President Obama summoned congressional leaders to a Friday summit at the White House in a last-ditch effort to protect taxpayers, unemployed workers and the fragile U.S. recovery from severe austerity measures set to hit in just four days.
Also Thursday, House Speaker John A. Boehner (R-Ohio) announced that he would call the House back into session this weekend. And in perhaps the most significant development, Senate Minority Leader Mitch McConnell (R-Ky.) for the first time was engaged directly in talks with the White House. He signaled an interest in cutting a deal.
“The truth is, we’re coming up against a hard deadline here . . . and Republicans aren’t about to write a blank check for anything Senate Democrats put forward just because we find ourselves at the edge of the cliff,” McConnell said in a speech Thursday afternoon on the Senate floor.
“We’ll see what the president has to propose,” McConnell said. “Hopefully, there is still time for an agreement of some kind that saves the taxpayers from a wholly preventable economic crisis.”
With uncertainty about a solution producing volatility in the equity markets, aides in both parties expressed hope that legislation could be enacted before the New Year’s Eve deadline. This marks just the fifth time since the 1930s that members of Congress have been dragged back from their holiday break to a post-Christmas session in Washington.
Aides cautioned, however, that quick action would require leaders in both chambers to rally firmly around a specific set of proposals.
One option that could potentially win broad support, Republican aides said, was allowing taxes to rise on household income over $400,000 a year — Obama’s latest offer in negotiations with Boehner — rather than the lower threshold of $250,000 a year, as Obama proposed during the presidential campaign.
Publicly, there was little sign of such a thaw Thursday. Instead, a sense of gloom pervaded the Capitol. Senate Majority Leader Harry M. Reid (D-Nev.) openly speculated on the Senate floor that there may no longer be time to avoid more than $500 billion in tax increases and spending cuts scheduled to take effect next week.
In preparation for that possibility, each party stepped up its efforts to proactively deflect blame, insisting that the other must act first.
Reid urged the House to take up an “escape hatch” bill adopted by the Senate in July that would forestall the worst of the cliff’s economic consequences by extending tax breaks adopted under President George W. Bush for income under $250,000.
He charged that Boehner is running a “dictatorship” in the House, refusing to bring forward the legislation because it might pass with broad Democratic support and a handful of Republican votes.
“Nothing can move forward in regards to our budget crisis unless Speaker Boehner and Leader McConnell are willing to participate in coming up with a bipartisan plan,” Reid said. “So far, they are radio-silent.”
McConnell retorted that Republicans have been eager to work with Obama. After one-on-one talks between Obama and Boehner failed to produce a broad deficit-reduction package last week, McConnell said it is now the president’s responsibility to put forward a new plan.
“Republicans bent over backwards,” he said. “We wanted an agreement. But we had no takers. The phone never rang.”
McConnell said the Senate’s bill was not a viable option because it was approved with only Democratic votes and because measures dealing with revenue are required by the Constitution to originate in the House.
Boehner also told Republican lawmakers in a conference call that the Senate must act first. He said the Senate should take up and amend a bill passed by House Republicans in August to extend tax breaks for Americans at all income levels and another approved in May that would shift military spending cuts set for next month to domestic programs.
Boehner’s message was that “we were going to wait for the Senate to take up the bill that we passed six months ago,” said one Republican lawmaker who was on the call. “Quit trying to do this leadership-negotiating thing.”
The day was rife with rumors of behind-the-scenes movement, evidence of the anxious energy that has gripped Washington as the deadline approaches.
The first round of excitement came when McConnell sent an e-mail to Republican senators suggesting that Obama “would finally be proposing a package to avoid the cliff and I agreed to review it,” according to a copy of the e-mail given to The Washington Post.
Sen. Scott Brown (R-Mass.) posted a note on his Facebook page announcing the pending offer, and a frenzied media scurried for details.
White House officials and Senate Democrats denied that a new proposal was forthcoming. But McConnell continued to insist throughout the day that he was eager to review the new offer. Ultimately, both parties confirmed that quiet talks were underway between aides to McConnell and senior White House officials, but that the details were in flux.
The scope of the package under discussion appeared to follow the contours Obama laid out Friday in a news conference where he urged Congress to extend expiring tax cuts for 98 percent of taxpayers and to keep benefits flowing to about 2 million long-term unemployed. In addition, aides said, talks were focused on preserving low tax rates for inherited estates and extending tax breaks for college tuition and the working poor adopted as part of Obama’s 2009 economic stimulus package.
But aides said that time had probably run out for an agreement on significant spending cuts or to lift the legal limit on government borrowing, which will have to be done within the next two months. And late Thursday a hang-up emerged: Republicans wanted to protect doctors from a scheduled reduction in Medicare payments, but they wanted to cover the cost by eliminating a new prevention fund championed by Sen. Tom Harkin (D-Iowa), chairman of the Health, Education, Labor, And Pensions Committee.
Despite the behind-the-scenes activity, some of McConnell’s closest allies predicted that there was too little time to seal an interim deal and said each side was trying to pin the blame on the other.
“It’s all theatrics now,” Sen. John Cornyn (R-Tex.), McConnell’s incoming chief deputy, told reporters.
Jittery financial markets were whipsawed by rumors all day, with the Dow Jones industrial average plummeting nearly 100 points in the 30 minutes after Reid convened the Senate at 10 a.m. with a dour assessment of the talks. When reports emerged that Boehner was calling the House back into session Sunday evening, the index rose more than 100 points, even though the speaker’s decision represented no sure cause for hope. The index closed down a modest 18 points, the fifth session in the last six days it has fallen.
Thursday was the kind of day that generations of lawmakers had sought to avoid. Since the 1930s — when an amendment to the Constitution decreed that congressional sessions would end just after New Year’s Day — it has been a bipartisan goal to leave before Christmas and not come back. There have been only four previous post-Christmas work sessions. Two were caused by World War II, another was related to the government shutdown of 1995, and another was triggered by a budget fight in 1963.
David A. Fahrenthold and Paul Kane contributed to this report.