Sen. Majority Leader Harry Reid (D-Nev.) dismissed Republicans' attempt to bring Social Security reform into "fiscal cliff" negotiations as "desperation."

"Here's the situation," Reid told reporters as he came out of a nearly two-hour meeting with fellow Democrats."I hear that some Republican senators of the caucus said that they shouldn't have done CPI and that's true, they shouldn't have done that in the first place, it was desperation. We're still left with a proposal they've given us that protects the wealthy and not the middle class. I'm not going to agree to that."

Asked if he was going to make a counter-offer, Reid replied, "I just did." But his office later clarified that there was no new counter-proposal and that he was just joking.

Politico reports that Sen. Barbara Mikulski (D-Md.) described the mood in the caucus meeting as "grim." 

Lori Montgomery and Ed O'Keefe contributed to this report.