By Susan Davis and David Jackson, USA TODAY
Facing a midnight deadline, Senate leaders and the White House struck
a "fiscal cliff" deal Monday night designed to avoid automatic tax
hikes and budget cuts set to take effect in the new year.
President Biden traveled to Capitol Hill late Monday to meet with Senate
Democrats, including those who have expressed skepticism about the
proposed agreement struck with Republican leader Mitch McConnell.
proposal would extend the George W. Bush-era tax cuts for family
incomes below $450,000, rates that are due to expire at midnight; the
plan would also delay, for two months, across-the-board spending cuts to
defense and domestic programs that are also part of the fiscal cliff,
according to sources familiar with the negotiations. They spoke
anonymously because they were not authorized to speak on the record.
The full Democratic-run Senate must still approve the plan -- and so must the Republican-controlled House.
not known whether the Senate will vote tonight on the plan or wait
until Tuesday; that's one of the subjects of the Democratic caucus
meeting with Biden; the House is scheduled to reconvene on Tuesday, New
One set of taxes is set to go up in 2013: The proposed
deal does not address the end of the payroll tax holiday on Tuesday.
That tax will rise by 2%, back to its 2010 level.
also does not address any increase in the nation's debt ceiling, which
-- combined with the delay of automatic spending cuts -- sets up the
distinct possibility of another cliff-like budget battle in February.
omission of the debt ceiling dismayed some liberal Democrats, including
Sens. Tom Harkin of Iowa and Sherrod Brown of Ohio. Their criticism
prompted Biden's visit to Capitol Hill late Monday.
"He's here to hear members' concerns and respond to them," said Reid spokesman Adam Jentleson.
There was an air of resignation among Democrats to the deal, however. "It's what we could get," said Jentleson.
Democratic Leader Nancy Pelosi, D-Cal., did not exactly endorse the
deal either, saying in a statement: "When a final agreement is reached
and passed by the Senate, I will present it to the House Democratic
Sen. Claire McCaskill, D-Mo., tweeted that the proposal
would also stop scheduled pay increases for Congress set for the spring
The final details came together hours after President
Obama said Congress was making progress on a short-term deal to avert
the fiscal cliff.
As the day dragged on, negotiations narrowed to a
Democratic offer to pay for the spending cuts for two months, estimated
to cost $24 billion, a McConnell spokesman said. Republicans wanted
additional cuts to make up for supplanting those cuts and sent Democrats
a list outlining $130 billion of suggested cuts for Democrats to
Senators were awaiting guidance from Senate Majority Leader Harry Reid, D-Nev., who chaired the caucus meeting.
his White House event earlier in the day, Obama told an audience of
cheering supporters that a proposal would help reduce the nation's $16
trillion-plus debt through higher taxes on the wealthy. He also said it
would also extend unemployment insurance and preserve tax credits for
such middle class items as child care and education.
campaign-style event chafed some congressional Republicans. Obama's 2008
presidential rival Sen. John McCain, R-Ariz., criticized it as "a
cheer-leading, ridiculing-of-Republicans exercise."
officials familiar with the talks, there is consensus to allow the
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 of more than $5
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
"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."
Obama also 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."
pivoted on how and whether to turn off the impending $110 billion in
spending cuts scheduled for 2013. They are part of the automatic $1.2
trillion in cuts over 10 years that Congress approved in the summer of
2011 when they failed to come up with deficit reduction on their own.
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, particularly in the GOP-controlled House.
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.
It was unclear how
much support the package will have in the House, but McConnell spokesman
Don Stewart was optimistic the chamber could approve the package after
the Senate sends it over. "(McConnell) has spoken to the speaker
throughout the entire process," said Stewart.
Biden has proven a
late but potentially crucial player in the budget negotiations.
Frustrated by his failure to make progress with Reid 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.
Without action, all of the Bush-era tax rates expire at midnight
resulting in a tax increase on practically every American household.
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
The AFL-CIO labor union, a major supporter of the
Democratic Party, also raised objections to reported details of a
possible agreement. In a tweet, AFL-CIO President Richard Trumka said
the proposal gives Republicans the chance of "further destabilizing
hostage taking" in the weeks ahead over raising the debt ceiling.
Congress had failed to act, Obama had asked Reid to bring to the floor a
stripped-down plan that would include a renewal of unemployment
insurance and an extension of the Bush tax cuts for middle-class
Americans who make less than $250,000 a year.
have to decide if they're going to block it, which will mean that
middle-class taxes do go up," President Obama said on Sunday on NBC's Meet the Press.
MORE: Deal would pale against expectations
FULL COVERAGE: The fiscal cliff
conflicts have been a recurring theme in the 112th Congress, which ends
Thursday at noon when nearly 100 new House and Senate lawmakers will be
sworn in to office.
The Democratic president and divided Congress
first clashed in spring 2011 over a near-government shutdown. Tensions
continued that summer during the fight over raising the national debt
Such tensions are likely to happen again in 2013. Congress
must approve in mid-February an increase in the $16.4 trillion debt
ceiling, the nation's borrowing authority, and in late March when the
current federal funding runs out and another government shutdown threat
looms if the partisan gridlock continues.
"When the president said
today that round two is the debt ceiling, he is right," said Sen.
Lindsey Graham, R-S.C. Republicans will fight for spending cuts,
particularly in entitlement programs like Medicare, in exchange for the
required congressional approval to raise the debt ceiling. "If that's
too much to ask, so be it," he said.