Senators seek compromise on fiscal cliff

WASHINGTON (AP) — Senate leaders groped for a last-minute compromise Saturday to avoid middle-class tax increases and possibly prevent deep spending cuts at the dawn of the new year as President Barack Obama warned that failure could mean a “self-inflicted wound to the economy.”

Obama chastised lawmakers in his weekly radio and Internet address for waiting until the last minute to try and avoid a “fiscal cliff,” yet said there was still time for an agreement. “We cannot let Washington politics get in the way of America’s progress,” he said as the hurry-up negotiations unfolded.

Senate Republicans said they were ready to compromise. “Divided government is a good time to solve hard problems_and in the next few days, leaders in Washington have an important responsibility to work together and do just that,” said Sen. Roy Blunt of Missouri, delivering his party’s weekly address.

Even so, there was no guarantee of success.

In a blunt challenge to Republicans, Obama said that barring a bipartisan agreement, he expected both houses to vote on his own proposal to block tax increases on all but the wealthy and simultaneously preserve expiring unemployment benefits.

Political calculations mattered as much as deep-seated differences over the issues, as divided government struggled with its first big challenge since the November elections.

Speaker John Boehner remained at arms-length, juggling a desire to avoid the fiscal cliff with his goal of winning another new term as speaker when a new Congress convenes next Thursday. Any compromise legislation is certain to include higher tax rates on the wealthy, and the House GOP rank and file rejected the idea when Boehner presented it as part of a final attempt to strike a more sweeping agreement with Obama.

Yet lawmakers have until the new Congress convenes to pass any compromise, and even the calendar mattered. Democrats said they had been told House Republicans might reject a deal until after Jan. 1, to avoid a vote to raise taxes before they had technically gone up and then vote to cut taxes after they had risen.

Nor was any taxpayer likely to feel any adverse impact if legislation is signed and passed into law in the first two or three days of 2013 instead of the final hours of 2012.

Gone was the talk of a grand bargain of spending cuts and additional tax revenue in which the two parties would agree to slash deficits by trillions of dollars over a decade.

Now negotiators had a more cramped goal of preventing additional damage to the economy in the form of higher taxes across the board — with some families facing increases measured in the thousands of dollars — as well as cuts aimed at the Pentagon and hundreds of domestic programs.

Republicans said they were willing to bow to Obama’s call for higher taxes on the wealthy as part of a deal to prevent them from rising on those less well-off.

Democrats said Obama was sticking to his campaign call for tax increases above $250,000 in annual income, even though he said in recent negotiations he said he could accept $400,000.

There were indications from Republicans that estate taxes might hold more significance for them than the possibility of higher rates on income.

One senior Republican, Sen. Jon Kyl of Arizona, said late Friday he was “totally dead set” against Obama’s estate tax proposal, and as if to reinforce the point, Blunt mentioned the issue before any other in his broadcast remarks. “Small businesses and farm families don’t know how to deal with the unfair death tax_a tax that the president and congressional leaders have threatened to expand to include even more family farms and even more small businesses,” he said.

Officials said any compromise was likely to ease the impact of the alternative minimum tax, originally designed to make sure that millionaires did not escape taxation. If left unchanged, it could hit an estimated 28 million households for the first time in 2013, with an average increase of more than $3,000.

Taxes on dividends and capital gains are also involved in the talks, as well as a series of breaks for businesses and others due to expire at the first of the year.

Obama and congressional Democrats are insisting on an extension of long-term unemployment benefits that are expiring for about 2 million jobless individuals.

Leaders in both parties also hope to prevent a 27 percent fee cut from taking effect on Jan. 1 for doctors who treat Medicare patients.

There was also discussion of a short-term extension of expiring farm programs, in part to prevent a spike in milk prices at the first of the year. It wasn’t clear if that was a parallel effort to the cliff talks or had become wrapped into them.

Across-the-board spending cuts that comprise part of the cliff were a different matter.

Republicans say Boehner will insist that they will begin to take effect unless negotiators agreed to offset them with specified savings elsewhere.

