Pete Souza/The White House, via NBC
President Obama spoke with David Gregory of NBC's "Meet The Press" in the Blue Room of the White House during an interview taped on Saturday.
WASHINGTON — Negotiations over a last-ditch agreement to head off large tax increases and sweeping spending cuts in the new year appeared to resume Sunday afternoon after Republican senators withdrew their demand that a deal must include a new way of calculating inflation that would lower payments to beneficiaries programs like Social Security and slow their growth.
Senate Republicans emerged from a closed-door meeting to say they agreed with Democrats that the request — which had temporarily brought talks to a standstill — was not appropriate for a quick deal to avert the tax increases and spending cuts starting Jan. 1.
To hold the line against raising taxes on high-income households while fighting for cuts to Social Security was “not a winning hand,” Senator John McCain, Republican of Arizona, said.
The concession could be a breakthrough, but Senate Republicans were still balking at an agreement on Sunday, adopting a new talking point that Democrats want to raise taxes just to increase spending, not to cut the deficit. That concern appears to center on a Democratic proposal to temporarily suspend across-the-board spending cuts to military and domestic programs as talks resume on a larger deficit deal.
The demand for the new way of calculating inflation, known as “chained CPI,” issued at 7:10 p.m. on Saturday, had stopped talks cold. Senator Mitch McConnell, the Republican leader, went to the Senate floor a little after 2 p.m. Sunday to say that Republicans had made their last offer and had yet to receive a reply.
“I’m concerned about the lack of urgency. I think we all know we’re running out of time,” Mr. McConnell said.
Senator Harry Reid, the majority leader, responded that “at this stage, we’re not able to make a counter offer.” He said that Mr. McConnell had negotiated in good faith but that “we’re apart on some pretty big issues.”
Mr. McConnell said he had made an emergency call to Vice President Joseph R. Biden Jr. to get the talks started again. The two spoke twice, and the White House dispatched the president’s chief legislative negotiator, Rob Nabors, to the Capitol to meet with Senate Democrats.
Talks foundered after Republicans dug in in an effort to get the largest deficit reduction deal in the time remaining, according to numerous Republican and Democratic officials familiar with the negotiations. Republicans told Democrats that they were willing to put off scheduled cuts in payments to health care providers who treat Medicare patients but that they wanted spending cuts elsewhere.
But it was the inflation calculation that forced Democrats from the negotiating table. President Obama has said that in a “grand bargain” on deficit reduction, he would go along with the change, which would slow the growth of programs whose outlays rise with consumer prices, and would raise more revenue by pushing people into higher tax brackets.
Democrats said that Mr. Obama and Congressional Democrats would accept that change, called “chained C.P.I.,” only as part of a larger deal that included locking in well more than $1 trillion in revenue over 10 years, along with other Republican concessions. Democrats fear that any such concessions now would only increase demands for addition concessions in the coming weeks, when talks resume on a “grand bargain” to reduce the deficit.
They point to the $1 trillion in spending cuts agreed to last year in the Budget Control Act. Democrats say those should be included in a $4 trillion “grand bargain” package, but Republicans say those cuts should not be part of future negotiations. Republicans would likely do the same if Democrats agree now to concessions on the inflation calculation, Democratic aides said Sunday.
Mr. Reid made clear that Democrats did not intend to include Social Security in any stopgap package. Doing so would make it hard for him to round up votes from his own party, and he has resisted touching Social Security.
“We’re not going to have any Social Security cuts,” Mr. Reid said on the floor.
The breakdown came after Mr. Obama appeared on the NBC program “Meet the Press” on Sunday and implored Congress to act.
“We have been talking to the Republicans ever since the election was over,” Mr. Obama said in the interview, which was taped on Saturday. “They have had trouble saying yes to a number of repeated offers. Yesterday I had another meeting with the leadership, and I suggested to them if they can’t do a comprehensive package of smart deficit reductions, let’s at minimum make sure that people’s taxes don’t go up and that two million people don’t lose their unemployment insurance.”
“And I was modestly optimistic yesterday, but we don’t yet see an agreement,” Mr. Obama said. “And now the pressure’s on Congress to produce.”
Negotiations Break Down on Debt Agreement
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Negotiations Break Down on Debt Agreement
