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Senate Minority Leader Mitch McConnell
Associated Press/Photos by Susan Walsh
Senate Minority Leader Mitch McConnell

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Congress | Lawmakers on Capitol Hill engage in 11th hour negotiations to avoid the pending fiscal cliff

Vice President Joe Biden and Senate Minority Leader Mitch McConnell have reportedly made “major progress” to avoid tax hikes scheduled to hit Americans in all tax brackets at the start of 2013.

Leaders from both parties are in closed-door negotiations in Washington, D.C., on the final day to avoid the so-called “fiscal cliff.” After weeks of stalled talks between President Barack Obama and House Speaker John Boehner, the focus has shifted to Vice President Biden and Sen. McConnell, who spent 23 years together in the Senate. The two engaged in overnight talks about how to stop taxes from increasing, and McConnell agreed to support legislation that would extend the George W. Bush-era tax cuts to American families making less than $450,000 annually, and individuals making at least $400,000.

It’s unclear how the Republican-controlled House would respond to such a proposal 10 days after Speaker Boehner’s “Plan B”—which would have extended cuts for everyone making under $1 million—was blocked by House conservatives who don’t want taxes increasing on any income level. Boehner said the Senate must pass a compromise, and he has committed to allow any Senate-approved legislation to the House floor for an up or down vote.

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One thing is all but assured: No comprehensive deal will be reached today. At best, the two sides will agree to a small, short-term agreement that will kick the fiscal can down the road to the 113th Congress, which is sworn in later this week.

Even if Biden and McConnell strike a deal, there’s currently no agreement to avoid the mandatory spending cuts known as “sequestration.” The military will disproportionately absorb the blow from the cuts, with defense spending accounting for half of the $109 billion in first-year cuts. Both sides say the cuts would be devastating, but, due to the lack of progress in negotiations on Capitol Hill, the Pentagon earlier this month announced it had begun preparing to slash spending—after the Defense Department for more than a year refused to budget for the sequestration cuts.

The potential Biden/McConnell deal also does nothing to extend the federal debt limit, which Treasury Secretary Timothy Geithner said would be reached today.

President Barack Obama, commonly thought to be in a strong bargaining position after his November reelection, has done little to budge the Republican-controlled House into meeting his primary demand of increasing taxes on the wealthy. President Obama maintains that since both sides can agree the Bush-era tax cuts should be extended for at least 98 percent of Americans, Congress should go ahead and pass legislation to stop that part of the fiscal cliff. In other words: Meet his chief demand without any concessions from the White House.

Republicans to this point haven’t taken the bait, even though the risk is that average Americans would pay at least $2,000 more in taxes next year.

“No agreement has been reached because too many politicians in Washington want to raise taxes in order to grow the government rather than decrease the deficit,” said Sen. Tom Coburn, R-Okla. “If politicians want to raise taxes and stop spending cuts without offering alternative cuts, which is precisely where we are now, they should have the courage to be transparent and make that case publicly, not in secret.”

Sen. Coburn said lawmakers are “stuck because many in Congress want to move toward Clinton-era tax rates but not Clinton-era spending.” During the 1990s, federal spending was 18 percent of the nation’s gross domestic product, but today government spending makes up about 24 percent of GDP.

Some conservative lawmakers quietly think going over the cliff is preferable, since it would cut the federal deficit by almost half in 2013. Under that scenario, the Congressional Budget Office has projected a recession next year.

J.C. Derrick
J.C. Derrick

J.C. is WORLD Magazine's Washington Bureau chief. He spent 10 years covering sports, higher education, and politics for the Longview News-Journal and other newspapers in Texas before joining WORLD in 2012. Follow J.C. on Twitter @jcderrick1.


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