With less than two days remaining for Congress to reach a budget agreement that would avoid the so-called “fiscal cliff,” a senior White House official tells ABC News that President Obama is still “modestly optimistic” that a deal can be struck to prevent middle class taxes from increasing on New Year’s Day.
But a resolution to the ordeal won’t come tonight.
Senate Majority Leader Harry Reid adjourned his chamber just before 6 p.m., ensuring a potential deal could not be voted on before senators return to business Monday morning.
The Nevada lawmaker vowed despite the recess, the parties’ leadership would continue negotiations throughout the night.
Vice President Biden has now re-emerged as a key player, back in Washington and playing “a direct role” in trying to make a deal with Senate Republicans. Biden has been tapped because of his long-standing relationship with Senate Republican Leader Mitch McConnell.
A Democratic source says that McConnell seems to be genuinely interested in getting an agreement. The news dovetails with reports that the GOP has backed off a key Social Security measure that had stalled negotiations.
According to sources, the row was sparked when the GOP offered a proposal that included a new method of calculating entitlement benefits with inflation. Called the “chained consumer price index,” or Chained CPI, the strategy has been criticized by some Democrats because it would lower cost of living increases for Social Security recipients.
“We thought it was mutually understood that it was off the table for a scaled-back deal,” a Democratic aide said. “It’s basically a poison pill.”
Obama has floated chained CPI in the past as part of a grand bargain, despite opposition from the AARP and within his own party.
Also in the Republican plan brought today: An extension of the current estate tax and no increase in the debt ceiling. Higher income earners would see their taxes increase, but at levels “well above $250,000,” the sources said.
That “major setback” in the talks was evident on the floor of the Senate this afternoon.
“I’m concerned about the lack of urgency here, I think we all know we are running out of time,” McConnell said, “I want everyone to know I am willing to get this done, but I need a dance partner.”
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