Congress on Monday will make a last-ditch effort to dodge the cascade of tax hikes and spending cuts set to go into effect Jan. 1 after negotiations to avoid the "fiscal cliff" on Sunday collapsed.
White House and congressional staff members were expected to work through Sunday night to craft a compromise proposal, with much of the negotiating taking place between Vice President Biden and Senate Minority Leader Mitch McConnell, R-Ky. The GOP Senate leader said he called on Biden Saturday after failing to reach agreement with Senate Majority Leader Harry Reid, D-Nev.
"I'm willing to get this done," McConnell said Sunday. "But I need a dance partner."
House Speaker John Boehner convened the House of Representatives Sunday evening with the expectation that the Senate would send a bill, but they ended up voting on other legislation instead.
Both parties are aiming for a fiscal cliff deal that, at the very least, stops hundreds of billions of dollars in tax hikes that will go into effect if the Bush-era tax cuts are allowed to expire. Democrats and Republicans are wrangling over who should continue to receive the tax cuts, with Republicans aiming for an income threshold of more than $500,000 and Democrats seeking President Obama's original proposal to keep the tax rates low only for those earning $250,000 or below.
The rare Sunday congressional session included a series of dramatic twists, with a potential deal collapsing midmorning after Democrats balked at a Republican demand that the final bill include a provision to reduce the rate of growth in Social Security payments.
Republicans quickly backed off their demand to include Social Security spending reforms, but the Senate, led by Democrats, remained stalled late Sunday over the tax increase threshold.
"There is still significant distance between the two sides, but negotiations continue," Reid said before leaving the Capitol late Sunday. "There is still time left to reach an agreement, and we intend to continue negotiations."
Reid summoned the Senate back at 11 a.m. Monday, but some lawmakers are worried that, with only hours left in the year, the nation is doomed to go over the fiscal cliff.
Republicans say the problem lies with Democrats, who are refusing a bill that would couple tax rate increases with significant spending cuts.
Democrats want to stop more than $1 trillion in automatic spending cuts by using revenue from tax increases. But Republicans say such a move would lead to higher spending. The GOP wants the deal to include big spending cuts instead.
"We're stuck because many in Congress want to move toward Clinton-era tax rates but not Clinton-era spending," said Sen. Tom Coburn, R-Okla.
Some lawmakers are coming up with their own last-minute solutions to soften the fiscal cliff.
Sen. Joe Manchin, D-W.Va., introduced the Cliff Alleviation at the Last Minute Act. The measure would phase in the tax hikes over three years and allow the Office of Management and Budget, an arm of the White House, to prioritize the automatic spending cuts.
"If we're as determined to go over the cliff as we seem, we've got to do something to soften the landing, because at the bottom of the fiscal cliff are immediate and massive tax increases, deep and indiscriminate spending cuts, and the risk of another recession," Manchin said.
Earlier in the day, the two parties jockeyed for the political high ground, with President Obama blaming the impasse on Republicans, who he said are behaving as though "their only priority is making sure that tax breaks for the wealthiest Americans are protected."
Boehner quickly responded with his own political barb, saying Obama has been unable to get his own party to agree to needed cuts.
"The president's comments today are ironic, as a recurring theme of our negotiations was his unwillingness to agree to anything that would require him to stand up to his own party," Boehner said.