- Created on 02 January 2013
House Passes Bill to Avert Fiscal Cliff, But More Trouble Lies Ahead
(CNN) -- After exhaustive negotiations that strained the country's patience, the House approved a bill to avert the dreaded fiscal cliff, staving off widespread tax increases and deep spending cuts.
In the 257-167 vote late Tuesday, 172 Democrats and 85 Republicans favored the bill; 16 Democrats and 151 Republicans opposed it.
The approved plan maintains tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000. It will raise tax rates for those who make more, marking the first time in two decades the rates jump for the wealthiest Americans.
The bill also extends unemployment insurance and delays for two months a series of automatic cuts in federal spending.
World markets rose after the news. U.S. stocks were poised to rise, too.
Just hours before the bill passed, House Speaker John Boehner pitched to fellow Republicans the idea of amending the Senate-approved bill to add a package of spending cuts. He cautioned about the risk in such a strategy, saying there was no guarantee the Senate would act on it.
By the end of the night, he was among the Republicans who voted for the bill as written.
President Barack Obama said he would sign the bill into law, but he did not say when. After the vote, he flew to Hawaii to rejoin his wife and daughters on their winter vacation.
Had the House not acted, and the Bush-era tax cuts expired fully, broad tax increases would have kicked in. In addition, $110 billion in automatic cuts to domestic and military spending would have taken place.
The combined effect could have dampened economic growth by 0.5%, possibly tipping the U.S. economy back into a recession and driving unemployment from its current 7.7% back over 9%, according to economists' estimates.
While the package provides some short-term certainty, it leaves a range of big issues unaddressed.
It doesn't mention the $16.4 trillion debt ceiling that the United States reached Monday.
It also puts off the so-called sequester, cuts in federal spending that would have taken effect Wednesday and reduced the budgets of most agencies and programs by 8% to 10%.
Come late February, Congress will have to tackle both those thorny issues.
Obama warned Congress that he will not tolerate another act of prolonged brinksmanship.
"While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up through the laws that they've passed," he said after the Tuesday night vote.
"We can't not pay bills that we've already incurred. If Congress refuses to give the United States government the ability to pay these bills in time, the consequences for the entire global economy would be catastrophic -- far worse than the impact of the fiscal cliff."
How they voted: House | Senate
A partial victory
While the deal gives Obama bragging rights for raising taxes on the wealthiest Americans, it also leaves him breaking a promise.
Obama had vowed to raise tax rates for the top-earning 2% of Americans, including those with household income above $250,000 and individuals earning more than $200,000.
Raising the threshold for higher tax rates shrinks the number of Americans affected.
While nearly 2% of filers have adjusted gross incomes over $250,000, only 0.6% have incomes above $500,000, according to the Tax Policy Center.
Some House Republicans weren't exactly overjoyed in voting for the plan.
"I'm a very reluctant yes," said Rep. Nan Hayworth, an outgoing Republican representative from New York.
"This is the best we can do, given the Senate and the White House sentiment at this point in time, and it is at least a partial victory for the American people," she said. "I'll take that at this point."
Conservative lobbyist Grover Norquist, whose Americans for Tax Reform pushes candidates to sign a pledge never to raise taxes, said the plan preserves most of the Bush tax cuts and won't violate his group's beliefs.
"The Bush tax cuts lapsed at midnight last night," Norquist tweeted Tuesday. "Every (Republican) voting for Senate bill is cutting taxes and keeping his/her pledge."
The timing of the vote was crucial, as a new Congress is set to be sworn in Thursday. And without a breakthrough, the entire process would have had to start over.
Specifics of the plan
The legislation will raise roughly $600 billion in new revenues over 10 years, according to various estimates.
According to the deal:
-- The tax rate for individuals making more than $400,000 and couples making more than $450,000 will rise from the current 35% to the Clinton-era rate of 39.6%.
-- Itemized deductions will be capped for individuals making $250,000 and for married couples making $300,000.
-- Taxes on inherited estates will go up to 40% from 35%.
-- Unemployment insurance will be extended for a year for 2 million people.
-- The alternative minimum tax, a perennial issue, will be permanently adjusted for inflation.
-- Child care, tuition and research and development tax credits will be renewed.
-- The "Doc Fix" -- reimbursements for doctors who take Medicare patients -- will continue, but it won't be paid for out of the Obama administration's signature health care law.
The Democratic-led Senate overwhelmingly approved the bill early Tuesday before passing it to the House.
As news about the fiscal cliff's deflection spread across the world, several markets reacted positively Wednesday.
