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Fiscal Cliff Agreement Continues to Elude Senators

Tom Williams/CQ Roll Call
Senators appear to still be far apart on a deal to avert the fiscal cliff but at least one issue, a proposed change in how cost-of-living increases are calculated for setting Social Security benefits, appeared settled after senators emerged from late afternoon party caucuses.

Obama caught flak from members of his own party when he included the new adjustment formula as part of his proposal for a longer-term deficit reduction deal earlier this month. Democrats say chained CPI would only be considered as part of an agreement that included an increase in the government’s borrowing limit, but Republicans do not want the debt ceiling on the table in the current negotiations. Republicans have made clear they hope to use a debt limit increase as leverage to win additional spending cuts early next year.

Charles E. Schumer of New York said Sunday morning that four sticking points included the income threshold for tax cut extensions, the estate tax rate and exemption level, a renewal of extended unemployment benefits and the automatic spending cuts put in place by the 2011 debt deal (PL 112-25).

Sen. Lindsey Graham, R-S.C., said he opposed including chained CPI in a fiscal cliff deal and said an agreement can be reached without such a provision. “It is not a condition of this deal for me and most Republicans to adjust CPI. I don’t know where that came from,” he said. “There is a crucial mass of 80 senators who would vote to fix the [alternative minimum tax], the doc fix, extend unemployment insurance, protect everybody $500,000 and below from a tax increase. There’s 80 senators that will do that without CPI.”

If no deal is reached, Reid has said he will ask the Senate to vote Monday on a tax package reflecting Obama’s proposals. Such a bill would extend current tax rates on income below $250,000 for couples, index the alternative minimum tax to inflation for 2012 and prevent payment cuts to physicians and tax estates at 2009 levels, with a top rate of 45 percent and a $3.5 million exemption.

On the House side of the Capitol, there was little expectation that there would be a vote on any potential deal Sunday. House GOP leaders planned to brief their conference Sunday evening.

It also appears more likely that House GOP leaders may prefer not to vote on any deal until Jan. 2, when any agreement would technically represent a tax cut after rates go up on Jan. 1. A lobbyist with knowledge of the negotiations said he has heard that the GOP does not want to vote on a plan until the new year.

In a note to lawmakers last week, House Rules Committee GOP aides cautioned that “given the realities of the legislative process, it would be very hard [though not impossible] to consider a deal this year. However, we stand ready to meet on whatever legislation is needed through the end of the year and beyond.”

Paul M. Krawzak and Sam Goldfarb contributed to this report.

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