Democratic Senate Majority Leader Harry Reid speaks on the Senate floor. (Reuters/C-SPAN/Handout)
The U.S. Senate on Sunday ended the day still sharply divided over how to avoid the automatic income-tax hikes and deep government spending cuts set to kick in Jan. 1 that could plunge the economy into a new recession.
Despite pleas from President Barack Obama and Republican House Speaker John Boehner for the Senate to resolve the stalemate, Democrat Harry Reid, the Senate Majority Leader, announced lawmakers would not return to work until 11 a.m. on Monday -- New Year's Eve -- for one last chance to avoid going over the so-called fiscal cliff.
Reid tried to sound a note of optimism, saying closed-door discussions would carry on.
“There is still significant distance between the two sides, but negotiations continue,” he said. “There is still time left to reach an agreement and we intend to continue negotiations.”
But senators on both sides sounded less than optimistic as they emerged from separate closed-door meetings -- one for Democrats, one for Republicans.
"We've all been told not to make plans for New Year's Eve," Missouri Democratic Sen. Claire McCaskill told reporters.
Some said they remained hopeful.
The Senate's number two Democrat, Dick Durbin of Illinois, told reporters he was "definitely" encouraged that Republicans had dropped a demand for reducing Social Security benefits as a condition for extending unemployment benefits set to expire for some two million Americans. Obama has said extending the unemployment benefits is one of his top priorities for any deal.
"Now that they’re backing off of it, maybe we can make some progress -- I hope," Durbin said.
Obama had previously offered to index Social Security benefits with a "chained" consumer price index -- essentially adopting a less generous measure of cost-of-living increases -- but only with safeguards for the poorest beneficiaries and only as part of a broader deficit-reduction plan.
Earlier, Republican Senate Minority Leader Mitch McConnell complained that Democrats had not yet given him a counteroffer to a GOP proposal delivered at 7 p.m. Saturday night. And McConnell spoke by telephone at least twice with Vice President Joe Biden in an effort to "jump-start" the stalled negotiations.
Even if McConnell and Reid could put together a last-minute compromise, that deal would still need to clear the Senate and the House of Representatives -- no mean feat with time running very short.
The two sides have been starkly at odds for the last year over which Bush-era income tax cuts to extend past their Jan. 1 expiration. Obama campaigned on letting taxes rise on income above $250,000, Republicans aim to set the threshold higher.
And the income tax threshold was far from the only bone of contention.
Obama and most Democrats want to extend unemployment benefits, but Republicans linked that request to the “chained CPI” for Social Security. With that change off the table, it was not clear what would happen to the jobless help, Durbin said.
Obama and most Democrats want to see the estate tax paid on large inheritances rise. Republicans want to exempt more estates from what they call the “death tax.”
The two sides are also looking at sparing millions of Americans from suddenly having to pay the Alternative Minimum Tax and eyeing a way to keep the reimbursement rate paid to doctors on Medicare-covered treatment from being slashed.
Maine Republican Sen. Olympia Snowe on Sunday blasted the last-minute negotiations as a "travesty" that had left American taxpayers disgusted and scared.
"It starts with beginning of this Congress -- in the last two years we’ve seen historic failure after historic failure," Snowe said. "Both parties and both branches of government ... it imposes a tremendous hardship and burden on the average American."
Snowe, who is retiring after 34 years in Congress, has said the intense partisanship in Washington largely drove her decision to leave.
- Politics & Government
- President Barack Obama
- unemployment benefits
- Dick Durbin