Australia's ASX All Ordinaries index added 1.2%. South Korea's KOSPI gained 1.5%, and the Hang Seng in Hong Kong advanced 1.9%. Tokyo's Nikkei and the Shanghai Composite remain closed for holiday celebrations but will reopen later in the week.
Payroll taxes still set to go up
Despite the last-minute fiscal cliff agreements, Americans are still likely to see their paychecks shrink somewhat because of a separate battle over payroll taxes.
The government temporarily lowered the payroll tax rate in 2011 from 6.2% to 4.2% to put more money in the pockets of Americans. That adjustment, which has cost about $120 billion each year, expired Monday.
Now, Americans earning $30,000 a year will take home $50 less per month. Those earning $113,700 will lose $189.50 a month.
With the latest battle round over, lawmakers will next set their sights on the other items on their docket of congressional squabbles over money: the debt ceiling and resolving the sequester.
Obama said he hopes leaders in Washington this year will focus on "seeing if we can put a package like this together with a little bit less drama, a little less brinksmanship (and) not scare the heck out of folks quite as much."
He thanked bipartisan House and Senate leaders for finally reaching a resolution Tuesday, but said Congress' work this year is just beginning.
"I hope that everybody now gets at least a day off I guess, or a few days off, so that people can refresh themselves, because we're going to have a lot of work to do in 2013."
Angry rhetoric flew
In the tense days leading up to the deal, heated words flew between some Democrats and Republicans.
On Friday, after Democratic Senate Majority Leader Harry Reid accused Boehner of holding a "dictatorship" in his chamber, the House speaker responded with a profanity.
"Go f--- yourself," Boehner said to Reid, according to a source with knowledge of the exchange in a White House lobby.
Dana Bash reported from Washington, and Holly Yan reported from Atlanta. CNN's Rich Barbieri, Charles Riley, Josh Levs, Dana Ford, Matt Smith, Jessica Yellin, Deirdre Walsh and Ted Barrett contributed to this report.
- Created on 01 January 2013
Senate Passes Fiscal Cliff Deal, Bill Now Moves to Republican-Controlled House
(CNN) -- If a Senate deal to avert the fiscal cliff becomes law, all but a sliver of the U.S. population will avoid higher tax rates, some key issues will be put off for two months, and all sides in the battle will emerge with a mixed record: winning key points, while ceding ground on others.
The deal, which passed the Democratic-controlled Senate in an overwhelming 89-8 vote in the middle of the night, would maintain tax cuts for individuals earning less than $400,000 and couples earning less than $450,000. Technically, it would reinstate cuts that expired at midnight.
The bill faces an uncertain future in the Republican-controlled House, which convenes at noon.
Some GOP lawmakers, including Reps. Phil Gingrey of Georgia and and Tim Huelskamp of Kansas, told CNN Tuesday they won't support the bill.
"It's taxing, and still taxing, small businessmen and women, and I don't like that at all," Gingrey said, referring to some small business owners who would be among those whose tax rates rise.
It's the opposite argument of some Democrats who oppose the bill. Sen. Tom Harkin, D-Iowa, complained that the deal "makes tax benefits for high-income earners permanent, while tax benefits designed to help those of modest means and the middle class are only extended for five years."
The bill temporarily extends certain tax breaks, such as the one for college tuition, while making new tax rates permanent.
It would mark the first time in two decades that tax rates jump for the wealthiest Americans -- giving some bragging rights to President Barack Obama, who has long insisted on such a move.
But it also leaves him breaking a promise. The president had vowed to raise tax rates for the top-earning 2% of Americans, including those with household income above $250,000.
"What I'm not going to do is to extend Bush tax cuts for the wealthiest 2% that we can't afford and, according to economists, will have the least positive impact on our economy," the president said at a news conference in November, after being asked by CNN why Americans should believe he would not "cave again this time" by allowing those Bush-era tax cuts to be extended.
When asked whether closing loopholes instead of raising rates would be satisfactory, the president responded, "when it comes to the top 2%, what I'm not going to do is to extend further a tax cut for folks who don't need it, which would cost close to a trillion dollars. And it's very difficult to see how you make up that trillion dollars, if we're serious about deficit reduction, just by closing loopholes in deductions. You know, the math tends not to work."
The deal passed by the Senate would cap itemized deductions for individuals making $250,000 and for married couples making $300,000.
Raising the threshold for higher tax rates to $400,000 shrinks the number of Americans affected. While nearly 2% of filers have adjusted gross incomes over $250,000, only 0.6% have incomes above $500,000, according to the Tax Policy Center.
Still, in a written statement early Tuesday, the president held on to the 98% figure he has so often touted.
