Fiscal cliff: 48 hours to go and Senate negotiations slow to a crawl

A late-breaking Republican demand to cut Social Security benefits through an alternative method of calculating inflation adjustments has put negotiations at an impasse.

Mary Calvert/REUTERS
Senate Majority Leader Harry Reid (D-NV) speaks with the media as he leaves the Senate Chamber Sunday afternoon. Efforts to prevent the economy from tumbling over a "fiscal cliff" stalled as Democrats and Republicans remained at loggerheads over a deal that would prevent taxes for all Americans from rising on New Year's Day.

UPDATE: Senate majority leader Harry Reid told the Senate at 5:48 p.m. Sunday that Senate Republicans have dropped their call for Social Security benefit cuts, or “chain” CPI, as part of a deal to avert the fiscal cliff. There is still “significant distance” between the two sides, he said, but “there is still time left to reach an agreement." The Senate will come in at 11 a.m. Monday, when the majority leader expects to make "further announcements."

Fiscal cliff negotiations hit a wall late Saturday night, but it took Senate Republicans about 15 hours to figure that out.

Typically, 11th hour negotiations are marked by a flurry of offers and counteroffers, all-night staff negotiations, phone calls, and huddles in back rooms littered with pizza boxes and diet soda cans.

That’s not happening, say staff close to the negotiations. Senate Republicans made their last offer about 7:10 p.m. Saturday. Democratic staff for majority leader Harry Reid promised a response by 10 a.m. on Sunday. Nothing came.

Instead, word leaked to the press that a late-breaking GOP demand to cut Social Security benefits through an alternative method of calculating inflation adjustments as “chained” CPI [Consumer Price Index] had put negotiations at an impasse. It was a poison pill, a show-stopper, Democratic aides told reporters.

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President Obama first proposed the idea in negotiations last spring with House Speaker John Boehner (R) of Ohio for a comprehensive deal on the debt ceiling and deficit reduction. But it’s anathema to many Senate liberals.

“Social Security has nothing to do with deficit reduction,” said Sen. Bernard Sanders (I) of Vermont, after the talks stalled on Sunday. “The idea of Republicans asking for cuts for Social Security and cuts for programs for disabled veterans while at the same time protecting the wealthiest people in this country is totally outrageous and I’m glad that Senator Reid said no.”

But GOP staff close to the negotiations say that Reid or his staff never conveyed that view back to Republicans.

“If they have a problem with that piece, we are encouraging them to resubmit an offer with it,” says a GOP aide, who spoke on condition of anonymity. “But all we heard is that the majority leader would not be countering.”

“There is no single issue that remains an impossible sticking point,” said Senate minority leader Mitch McConnell in a floor speech before party caucus meetings to brief senators at 3 p.m. “The sticking point appears to be a willingness, an interest or frankly the courage to close the deal.”

Standing side by side on the Senate floor, Senator Reid responded: “I have had a number of conversations with the president, and at this stage we’re not able to make a counteroffer.”

“Perhaps as the day wears on, I will be able to,” he added. “I will say this: I think that the Republican leader has shown absolutely good faith. It’s just that we are apart on some pretty big issues.”

If Senate leaders fail to reach an agreement, the Senate is expected to take up on Monday President Obama’s proposal for a stripped down agreement that would extend Bush-era tax rates for all incomes below $250,000 and extend unemployment rates at the current 99 weeks.

But such a measure would also have to pass the House, where many GOP conservatives are strongly committed to opposing all tax hikes. Last week, Speaker Boehner was forced to pull his own “Plan B” proposal to extend current tax rates for all incomes below $1 million, after opposition within GOP ranks. 

“I still can’t believe they won’t get something done given the perilous place this leaves our country,” said Sen. Olympia Snowe (R) of Maine, after the floor exchange between the two leaders.

“But the only thing Congress is predictable about is waiting until the very last hour,” she added.

2012 enters the record books. Were you paying attention? A news quiz.

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