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Reid, McConnell to Seek Budget Compromise Plan

Reid, McConnell to Seek Budget Compromise Plan

By Alexis Simendinger - December 28, 2012

Senate leaders Harry Reid and Mitch McConnell agreed Friday to work through the weekend to develop a possible fiscal-cliff plan they hope could pass in both chambers of Congress before Dec. 31.

The eleventh-hour effort was the upshot of an hour-long discussion at the White House among congressional leaders and President Obama. Speaker John Boehner told the group that the House, which is scheduled to return to work Sunday night, will act only after the Senate makes the next move.

Should Congress fail to ratify legislation in time for Obama to sign it before midnight Monday, more than $500 billion in automatic spending cuts and tax increases will take effect New Year’s Day.

The president -- sounding impatient, distracted and stern -- said Americans are baffled that Congress cannot find a way to agree after nearly two years of discussions about a significant deficit reduction package that could blend tax hikes and spending cuts.

“The American people are watching what we do here,” he said, adding that they wonder “why everything has to wait until the last minute.”

Although he described himself as “modestly optimistic,” Obama sounded uncertain of the outcome in Congress. “I still want to get this done,” he said. “The hour for immediate action is now.”

For Democrats, the stopgap goal this weekend is to avoid tax hikes next week on families deemed to be middle class; for Republicans, it is to avoid increases on all earners, including the top 2 percent, whom Obama has said need to pay more. The president also wants to extend unemployment insurance to about 2 million long-term unemployed Americans, and pass what he calls a “down payment” on spending initiatives that might promote growth as well as curb deficits. Republicans have resisted the president’s position, arguing that he has not endorsed sufficient entitlement and spending reductions and is too eager to raise taxes, even if for just a small fraction of Americans. They also complain that Obama and congressional Democrats remain wedded to additional “investment” spending in a smaller deal, should one be possible.

Obama and Reid agreed Friday that should Congress fail to reach an agreement this weekend, the Senate majority leader will bring the basic ingredients of middle-class tax breaks and unemployment insurance to the floor for an up-or-down vote Monday.

In the final days of the year, the White House and lawmakers are searching for an agreement that can be short-term -- a measure that could become law for possibly two or three months -- followed by new budgetary battles in the 113th Congress. The nation’s limit on its borrowing authority will be reached next week, and the Treasury Department has advised Congress that it can juggle accounts for possibly two months into 2013 before the nation could face default on its obligations. Republicans are using the debt ceiling as leverage to elicit concessions from Democrats on other aspects of any fiscal cliff deal.

Lofty aspirations for unleashing stronger economic growth through a bipartisan, 10-year budget plan will be deferred until the new year no matter what happens over the weekend. A $4 trillion “grand bargain” to curb deficits and debt is no longer on the negotiating table.

After brief holiday vacations, the president and congressional leaders returned to Washington in slow-scramble mode. Congress and the president agreed in 2011 to create the cliff as a trigger to force an agreement following this year’s elections. Neither the hoped-for statutory discipline, nor the election results, altered what remains a partisan impasse.

Senate Minority Leader McConnell described Friday’s discussion with Obama and his congressional colleagues as “a good meeting.” He said he and Reid hope to have a recommendation by Sunday “that I can make to my conference and the Majority Leader can make to his conference. And so we’ll be working hard to try to see if we can get there in the next 24 hours. So I’m hopeful and optimistic.”

A statement released by Boehner’s office after the meeting noted that the speaker “reminded the group that the House has already acted to avert the entire fiscal cliff and is awaiting Senate action. The leaders spent the majority of the meeting discussing potential options and components for a plan that could pass both chambers of Congress. The Speaker told the President that if the Senate amends the House-passed legislation and sends back a plan, the House will consider it -- either by accepting or amending. The group agreed that the next step should be the Senate taking bipartisan action.”

House Minority Leader Nancy Pelosi told reporters that the meeting was “frank and constructive.” 

The president will appear Sunday morning on "Meet the Press," where the focus is sure to be on the fiscal impasse.

Alexis Simendinger covers the White House for RealClearPolitics. She can be reached at asimendinger@realclearpolitics.com. Follow her on Twitter @ASimendinger.

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