The deal "protects 98% of Americans and 97% of small business owners from a middle class tax hike," he said. "While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay."
The president also acknowledged, "There's more work to do to reduce our deficits, and I'm willing to do it. But tonight's agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans."
However, many Americans are still likely to see their paychecks shrink somewhat, due to a separate battle over payroll taxes.
Senate vote 'sends a strong message'
"Glad it's over," said Senate Majority Leader Harry Reid, D-Nevada, after the vote on the fiscal cliff deal, just a couple of hours after the East Coast rang in the new year. "We'll see if the Republicans in the House can become functional instead of dysfunctional."
A statement from House leadership made no promises.
"Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members -- and the American people -- have been able to review the legislation," the statement said.
A vote could come as early as New Year's Day. The House is scheduled to convene at noon.
Sen. John Hoeven, R-North Dakota, was hopeful the House will follow suit.
"The vote was 89 to 8. Bipartisan vote. 89 votes," he said. "I think it sends a strong message and I think it will be approved by the House."
What the package proposes
Under the Senate package:
-- Taxes would stay the same for most Americans. But they will increase for individuals making more than $400,000 and couples making more than $450,000. For them, it will go from the current 35% to the Clinton-era rate of 39.6%.
-- Itemized deductions would be capped for those making $250,000 and for married couples making $300,000.
-- Taxes on inherited estates will go up to 40% from 35%.
-- Unemployment insurance would be extended for a year for 2 million people.
-- The alternative minimum tax -- a perennial issue -- would be permanently adjusted for inflation.
-- Child care, tuition and research and development tax credits would be renewed.
-- The "Doc Fix" -- reimbursements for doctors who take Medicare patients -- will continue, but it won't be paid for out of the Obama administration's signature health care law.
-- A spike in milk prices will be avoided. Agriculture Secretary Tom Vilsack said milk prices would have doubled to $7 a gallon because a separate agriculture bill had expired.
What's not addressed
While the package provides some short-term certainty, it leaves a range of big issues unaddressed.
It doesn't mention the debt ceiling, and temporarily puts off for two months the so-called sequester -- a series of automatic cuts in federal spending that would have taken effect Wednesday. It would have reduced the budgets of most agencies and programs by 8% to 10%.
This means that, come late February, Congress will have to tackle both those thorny issues.
"We're going to have to deal with the sequester, that's true," said Sen. Max Baucus, D-Montana, "but look, this is better than nothing."
Reid said the agreement was a win for average Americans.
"I've said all along that our most important priority was to protect the middle class families," he said. "This legislation does that."
And maybe a bit more.
According to the U.S. Census Bureau, median household income in 2011 was $50,054, which is well below the tax cut threshold approved by the Senate.
Senate Minority Leader Mitch McConnell, R-Kentucky, praised the effort, but said it shouldn't have taken so long to get an agreement.
"We don't think taxes should be going up on anyone but we all knew that if we did nothing they would be going up on everyone today," he said. "We weren't going to let that happen."
If the bill doesn't pass
There's a lot at stake.
If the House doesn't act and the Bush administration's 2001 and 2003 tax cuts expire, broad tax increases will kick in, as will $110 billion in automatic cuts to domestic and military spending.
The nonpartisan Congressional Budget Office has predicted the combined effect could dampen economic growth by 0.5%, possibly tipping the U.S. economy back into a recession and driving unemployment from its current 7.7% back over 9%.
But if tax-averse House Republicans approve the bill Tuesday -- when taxes have technically gone up -- they can argue they've voted for a tax cut to bring rates back down, even after just a few hours. That could bring some more Republicans on board, one GOP source said.
But Gingrey, speaking Tuesday to CNN, said he does not believe his constituents will see it that way.
He's concerned they will see it as "just more smoke and mirrors, and Congress pulls these stunts all the time," Gingrey said. "Putting off the sequester for two months, kicking that can down the road yet again... this bill, as I see it so far, looks like it's all about raising revenue, but very little, if anything, about cutting spending."
Concerns persist
The White House budget office noted in September that sequestration was designed during the 2011 standoff over raising the federal debt ceiling as "a mechanism to force Congress to act on further deficit reduction" -- a kind of doomsday device that was never meant to be triggered. But Congress failed to substitute other cuts by the end of 2012, forcing the government to wield what the budget office called "a blunt and indiscriminate instrument."
In its place, the Senate plan would use $12 billion in new tax revenue to replace half the expected deficit reduction from the sequester and leave another $12 billion in spending cuts, split half-and-half between defense and domestic programs.
