US President Barack Obama summoned congressional leaders to a White House meeting three days before a year-end deadline to avoid US$600 billion in spending cuts and tax increases as lawmakers gave little sign they intend to act together on a budget plan.
Obama, who had been negotiating one-on-one with US House Speaker John Boehner, was to meet yesterday with Republicans Boehner and Senate Minority Leader Mitch McConnell, and Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi, both Democrats.
The president returned early from his holiday in Hawaii on Thursday as lawmakers disputed which party would be responsible for missing the deadline for a debt deal, a failure that could hurt the US’ credit rating and cause an economic recession.
“We’ll see what the president has to propose,” McConnell said on the US Senate floor yesterday. “Hopefully, there is still time for an agreement of some kind that saves the taxpayers from a wholly preventable economic crisis.”
On Capitol Hill, pessimism was the prevailing mood as the deadline for the so-called “fiscal cliff” approached. The Republican-led House called an unusual Sunday session for tomorrow night, though the leaders did not say what action they planned to take.
Markets pared losses following the announcement of the House return tomorrow. The Standard & Poor’s 500 Index had fallen as much as 1.3 percent on mounting concern that no deal would be reached.
In yesterday’s meeting, Boehner was to “continue to stress that the House has already passed legislation to avert the entire fiscal cliff and now the Senate must act,” Boehner’s spokesman Brendan Buck said in a statement.
Senate leaders took to the chamber’s floor to accuse the other party of refusing to compromise on legislation aimed at trimming the debt.
“We wanted an agreement, but we got no takers. The phone never rang,” McConnell said.
“We have nobody to work with, to compromise,” Reid said. “I don’t know time-wise how it can happen now.”
If Congress does nothing, taxes will go up next year by an average of US$3,446 for US households, according to the nonpartisan Tax Policy Center in Washington. Tax filing for as many as two-thirds of US taxpayers could be delayed into at least late March. Defense spending would be cut, and the economy would probably enter a recession in the first half of next year, according to the Congressional Budget Office.
Tax cuts enacted under former US president George W. Bush are scheduled to expire on Monday, though the effects of the higher tax rates and federal spending cuts would accumulate over a matter of months. Congress could reverse them by acting retroactively next year.
With the calendar closing in, Obama may be aiming for a deal early next month, said Joe Minarik, a budget aide in former US president Bill Clinton’s administration.
If the president “has the sense that there is a deal that can be struck, he will probably try to glide by the end of the year as smoothly as possible and not send any troubling signals,” Minarik said. “That would seem to be the best option in terms of the effect on the economy.”
Asked whether he expected Obama to push a specific proposal at the meeting, US Senator Dick Durbin, a Democrat, said: “He came all the way back from Hawaii, and I’m sure it isn’t just to share a cup of tea.”