'Cliff' Talks Reach Final Day

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Byline: Washington Post Washington Post

WASHINGTON -- After a tortured day of bargaining, setbacks and speech-making, Republicans and Democrats had yet to reach agreement late Sunday to avert the "fiscal cliff."

That left them barely a day to strike a deal, and then pass it through both the Senate and the House.

If that doesn't happen, a set of painful tax hikes will begin to kick in Tuesday, followed soon after by deep cuts in government spending.

On Sunday, there were some small reasons for hope. Negotiations shifted to the capital's two unofficial "closers" -- Vice President Joe Biden and Senate Minority Leader Mitch McConnell, a Kentucky Republican, who together had resolved past crises over tax hikes and the limit on federal borrowing.

And Republicans also dropped a demand that had briefly become a major sticking point: that Democrats agree to a cost-saving, but politically sensitive, reduction in Social Security benefits. The demand, which involved using a less generous measure of inflation called "chained CPI," would effectively reduce the cost-of-living increases in Social Security benefits over time.

Previously, the GOP had demanded it in exchange for President Barack Obama's request to extend emergency unemployment benefits and cancel deep cuts to the Pentagon and other agency budgets. A Democratic aide close to the talks described the request as a "poison pill."

Even after that demand was set aside, the broader talks remained hung up over the same issues that had stalled them for months. Republicans and Democrats could not agree on how many taxpayers should see their tax rates go up, or about whether to put off a massive $100 billion spending cut called the "sequester."

By the evening, the best thing that Senate Majority Leader Harry Reid, a Nevada Democrat, could say about the talks was that there were still talks going on.

"There's still time left to reach an agreement, and we intend to continue negotiations," Reid said on the Senate floor. The chamber will be back in session at 11 a.m. today.

It is a time-honored congressional tradition that any deal must be preceded by hours of doomsaying and pessimism. It's easier to sell a deal, of course, if you've first conditioned your colleagues and the public to fear there will be no deal at all.

On Capitol Hill on Sunday, even lawmakers seemed confused about whether they were watching another round of that familiar late-stage political theater -- or if, this time, the pessimism was genuine.

"The two parties are so close that they can't afford to walk away," said Sen. Mike Johanns, a Nebraska Republican, calling the fits and starts of this weekend "just normal" posturing in high-level negotiations. "I continue to be optimistic."

But, as optimistic as Johanns was, other senators were gloomy. "I think we're going over the cliff," Sen. Lindsey Graham, a South Carolina Republican, wrote on Twitter.

"It just looks like we can't govern," Sen. Kay Bailey Hutchison, a Texas Republican, said on the Senate floor. She said she was horrified that the last few days before her retirement would be spent on "a complete meltdown."

The fiscal cliff includes the expiration of Bush-era tax cuts, plus the "sequester" that Congress set up during the 2011 debt-ceiling fight. Lawmakers believed, back then, that these cuts were so big, and so broad, that even this gridlocked Congress would have to come back and figure out a better solution.

On Sunday, it looked as if they were wrong.

On Capitol Hill, Sunday's events revealed a new -- and troubling -- dynamic in these negotiations. It had been assumed, beforehand, that the most difficult part of averting the fiscal cliff would not be striking a deal. Instead, it would be passing that deal through the fractious, GOP-led House.

On Sunday, however, it seemed that the Senate, and the Democrats, would also be an obstacle. …