Fiscal-cliff talks between U.S. Senate leaders hit a major setback Sunday because of differences primarily over Social Security, leading to an appeal to Vice President Joe Biden for aid in breaking the gridlock.
Senate leaders began scrambling to sort out a fiscal-cliff fix on Saturday after President Barack Obama requested that they work up a bipartisan deal the day before. The president urged Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., to find a compromise that would prevent the economy from falling off the cliff and into a recession.
However, Democrats and Republicans failed once more, with Social Security this time around reportedly high in the mix, particularly with respect to how benefits would increase over time.
Democrats don't want Social Security to be affected, but Republicans demanded Saturday evening that its benefits be cut in exchange for the extension of the emergency unemployment benefits the president has requested, the Washington Post reported.
This demand “shocked and disappointed” Reid, aides told the Post.
Meanwhile, McConnell said: “There’s no single issue that remains an impossible sticking point. The sticking point appears to be the willingness and interest or frankly the courage to close the deal. I want everyone to know, I’m willing to get this done, but I need a dance partner.”
Without a deal, middle-class families and millions of unemployed Americans won't be spared the worst of the fiscal cliff, at least in the short term.
Obama has urged the Senate's Reid to bring a basic package to the floor for an up-or-down vote in the event the fiscal-cliff talks fail. That bill would prevent a middle-class tax increase, extend unemployment insurance, and lay out plans for future deficit reduction.
The bill is Obama’s last-ditch move to fend off some of the most damaging effects of the fiscal cliff, which includes higher taxes, lower government spending, and an unemployment rate that could shoot up to 9.1 percent, according to Congressional Budget Office projections.
Obama blamed Republicans for the impasse on Sunday's edition of NBC's "Meet the Press," saying they are blocking a compromise.
Almost all Americans would be affected should the current tax-rate cuts are allowed to expire at the end of the year if Washington doesn’t find common ground on extending at least some of those cuts.
Without some kind of intervention, taxes would rise on 90 percent of Americans, according to the Tax Policy Center. Middle-income earners who make between $40,000 and $64,000 annually would experience an average increase of about $2,000, the center estimated. Taxes on investments would go up, and the federal estate tax rate would climb to 55 percent from 35 percent.
As the New Year approaches, the talk on Capitol Hill should increasingly be about voting for extending tax cuts, with key questions being centered on which ones, for how long, and by how much.
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