Conservative lobbyist Grover Norquist, whose Americans for Tax Reform group pushes candidates to sign a pledge never to raise taxes, said the plan "right now, as explained" would preserve most of the Bush tax cuts and wouldn't violate his group's pledge.
"Take the 84% of your winnings off the table," Norquist told CNN. "We spent 12 years getting the Democrats to cede those tax cuts to the American people. Take them off the table. Then we go back and argue about making the tax cuts permanent for everyone."
But Robert Reich, who served as labor secretary in the Clinton administration, said the $450,000 threshold "means the lion's share of the burden of deficit reduction falls on the middle class, either in terms of higher taxes down the road or fewer government services." In addition, he said, the plan does nothing to raise the federal debt ceiling just as the federal government bumps up against its borrowing limit.
And that, Arizona GOP Sen. John McCain told CNN, is likely to be "a whole new field of battle."
"We just added 2.1 trillion in the last increase in the debt ceiling, and spending continues to go up," McCain said. "I think there's going to be a pretty big showdown the next time around when we go to the debt limit."
CNN's Matt Smith, Mike Pearson, Jessica Yellin, Dana Bash, Deirdre Walsh, Lisa Desjardins, Ted Barrett and Ashley Killough contributed to this report.
- Created on 28 December 2012
Fish or Cut Bait? Obama, Congress to Meet on Fiscal Cliff
(CNN) -- Is it political theater or a true last-ditch effort to avoid the fiscal cliff?
President Barack Obama and congressional leaders will discuss the looming tax hikes and spending cuts of the fiscal cliff at a White House meeting on Friday, as increasingly anxious markets and taxpayers look for any hint of progress.
Stocks opened lower on Friday amid growing fears that the president and legislators will fail to strike a deal, which also caused the Consumer Confidence Index to drop on Thursday.
Economists warn that continued stalemate could cause another recession as taxes go up on everyone with the expiration of lower rates from the administration of President George W. Bush, coupled with slashed government spending, including for the military.
The White House meeting scheduled for 3 p.m. ET will include Obama, Vice President Joe Biden, House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell.
It comes with the Senate back in town after a Christmas holiday for a rare end-of-year appearance before a new Congress convenes early in the new year. Boehner plans to bring the House back on Sunday.
Reid and McConnell took turns blaming the other side for the impasse on Thursday, but neither seized the chance to offer remarks when the Senate opened on Friday. Other senators expressed opinions on the negotiations ranging from optimism to frustration.
Democratic Sen. Chuck Schumer of New York told NBC's "Today" show he was "a little more optimistic today" about reaching a deal.
"Sometimes it's darkest before the dawn," Schumer said, noting the renewed engagement by McConnell and Boehner, the top congressional Republicans.
"The fact that (Boehner's) come back and the four of them are at the table means to me we could come up with some kind of agreement that would avoid the main parts of the fiscal cliff, particularly taxes going up on middle-class people," he added.
Sen. Olympia Snowe, R-Maine, told CNN's "Starting Point" that a deal must originate from talks between Obama and the four congressional leaders for Americans to regain confidence in the federal government.
"It's got to start with the leaders and the president at the White House this afternoon. Hopefully they'll agree to a framework," said Snowe, who is retiring.
"I hope the speaker can get this job done before the end of this year and not defer it to next year," she continued. "We've got to demonstrate we have some capacity left to make decisions in Washington on these very significant issues for the country."
However, Republican Sen. Bob Corker of Tennessee downplayed the importance of Friday's meeting on CBS "This Morning," saying it "feels too much to me like optics to make it look like we're doing something."
"This is a total dereliction of duty at every level," added Corker, who has called for Republicans to compromise on the central issue of allowing tax rates to increase on top income brackets. "I've been very surprised that the president has not laid out a very specific plan to deal with this, but candidly Congress could have done the same and I think the American people should be disgusted."
He predicted Friday's meeting would result in a "kick-the-can-down the road" solution, meaning larger questions on tax increases and spending cuts would be put off until next year.
On Thursday, McConnell said his side won't "write a blank check for anything Senate Democrats put forward just because we find ourselves at the edge of the cliff."
Reid, however, argued that Republicans undermined a potentially major agreement over the past two years by refusing to compromise on their opposition to higher tax rates for the wealthy. Hours before Friday's meeting was announced, he was doubtful there would be a deal by January 1.
"I don't know, timewise, how it can happen now," Reid said.
The principal dispute continues to be over taxes, specifically the demand by Obama and Democrats to extend most of the tax cuts passed under Bush while allowing higher rates of the 1990s to return on top income brackets.
Obama campaigned for re-election on keeping the current lower tax rates on family income up to $250,000, which he argues would protect 98% of Americans and 97% of small businesses from rates that increase on income above that level.
