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Obama, lawmakers to discuss short-term fiscal deal

5:32 PM, Dec 28, 2012   |    comments
Barack Obama, as US President, and John Boehner, as US Representative of Ohio and House Speaker/AP
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By David Jackson and Susan Davis, USA TODAY

President Obama and congressional leaders discussed short-term plans Friday to avoid the tax hikes and budget cuts that kick in next week if the nation goes over the so-called "fiscal cliff."

White House officials declined to comment on the meeting that began at 3:10 p.m. and lasted a little more than an hour; but they noted that the president has offered to work on a short-term deal to beat the Dec. 31 deadline for the cliff.

Before leaving for vacation in Hawaii a week ago, Obama said he asked Republican and Democratic leaders to "work toward a package that prevents a tax hike on middle-class Americans, protects unemployment insurance for 2 million Americans and lays the groundwork for further work on both growth and deficit reduction. That's an achievable goal."

Obama returned to the White House on Thursday. On Friday afternoon, he met with House Speaker John Boehner, R-Ohio; Senate Majority Leader Harry Reid, D-Nev.; House Minority Leader Nancy Pelosi, D-Calif.; and Senate Minority Leader Mitch McConnell, R-Ky.

Treasury Secretary Timothy Geithner also attended.

Even if the group agrees on a deal, it would still have to be approved by both the Republican House and Democratic Senate.

In recent weeks, the White House and Congress had hoped for a major deal to reduce the federal debt that now exceeds $16 trillion. They have discussed spending cuts, steps toward a tax overhaul and changes to entitlement programs and ways to address the debt ceiling.

With time growing short, however, the parties are now discussing a scaled-back agreement ahead of next week's deadline.

One of their likely topics on Friday: the fate of the George W. Bush tax cuts, which are due to expire at the end of the year, leading to a rise in income tax rates for all Americans.

Obama has proposed extending the Bush tax rates for most Americans, but ending them for those who make more than $250,000; he has also discussed increasing that threshold to $400,000 a year in talks with Republicans..

Many Republicans oppose any rise in income tax rates, though Boehner has offered to end the Bush tax cuts for those who make more than $1 million a year.

In the meantime, some officials are already talking about what happens after the country goes over the cliff on Tuesday, New Year's Day.

"It looks like that is where we're headed," Reid said on Thursday, if only because so little time is left before the end of the year.

Lawmakers are now starting to say that the next Congress -- the one that will be sworn in Jan. 3 -- will have to work on a debt reduction deal, including legislation to deal retroactively with the tax increases that take effect on Jan. 1.

One advantage of this approach: Senate and House members in the next Congress would be able to argue next year that they are voting to cut taxes; the tax hikes would already be in effect.

Reid blamed Boehner and the Republican-run House, saying they have refused to even vote on plans to reduce the debt with higher taxes on the wealthy as well as budget cuts.

Boehner said it's up to Reid and the Senate Democrats to act on measures passed by the House that emphasize reduced spending.

After the Friday meeting at the White House, some senior administration officials -- including Geithner and top adviser Valerie Jarrett -- will conduct a conference call with business leaders to discuss fiscal cliff issues; Obama himself will not be on the call.

Despite the partisan impasse, there is overwhelming agreement on Capitol Hill that Washington will at least extend the current tax rates for the majority of Americans. "It'll get resolved, and most Americans, almost all Americans, won't pay higher taxes next year," said Sen. Lamar Alexander, R-Tenn.

What remains uncertain is whether Congress will send legislation to the president before the Dec. 31 "fiscal cliff" deadline, or in the days or weeks after when the tax rates have expired. "That'll either be settled this weekend by our votes or it'll be settled after the first of the year," Alexander said.

Efforts to achieve a broad deficit reduction deal are all but gone, said Alexander and Sen. Bob Corker, R-Tenn., who outlined their proposal Friday to deal with the next budgetary crisis facing Washington - a vote to raise the $16.4 trillion debt ceiling, the nation's borrowing authority.

"Unfortunately for America, the next line in the sand is going to be the debt ceiling," said Corker, who outlined a GOP proposal to raise the debt ceiling by $1 trillion in exchange for entitlement changes to Medicare, Social Security and Medicaid.

Corker said he believes the White House meeting is for "optics" and will not produce any significant bipartisan agreement. He said senators, during a series of votes Friday, were discussing on the floor how to bring up a bill to address the immediate fiscal issues of expiring tax rates and spending cuts.

Corker levied a harsh critique of the president and his congressional colleagues. "It's pretty apparent that we're not going to do what we've been called to do," he said, "I think that every American should be disgusted with all of Washington....And it's a shame that we are where we are, and candidly, that our economy is not going to be what it could have been the first quarter of this year if we had just done the work that we were supposed to do by this year end."

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