That would set the stage for the next round of brinkmanship — a struggle over Republican calls for savings from Medicare, Medicaid and other federal benefit programs.

The Treasury’s ability to borrow is expected to expire in late winter or early spring, and without an increase in the $16.4 trillion limit, the government would face its first-ever default. Republicans have said they will use administration requests for an extension as leverage to win cuts in spending.

Ironically, it was just such a maneuver more than a year ago that set the stage for the current crisis talks over the fiscal cliff.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Trader Joe’s customers walk in and out of the store on Monday, Nov. 20, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
New Trader Joe’s opens this week at Everett Mall

It’s a short move from a longtime location, essentially across the street, where parking was often an adventure.

Ian Bramel-Allen enters a guilty plea to second-degree murder during a plea and sentencing hearing on Wednesday, March 6, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
‘Deep remorse’: Man gets 17 years for friend’s fatal stabbing in Edmonds

Ian Bramel-Allen, 44, pleaded guilty Wednesday to second-degree murder for killing Bret Northcutt last year at a WinCo.

Firefighters respond to a small RV and a motorhome fire on Tuesday afternoon in Marysville. (Provided by Snohomish County Fire Distrct 22)
1 injured after RV fire, explosion near Marysville

The cause of the fire in the 11600 block of 81st Avenue NE had not been determined, fire officials said.

Ashton Dedmon appears in court during his sentencing hearing on Tuesday, March 5, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
Everett Navy sailor sentenced to 90 days for fatal hit and run

Ashton Dedmon crashed into Joshua Kollman and drove away. Dedmon, a petty officer on the USS Kidd, reported he had a panic attack.

A kindergarten student works on a computer at Emerson Elementary School on Wednesday, Feb. 28, 2024, in Everett, Washington. (Ryan Berry / The Herald)
‘¡Una erupción!’: Dual language programs expanding to 10 local schools

A new bill aims to support 10 new programs each year statewide. In Snohomish County, most follow a 90-10 model of Spanish and English.

Logo for news use featuring the Tulalip Indian Reservation in Snohomish County, Washington. 220118
Woman drives off cliff, dies on Tulalip Reservation

The woman fell 70 to 80 feet after driving off Priest Point Drive NW on Sunday afternoon.

Everett
Boy, 4, survives fall from Everett fourth-story apartment window

The child was being treated at Seattle Children’s. The city has a limited supply of window stops for low-income residents.

People head out to the water at low tide during an unseasonably warm day on Saturday, March 16, 2024, at Lighthouse Park in Mukilteo, Washington. (Ryan Berry / The Herald)
Everett shatters record high temperature by 11 degrees

On Saturday, it hit 73 degrees, breaking the previous record of 62 set in 2007.

Snohomish County Fire District #4 and Snohomish Regional Fire & Rescue respond to a motor vehicle collision for a car and pole. The driver was pronounced dead at the scene, near Triangle Bait & Tackle in Snohomish. (Snohomish County Sheriff’s Office)
Police: Troopers tried to stop driver before deadly crash in Snohomish

The man, 31, was driving at “a high rate of speed” when he crashed into a traffic light pole and died, investigators said.

Alan Dean, who is accused of the 1993 strangulation murder of 15-year-old Bothell girl Melissa Lee, appears in court during opening statements of his trial on Monday, March 18, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
31 years later, trial opens in Bothell teen’s brutal killing

In April 1993, Melissa Lee’s body was found below Edgewater Creek Bridge. It would take 27 years to arrest Alan Dean in her death.

Logo for news use featuring the municipality of Snohomish in Snohomish County, Washington. 220118
Man dies after crashing into pole in Snohomish

Just before 1 a.m., the driver crashed into a traffic light pole at the intersection of 2nd Street and Maple Avenue.

Bodies of two men recovered after falling into Eagle Falls near Index

Two men fell into the falls and did not resurface Saturday, authorities said. After a recovery effort, two bodies were found.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.