"Fiscal cliff" talks stalled for now but progress possible

WASHINGTON Sun Nov 25, 2012 2:36pm EST

Darkness sets in over the U.S. Capitol building hours before U.S. President Barack Obama is set to deliver his State of the Union address to a joint session of Congress on Capitol Hill in Washington January 24, 2012. REUTERS/Jonathan Ernst

Darkness sets in over the U.S. Capitol building hours before U.S. President Barack Obama is set to deliver his State of the Union address to a joint session of Congress on Capitol Hill in Washington January 24, 2012.

Credit: Reuters/Jonathan Ernst

WASHINGTON (Reuters) - U.S. lawmakers have made little progress in the past 10 days toward a compromise to avoid the harsh tax increases and government spending cuts scheduled for January 1, a senior Democratic senator said on Sunday.

The United States is on course to slash its budget deficit nearly in half next year. Closing the gap that quickly, which in Washington is referred to as going over a "fiscal cliff," could easily trigger a recession.

"Unfortunately, for the last 10 days, with the House and Congress gone for the Thanksgiving recess ... much progress hasn't been made," Dick Durbin, the No. 2 Senate Democrat, told ABC's "This Week" program.

Still, lawmakers in both the Democratic and Republican parties have been trying to convince the public - and financial markets - that they are willing to compromise and can reach a deal before the end of the year.

Durbin indicated Democrats might accept a reform of the government's Medicare health insurance program for the elderly that would make higher-income seniors pay more for their care.

Democrats traditionally oppose limiting Medicare benefits according to income, a practice known as "means testing." Durbin said Medicaid, a public health insurance program for the poor, also could be overhauled.

"We can make meaningful reforms in Medicare and Medicaid without compromising the integrity of the program, making sure that the beneficiaries are not paying the price for it, except perhaps the high-income beneficiaries," Durbin said.

A deadline looms over the talks. Without action by lawmakers and President Barack Obama, roughly $600 billion in tax increases and spending cuts will start to hit households and companies in early January.

Republicans and Obama's Democrats are at an impasse over the president's wish to raise income tax rates on the wealthiest Americans, which Republicans say would hurt job creation.

Republicans also want to cut spending on social programs more than Democrats say they will accept.

Still, a growing group of Republican lawmakers are loosening their ties to Grover Norquist, the anti-tax activist famous for getting elected officials to sign a pledge that they will vote against any tax increases.

Republican Senator Lindsey Graham said Republicans will allow tax revenues to rise as long as social spending programs are reformed. "I will violate the pledge - long story short - for the good of the country, only if Democrats will do entitlement reform," he told "This Week."

Graham said he supported boosting revenues by closing tax loopholes rather than by raising tax rates.

Republican Senator Saxby Chambliss said last week he "cared more about the country" than a 20-year-old pledge, and on Sunday Republican Representative Peter King, chairman of the House Homeland Security Committee, told NBC's "Meet the Press" he agreed with Chambliss.

Durbin said the Democrats' will for substantial entitlement reform did not extend to Social Security, the federal government pension program, which he said only needs small tweaks to ensure long-term solvency.

"Bring entitlement reform into the conversation. Social Security, set (it) aside," Durbin said.

(Additional reporting by Patricia Zengerle; Editing by Todd Eastham and Bill Trott)

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Comments (8)
UnPartisan wrote:
It is possible, but it is unlikely. The Fiscal Cliff is really a grand compromise. Both parties get what they want, and they can blame the other party for the increased taxes or cuts in spending. They get what is necessary with none of the blame.

Nov 25, 2012 1:16pm EST  --  Report as abuse
morbas wrote:
Tea ‘Republicans … are at an impasse with the president’s wish to raise income tax rates on the wealthiest Americans.’ End of Line.
We can balance Federal, State and Municipality budgets with a Nationalized Income Tax that lowers the rate on the lower quintile, does not tax sustenance wages, and eliminates all other taxes to include business taxes. What more could we do to rejuvenate the economy. The Federal budget is 1/3rd the total of the states and municipalities, the ice we see above the water is a 1/3rd fraction of the total problem. The wealth is concentrated at the top, with half of the income in the top quintile of Americans, the aristocracy rules. We absolutely must increase taxes on the 250K and up to 80%, which is less than the 1960′s 91.5% top rate, this would immediately balance the budgets. Any republic that does not rule the aristocracy through taxation is a slave nation, a banana republic. While nationalization of taxes requires all states to pass a amendment, this could be wholly executed at the Federal Level, with each state joining in over time. It cannot be done at each state level first because of the Federalized monetary system. Honorable POTUS, step up the the plate not for a single, but a grand slam please. This is not a tax increase, it is a pay forward on international indebtedness that must be paid as a real and virtual taxation. Put this issue to bed please.

Nov 25, 2012 7:10pm EST  --  Report as abuse
xyz2055 wrote:
morbas…Is this the Jack Daniels plan? The plan you came up with after drinking a bottle of Jack Daniels? We currently have a $1T annual deficit…while you haven’t given any hard numbers….let me see if I’ve got this straight…without cutting ANY spending you can balance the budget by raising $1T more a year in tax revenue by lowering the taxes for those in the lower “quintile” (1/5 of the population?), no sustenance wage taxes, eliminate all other business taxes and then tax everyone making $250K or more at an 80% tax rate. You do realize that no one ACTUALLY paid taxes of 91.5% of their total income in the 1960′s…right? Did you ever attend a class in government (assuming you got a formal education)…separation of powers, the Constitution, the roles of each of the branches of government (any of this ringing a bell?)…Presidents do not write legislation. Per our Constitution only Congress can do that. Tax Legislation originates in the House of Representatives. Do you have any idea what percent of Congressman make more than $250K per year? Or how many are millionaires? So your plan is to get Congress to write and pass NEW TAX legislation that will tax themselves (and everyone else who makes $250k or more) at an 80% tax rate and lower taxes on everyone else THEN send it to the President for his signature….AND it will generate $1T more in Tax Revenue. Good luck with that.

Nov 25, 2012 10:42pm EST  --  Report as abuse
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