The late-afternoon invitation from the president surprised senior Republicans. But it did nothing to dispel the sense that hope is all but lost for a far-reaching agreement to raise taxes, cut spending and avert the year-end cliff.
Obama’s top economic adviser, Gene Sperling, confirmed the gloomy outlook in a closed-door lunch meeting Thursday with Senate Democrats, according to those present.
Senior Senate Republicans, meanwhile, were at work on a fallback plan that would not significantly restrain the national debt but would at least avert widespread economic damage by canceling tax increases scheduled to take effect next year for the vast majority of Americans. That strategy calls for Republicans to capitulate to Obama’s demand to let tax rates rise on wage and salary income for the wealthiest 2 percent of taxpayers.
But the approach would also seek to thwart the Democrats by trying to block other steps that would increase taxes paid by wealthy taxpayers, including higher rates on investment income and limits on the value of itemized deductions. This strategy would produce only about $440 billion in new taxes and give the Democrats even less revenue than Republicans had previously put on the table. In his initial offer earlier this month, Boehner had said he could support $800 billion in new tax revenue.
With a relatively low price in new taxes, the strategy, if successful, would represent a tactical victory for Republicans and shift the political burden onto Democrats to make greater concessions on federal spending.
Senate Minority Leader Mitch McConnell (R-Ky.) has floated the strategy among Republicans in both chambers, according to lawmakers and senior GOP aides. It has been rejected by Boehner and other House leaders, aides said.
Don Stewart, a spokesman for McConnell, denied that he was floating the idea. “The leader has held numerous discussions to hear input from his members, and many ideas have been raised,” he said.
But top GOP policy aides continued to refine the plan Thursday as a growing number of Senate Republicans clamored for action to prevent the fiscal crisis — for which, polls show, Republicans would be blamed.
So what’s next for the fiscal cliff talks? According to Rachel Weiner, no one knows.
Not one single event is currently scheduled for Friday on Capitol Hill to address the approaching “fiscal cliff.”
Most members of Congress left town Thursday night, with no plans to return until the Senate reconvenes Monday afternoon and the House comes back on Monday evening. Senate Majority Leader Harry M. Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) were seen leaving the Capitol Thursday around 6:30 p.m. Even House Speaker John A. Boehner (R-Ohio) – who last week vowed to stay in Washington to work on a deal with President Obama – plans to travel this weekend to his home state of Ohio after a frank exchange at the White House Thursday night that lasted about 50 minutes.