Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) continued urgent talks Monday over a deal to avoid the “fiscal cliff” after Democrats offered several significant concessions on taxes, including a proposal to raise rates only on earnings over $450,000 a year.
With a New Year’s Eve deadline hours away, Democrats abandoned their earlier demand to raise tax rates on household income over $250,000 a year. President Obama had vowed repeatedly during his reelection campaign to allow tax cuts to expire for incomes over that level.
Democrats also relented on the politically sensitive issue of the estate tax, according to a detailed account of the Democratic offer obtained by The Washington Post. They promised instead to hold a vote in the Senate that would guarantee that taxes on inherited estates remain at their current low levels, a key GOP demand.
“There are a number of issues on which the two sides are still apart, but negotiations are continuing as I speak,” Senate Majority Leader Harry M. Reid (D-Nev.) said in a floor speech shortly after the body convened at 11 a.m. Monday. “But we really are running out of time,” he added.
Reid said there were “still some issues that need to be resolved before we can bring legislation to the floor.”
Regardless of whether an agreement is reached to avoid the “fiscal cliff,” many Americans are all but certain to face a broad hike in taxes starting Tuesday because of the expiration of the payroll tax cut, which was enacted in 2011 as a temporary measure to boost economic growth. The increased payroll taxes, combined with hikes affecting the very wealthy, would effectively mark the end of a prolonged period of declining taxation that has become a defining characteristic of the American economy.
McConnell’s office reported that talks between the Republican leader and Biden took place early Monday at 12:45 a.m. and 6:30 a.m. EST. A spokesman for McConnell expressed some hope of reaching a deal.
McConnell was holding out to set the income threshold for tax increases even higher, at $550,000, according to people close to the talks in both parties. And he was protesting a Democratic proposal to raise taxes on investment profits for households with income above $250,000.
The two sides were also sharply at odds over automatic spending cuts set to decimate budgets at the Pentagon and other federal agencies next month. Democrats were seeking to delay the cuts, known as the “sequester,” until 2015, without identifying other savings to compensate. They were also pressing to extend unemployment benefits, farm subsidies and Medicare payments to doctors, again without offsetting cuts as Republicans demand.
“The Leader and the VP continued their discussion late into the evening and will continue to work toward a solution,” Don Stewart, McConnell’s spokesman, said in a statement Monday.
Sen. Jon Kyl (R-Ariz.) said Monday morning that a “lot of progress” has been made in the fiscal cliff talks, but he cautioned that “there is no agreement yet,” Reuters news agency reported.
Biden, McConnell continue ‘cliff’ talks as clock winds down
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Biden, McConnell continue ‘cliff’ talks as clock winds down
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