxes on
households earning more than $250,000 a year and instead accept a
$400,000 threshold like the one he offered in negotiations with Boehner.
Another was whether Republicans would seek a higher income threshold.
The deal would also likely put off the scheduled
spending cuts. Such a year-end bill could also include an extension of
expiring unemployment benefits, a reprieve for doctors who face a cut in
Medicare payments and possibly a short-term measure to prevent dairy
prices from soaring, officials said.
If a deal was not possible, it would become evident
at Friday's White House meeting, and Obama and the leaders would leave a
resolution for the next Congress to address in January.
Such a delay could unnerve the stock market, which
edged lower for a fifth day Friday amid worries that lawmakers would
fail to reach a budget deal. Economists say that if the tax increases
are allowed to hit most Americans and if the spending cuts aren't scaled
back, the recovering but fragile economy could sustain a traumatizing
Obama called for the meeting as top lawmakers on
Thursday alternately cast blame on each other while portraying
themselves as open to a reasonable last-minute bargain.
Senate Democratic Leader Harry Reid all but
conceded that any effort at this late date was a long shot. "I don't
know timewise how it can happen now," he said.
The No. 2 Senate GOP leader, Jon Kyl of Arizona,
said it is "pretty unlikely" that Senate Republicans would agree to
legislation averting the fiscal cliff if it wouldn't pass muster in the
"If you know the House isn't going to do something,
why go through the charade?" he told reporters. "That becomes political
Obama and Reid, D-Nev., would have to propose a
package that Senate Republican Leader Mitch McConnell would agree not to
block with procedural steps that require 60 votes to overcome.
Sen. Chuck Schumer of New York said he still thinks a deal could be struck.
The Democrat told NBC's "Today" show Friday that he believes the "odds are better than people think."
Schumer said he based his optimism on indications that McConnell has gotten "actively engaged" in the talks.
Appearing on the same show, Republican Sen. John
Thune noted the meeting scheduled later Friday at the White House,
saying "it's encouraging that people are talking."
But Sen. Bob Corker, R-Tenn., predicted that "the worst-case scenario" could emerge from Friday's talks.
"We will kick the can down the road," he said on "CBS This Morning."
"We'll do some small deal and we'll create another
fiscal cliff to deal with the fiscal cliff," he said. Corker complained
that there has been "a total lack of courage, lack of leadership," in
If a deal were to pass the Senate, Boehner would have to agree to take it to the floor in the Republican-controlled House.
Boehner discussed the fiscal cliff with Republican
members in a conference call Thursday and advised them that the House
would convene Sunday evening. Rep. Tom Cole, R-Okla., an ally of the
speaker, said Boehner told the lawmakers that "he didn't really intend
to put on the floor something that would pass with all the Democratic
votes and few of the Republican votes."
But Cole did not rule out Republican support for
some increase in tax rates, noting that Boehner had amassed about 200
Republican votes for a plan last week to raise rates on Americans
earning $1 million or more. Boehner ultimately did not put the plan to a
House floor vote in the face of opposition from Republican
conservatives and a unified Democratic caucus.
"The ultimate question is whether the Republican
leaders in the House and Senate are going to push us over the cliff by
blocking plans to extend tax cuts for the middle class," White House
communications director Dan Pfeiffer said. "Ironically, in order to
protect tax breaks for millionaires, they will be responsible for the
largest tax increase in history."
Boehner, McConnell, Reid and House Democratic
Leader Nancy Pelosi are all scheduled to attend Friday's White House
meeting with Obama. Vice President Joe Biden will also participate in
the meeting, the White House said.
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