Negotiations stalled Sunday on Capitol Hill where Senate leaders are trying to find a compromise to avert year-end tax hikes and spending cuts that threaten economic recovery.
"At this stage, we are not able to make a counter-offer," said Senate Majority Leader Harry Reid, D-Nev., in response to the most recent offer made by Senate Minority Leader Mitch McConnell, R-Ky., on Saturday evening. "Perhaps as the day moves on I will be able to."
He added: "We're apart on some pretty big issues."
Reid adjourned the Senate Sunday evening with no deal in sight.
Negotiations hit a wall when Senate minority Leader Mitch McConnell, R-Ky., asked to include a provision to change the way cost-of-living adjustments are made for Social Security benefits, according to a Senate Democratic aide who isn't authorized to discuss the status of negotiations and spoke on condition of anonymity. Republicans broadly support the proposal, which could ease passage for a final legislative package in a divided Congress, but the proposal is a non-starter for Democrats.
Republican senators were briefed by McConnell on the state of negotiations. Senators in interviews said Social Security benefits were not the holdup. It's "not going to be a part of any deal," said Sen. Bob Corker, R-Tenn.
Rather, Republicans said their issue was a Democratic proposal to use revenues raised through higher rates on the wealthy to pay for the impending spending cuts. It would ease the pain of cuts on defense and social programs, but do nothing to reduce the deficit, which is why the cuts were put in place to begin with.
"It's pretty shocking," said Corker of the proposal.
Sen. Kay Bailey Hutchison, R-Texas, said the two leaders appear closer than they are far apart on a deal. She said she believes there is broad bipartisan agreement to allow the threshold for tax rates to rise to the $400-$500,000 range.
"The hurdles are that you can't use tax increases on anyone to pay for more spending," she said. "I think where new revenue goes is the bone of contention."
McConnell said he is "concerned about the lack of urgency" because he has yet to receive a counteroffer from Reid. "I want everyone to know I'm willing to get this done, but I need a dance partner."
He said he made a call Sunday to Vice President Joe Biden "to see if he could help jumpstart negotiations on his side." McConnell and the vice president have had a strong working relationship in previous fiscal negotiations. Reid said he also spoke Sunday with the president.
Congress reconvened Sunday with just one day remaining before all of the Bush-era tax rates expire and the first $100 billion in scheduled $1.2 trillion in across-the-board spending cuts take effect at the start of the new year.
If they fail to reach an agreement, Reid is prepared to bring to the floor Monday a stripped down bill to extend the middle class tax rates and unemployment benefits. If it passes the Democratic controlled Senate, it would be sent to the Republican controlled House, where passage is not guaranteed because of GOP opposition.
"Now the pressure's on Congress to produce," President Obama said Sunday on NBC's Meet the Press.
By Susan Davis and David Jackson, USA TODAY