By DAVID ESPO and JIM KUHNHENN
Associated Press
WASHINGTON (AP) - The end game at hand, the White
House and Senate leaders launched a final attempt at compromise Friday
night in hopes of preventing a toxic blend of middle-class tax increases
and spending cuts from taking effect at the turn of the new year.
"I am hopeful and optimistic" of reaching an
agreement after months of gridlock, the Senate Republican Leader, Mitch
McConnell of Kentucky, said after a meeting with President Barack Obama
and top congressional leaders at the White House.
He said he hoped for a compromise that could be
presented to rank and file lawmakers by Sunday, little more than 24
hours before the year-end deadline.
Said Majority Leader Harry Reid said, "I'm going to
do everything I can" to prevent the tax increases and spending cuts
that threaten to send the economy into recession. He cautioned,
"Whatever we come up with is going to be imperfect.
Success was far from guaranteed in an atmosphere of
political mistrust - even on a slimmed-down deal that postponed hard
decisions about spending cuts into 2013 - in a Capitol where lawmakers
grumbled about the likelihood of spending the new year holiday in the
Capitol.
"The clock is ticking," Sen. Max Baucus, chairman
of the Senate Finance Committee, said in remarks on the Senate floor as
Obama and congressional leaders were meeting several blocks away at the
White House. "My message to them is simple. We can do this. We can get
this done, and we must," added the Montana Democrat.
Congressional Democrats said Obama was ready with a revised offer to present.
But that drew a denial from a person familiar with
the talks, who said the president would review his proposal from a week
ago, when he urged lawmakers to preserve tax cuts for most while letting
rates rise above incomes of $250,000 a year. At the same time, Obama
said lawmakers should extend unemployment benefits for the long-term
jobless. The person was unauthorized to discuss the private meeting
publicly and spoke on condition of anonymity.
The meeting lasted a little over an hour and
neither the president nor the four lawmakers spoke with reporters before
or immediately after the session.
The guest list included two Republicans, House
Speaker John Boehner, and McConnell; as well as Democrats Reid and Rep.
Nancy Pelosi of California, her party's leader in the House.
The same group last met more than a month ago and
emerged expressing optimism they could strike a deal that avoided the
fiscal cliff. At that point, Boehner had already said he was willing to
let tax revenues rise as part of an agreement, and the president and his
Democratic allies said they were ready to accept spending cuts.
Since then, though, talks between Obama and Boehner
faltered, the speaker struggled to control his rebellious rank and
file, and Reid and McConnell sparred almost daily in speeches on the
Senate floor. Through it all, Wall Street has paid close attention, and
in the moments before the meeting, stocks were trading lower for the
fifth day in a row.
The core issue is the same as it has been for more
than a year, Obama's demand for tax rates to rise on upper incomes while
remaining at current levels for most Americans. He made the proposal
central to his successful campaign for re-election, when he said incomes
above $200,000 for individuals and $250,000 for couples should rise to
39.6% from the current 35%.
Boehner refused for weeks to accept any rate
increases, and simultaneously accused Obama of skimping on the spending
cuts he would support as part of a balanced deal to reduce deficits,
remove the threat of spending cuts and prevent the across-the-board tax
cuts.
Last week, the Ohio Republican pivoted and
presented a Plan B measure that would have let rates rise on
million-dollar earners. That was well above Obama's latest offer, which
called for a $400,000 threshold, but more than the speaker's rank and
file were willing to accept.
Facing defeat, Boehner scrapped plans for a vote,
leaving the economy on track for the cliff that political leaders in
both parties had said they could avoid. In the aftermath, Democrats said
they doubted any compromise was possible until Boehner has been elected
to a second term as speaker when the new Congress convenes on Jan. 3.
Apart from income tax rates, congressional
officials in both parties said a handful of other issues were the
subject of private talks in the Capitol. These included the Alternative
Minimum Tax, which would effectively raise taxes on millions of
upper-middle-class families unless Congress acts; as well as taxes on
capital gains, dividends and estates.
In addition, benefits for the long-term unemployed
are due to expire in the next few days, and doctors face the prospect of
a deep cut in the fees they receive for treating Medicare patients
unless legislation is passed to prevent it.
Further compounding the year-end maneuvering, there
are warnings that the price of milk could virtually double beginning
next year.
Congressional officials said that under current
law, the federal government is obligated to maintain prices so that
fluid milk sells for about $20 per hundredweight. If the law lapses,
the Department of Agriculture would be required to maintain a price
closer to $36 of $38 per hundredweight, they said. It is unclear when
price increases might be felt by consumers.
Associated Press writers Alan Fram and Andrew Taylor contributed to this report.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten.
President Barack Obama spoke on Friday.
