President Barack Obama makes a statement about fiscal cliff negotiations from the Old Executive Office Building next to the White House on Monday, December 31, 2012. (Photo: BRENDAN SMIALOWSKI/AFP/Getty Images)
President Obama said Monday that Congress is making progress on a short-term deal to avoid the fiscal cliff series of tax hikes and spending cuts scheduled to strike at midnight.
Negotiators have signed off on the provisions of a deal affecting tax rates, according to Senate Minority Leader Mitch McConnell, R-Ky., but an ongoing dispute over how and whether to turn off impending spending cuts remains a hurdle.
"We're very, very close to an agreement," McConnell said, who suggested that Congress may have to move forward with a vote on just the tax portion of an agreement to reassure Americans while Congress continues to fight over spending cuts. "Let's take what's been agreed to and get moving," he said.
An agreement to prevent a New Year's tax hike "is within sight -- but it's not done," Obama told an audience of cheering supporters at a White House event. Without providing specific details, Obama said the proposal would help reduce the nation's $16 trillion-plus debt through higher taxes on the wealthy. He said it would also extend unemployment insurance and preserve tax credits for such middle class items as child care and education.
"There are still issues left to resolve but we're hopeful Congress can get it done," Obama said at a campaign-style event that chafed congressional Republicans. Obama's 2008 presidential rival Sen. John McCain, R-Ariz., criticized it as "a cheerleading, ridiculing-of-Republicans exercise."
According to officials familiar the talks, there is consensus to allow the George W. Bush-era rates to expire for individuals earning above $400,000 and joint filers above $450,000. Negotiators have also agreed to an increase in the estate tax rate from 35% to 40% on inheritances over $5 million.
The president said he would have preferred a bigger debt reduction deal, but congressional Republicans balked and now it will have to be done "in stages." Down the line, Obama said he will continue to insist that debt reduction be balanced with revenues as well as spending cuts, foreshadowing a second term defined by budgetary clashes with Republicans.
"It's going to have to be a matter of shared sacrifice, at least as long as I'm president," Obama said. "And I'm going to be president for the next four years, I hope."
The president's comments were immediately met with frustration by Republican senior congressional aides who vented on Twitter.
"If Obama's goal was to harm the process and make going over the cliff more likely, he's succeeding," said Doug Heye, a spokesman for House Majority Leader Eric Cantor, R-Va.
Added Josh Holmes, a top aide to Senate Majority Leader McConnell, R-Ky.: "(Obama) just moved the goalpost again. Significantly. This is new."
Obama, meanwhile, cracked a joke about lawmakers: "And one thing we can count on with respect to this Congress is that if there is even one second left before you have to do what you're supposed to do, they will use that last second."
The negotiations have narrowed down to how and whether to turn off the impending $110 billion in spending cuts scheduled for 2013 as part of an automatic $1.2 trillion over 10 years across-the-board spending slash Congress agreed to last year when they failed to come up with deficit reduction on their own.
Republicans object to using new revenue to pay for the cuts because it negates the overarching goal of deficit reduction. "Everybody in this body knows that we've done nothing-nothing-to reduce a penny of debt in this country," said Sen. Bob Corker, R-Tenn. Any proposal to use revenue to pay for spending without additional cuts will likely face significant opposition among Republicans, particulary in the GOP-controlled House.
Speaker John Boehner, R-Ohio, has said he will bring to the floor whatever passes the Senate, but he has cautioned that his chamber reserves the right to amend -- or defeat -- the proposal. House GOP leaders advised members that votes are expected later Monday, but the situation remains "very fluid."
Vice President Joe Biden has proven a late but potentially crucial player in the budget negotiations. Frustrated by his failure to make progress with Senate Majority Leader Harry Reid, D-Nev., over the weekend, McConnell called on Biden to step in and help move the talks forward. The two have remained in constant contact since then, McConnell said. "I'm happy to report the effort has been a successful one," he said.
The administration's willingness to raise the threshold for higher tax rates above the president's campaign pledge for earners above $250,000 was met with resistance by liberals. "This is one Democrat that doesn't agree with that at all," said Sen. Tom Harkin, D-Iowa. "I think that's grossly unfair." Harkin said that most Americans earn between $25,000-$60,000. "And they're the ones getting hammered right now," he said.
If Congress fails to move forward on their own, President Obama has asked Reid to bring to the floor a stripped-down plan that would include a renewal of unemployment insurance and an extension of the George W. Bush tax cuts for middle-class Americans who make less than $250,000 a year.
By Susan Davis and David Jackson, USA TODAY