Updated Sunday, December 30, 5:39 p.m.
Less than 36 hours before the new year, when the Bush tax cuts are scheduled to expire, budget negotiations on Capitol Hill ground to a halt, and an increasingly restless Mitch McConnell — the Senate Minority Leader — enlisted the help of Vice President Joe Biden to resolve the remaining differences between Democrats and Republicans over whether and how to avoid the fiscal cliff.
McConnell’s gesture suggests a desire to avoid an uncomfortable New Year’s Eve conundrum. If he and Biden come up empty, Senate Majority Leader Harry Reid has pledged to introduce legislation that would extend the Bush tax cuts for income up to $250,000, extend emergency unemployment benefits and protect millions of middle class taxpayers from having to pay the Alternative Minimum Tax. McConnell and Senate Republicans would then have to decide whether to mount a filibuster, and bear responsibility for the economic impact of across the board tax increases and spending cuts next year, or allow the legislation to pass on a majority rules basis, and pass the measure over to House Speaker John Boehner.Negotiations broke down Sunday after McConnell pressed Reid to include in a year-end deal a provision that would re-index Social Security payments to a less generous measurement of inflation called chained CPI. Dems say including Social Security cuts in a deal that doesn’t increase the debt limit is a non-starter.
On the Senate floor Sunday afternoon, Reid officially quashed the offer. “We’re willing to make difficult concessions as part of a balanced, comprehensive agreement but we’ll not agree to cut Social Security benefits as part of a small or short-term agreement, especially if that agreement gives more handouts to the rich.”
In other words, Dems might swallow chained CPI or other cuts to social programs as part of a broader agreement in 2013, but current negotiations must focus on the narrow issue of protecting middle-class tax payers from a tax increase.
So what comes next? After Reid told McConnell he was unprepared to provide a counter-offer, a senior Senate Democratic aide said “this might be it.”
McConnell’s offer suggests a narrowly tailored agreement on taxes — one that includes no spending concessions from Democrats, and allows tax rates on top earners to ride — lacks broad support from his members.
Late update: Republicans have dropped the chained CPI demand. Senators in the Capitol suggested that the development could kickstart negotiations, but Senate Majority Leader Harry Reid has yet to provide Republicans a counteroffer.