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.
Efforts in the Senate to cut a last-minute bipartisan deal to avoid the fiscal cliff’s tax increases and spending cuts continued Sunday evening with little sign of an imminent breakthrough.
“There is still significant distance between the two sides, but negotiations continue,” Majority Leader Harry Reid, D-Nev., told senators just before 6 p.m. “There is still time left to reach an agreement, and we intend to continue negotiations.”
At least one issue appeared settled after senators emerged from late afternoon party caucuses. There was general agreement that a proposed change sought by Republicans in how cost-of-living increases are calculated for setting Social Security benefits and adjusting tax brackets is off the table in the current deficit-reduction talks.
The standoff on other issues continued with some $500 billion in tax increases due to take effect in barely more than a day.
Democrats said their latest proposal would extend expiring tax rates for individuals with taxable income up to $360,000 and couples with income of about $450,000.
Sen. Barbara A. Mikulski, D-Md., said revenue raised by allowing tax rates to rise for taxpayers above those levels would either pay for a two-year delay in the automatic spending cuts due to begin in January or for a one-year moratorium coupled with a renewal of extended unemployment compensation that expires at year’s end.
Senators made clear after their conference meetings that deep differences continue to separate the two parties on the estate tax as well as the automatic spending cuts.
While Democratic leaders are trying to implement President Barack Obama’s proposal to allow the estate tax rate to increase from 35 percent to 45 percent, Republicans continued to insist on the current rate.
Democrats pressed to defer the automatic spending cuts, perhaps for two years. But Republicans pressed to reconfigure the spending cuts instead of using tax revenue to replace them.
“The proposal for a two-year moratorium on sequestration is a sticking point,” said Kay Bailey Hutchison, R-Texas. She said the sequester should be held off, but for a shorter period.
A number of Republicans including John McCain of Arizona and Roger Wicker of Mississippi confirmed that Republicans have backed away from an earlier proposal to replace some of the spending cuts with savings from using the less-generous adjustments to Social Security, known as the “chained CPI.”