“There’s still significant differences between the two sides but negotiations continue,” Reid, a Nevada Democrat, said on the Senate floor today. The Senate will resume its session tomorrow at 11 a.m. Washington time and “perhaps” have further announcements then, he said. “I certainly hope so.”
McConnell, a Kentucky Republican, reached out to Vice President Joe Biden in an effort to break the impasse.
Congress is working to avert more than $600 billion in tax increases and federal spending cuts, the so-called fiscal cliff, set to start taking effect in two days. The House and Senate are holding an unusual Sunday session after President Barack Obama on Dec. 28 asked Reid and McConnell to try to find a solution.
“The sticking point appears to be a willingness or interest or frankly, the courage to close the deal,” McConnell said on the Senate floor. “I’m willing to get this done, but I need a dance partner.”
Illinois Senator Dick Durbin, the second-ranking Democrat, said unresolved issues include the income threshold at which tax rates would rise, expiring estate tax levels and how to prevent an expansion of the alternative-minimum tax.
CAPITAL GAINS
Durbin also said there is a debate over raising the rate for capital gains and dividends from 15 percent to 20 percent. The issue is at what income level the rate would jump to the higher percentage, he said.
Regarding talks between McConnell and Biden, Reid said, “I wish them well.” Biden was at the White House, according to an administration official who spoke on condition of anonymity.
During an interview broadcast earlier today on NBC’s “Meet the Press,” Obama made a last-minute appeal for compromise and warned of “an adverse reaction in the markets” if Congress doesn’t act.
Republicans “say that their biggest priority is making sure that we deal with the deficit in a serious way, but the way they’re behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected,” Obama said. He said his offers to Republicans have been “so fair that a lot of Democrats get mad at me.”
COMMENTS IRONIC
In a statement, House Speaker John Boehner, an Ohio Republican, called Obama’s comments “ironic, as a recurring theme of our negotiations was his unwillingness to agree to anything that would require him to stand up to his own party.”
Several Senate Republicans leaving a caucus meeting said McConnell told them the talks stalled because Obama insists on using revenue generated from higher tax rates on the wealthy to reduce the spending cuts scheduled to begin in January.
Senator Bob Corker, a Tennessee Republican, said new revenue should go instead to deficit reduction. Democrats “want to spend it all now,” he said.
Democrats have said for more than a year that new revenue should be used to turn off the spending cuts. That was the basis of their proposals in last year’s failed talks by a deficit- reduction supercommittee.
SOCIAL SECURITY
Earlier today, Senator John McCain of Arizona said his fellow Republicans would stop insisting on using a new inflation measure that would lead to smaller Social Security cost-of- living increases.
“It’s not a winning argument to say benefits for seniors versus tax breaks for rich people,” McCain told reporters.
Reid said earlier today that Democrats wouldn’t agree to use the new inflation measure as part of a short-term deal. He said he would keep trying to come up with an offer to Republicans.
The setback over Social Security followed 24 hours of progress toward a deal, according to a Democratic aide familiar with the talks. During the previous two days, Reid and McConnell had been closing in on agreement on a threshold for letting income tax rates increase for top earners and narrowing differences over the estate tax, the aide said.
Bloomberg News