Republicans oppose any kind of increase in tax rates, and Boehner suffered the political indignity last week of offering a compromise -- a $1 million threshold for the higher rates to kick in -- that his GOP colleagues refused to support because it raised taxes and had no chance of passing the Senate.
Last Friday, the president proposed the scaled-back agreement that included his call for extending tax cuts on households with incomes under $250,000, as well as an extension of unemployment insurance.
Both sides say political concerns undermine a possible agreement.
On Thursday, Reid said Boehner wanted to wait until after the new House re-elects him as speaker early next month before proceeding with a compromise -- one that will need support from both Democrats and Republicans to pass.
Boehner is "more concerned about his speakership than putting the country on firm financial footing," Reid claimed.
In response, Boehner spokesman Michael Steel said Reid should stop talking and instead take up legislation passed by the House to avert the fiscal cliff.
Reid and Democrats reject the GOP proposals, which would extend all the Bush tax cuts and revamp the spending cuts of the fiscal cliff, calling them insufficient and saying they would shift too much deficit reduction burden on the middle class.
One possibility is the fiscal cliff takes effect and taxes go up in January, then Congress steps in to bring tax rates back down for at least some people -- allowing them to say they're lowering taxes, even if rates for top income brackets are higher in 2013 than they were in 2012.
Obama and Democrats have leverage, based on the president's re-election last month and Democratic gains in the House and Senate in the new Congress. In addition, polls consistently show majority support for Obama's position on taxes, and Democrats insist the House would pass the president's plan with Democrats joined by some Republicans if Boehner allowed a vote on it.
However, anti-tax crusader Grover Norquist has vowed to back primary challenges against Republicans who violate his widely signed pledge not to raise taxes. Even if a deal is reached, Norquist predicts budget showdowns will continue every time the government needs more money to operate.
"There the Republicans have a lot of clout because they can say we'll let you run the government for the next month, but you've got to make these reforms," he said this week.
On Wednesday, Treasury Secretary Timothy Geithner told Congress the government would reach its borrowing limit at year's end, but could take steps to create what he called "headroom" for two months or so.
However, Geithner said uncertainty about the fiscal cliff and deficit negotiations make it hard to predict precisely how long government measures to address the situation will last.
The possibility of a fiscal cliff was set in motion over the past two years as a way to force action on mounting government debt.
Now, legislators risk looking politically cynical by seeking to weaken the measures enacted to try to force them to confront tough questions regarding deficit reduction, such as changes to government programs like Social Security, Medicare and Medicaid.
The two sides seemingly had made progress early last week on forging a $2 trillion deficit reduction deal that included new revenue sought by Obama and spending cuts and entitlement changes desired by Boehner.
Obama's latest offer set $400,000 as the income threshold for a tax rate increase, up from his original plan of $250,000. It also had a new formula for the consumer price index -- called chained CPI -- that wraps in new assumptions on consumer habits in response to rising prices, such as seeking cheaper alternatives, and would result in smaller benefit increases.
Statistics supplied by opponents say the change would mean Social Security recipients would get $6,000 less in benefits over the first 15 years of chained CPI. Liberal groups have openly challenged the plan, calling it a betrayal of senior citizens who contributed all their lives for their benefits.
Boehner appeared to move on increased tax revenue, including higher rates on top income brackets and eliminating deductions and loopholes. But his inability to rally all House Republicans behind his plan last week raised questions about his role and what comes next.
CNN's Dana Bash, Deirdre Walsh, Ted Barrett, Jessica Yellin and Kevin Liptak contributed to this report.
- Created on 31 December 2012
Hillary Rodham Clinton Admitted To Hospital With Blood Clot Following Concussion
(AP) — Secretary of State Hillary Rodham Clinton has been admitted to a New York hospital after the discovery of a blood clot stemming from the concussion she sustained earlier this month.
Clinton spokesman Philippe Reines says her doctors discovered the clot during a follow-up exam Sunday. Reines says Clinton is being treated with
...
- Created on 27 December 2012
Report: Obama to Send New Fiscal Cliff Proposal to Congress
(CNN) -- In an effort to end an impasse over taxes, President Barack Obama plans to send Congress a scaled-back proposal Thursday to avoid the harshest impacts of the fiscal cliff, sources told CNN.
A Republican senator said Obama told Senate Minority Leader Mitch McConnell, R-Kentucky, that the president's plan would arrive on Thursday, and a Senate Democratic leadership member also said that was the approach being taken. Both sources spoke on condition of not being identified further.
The move would answer McConnell's call for the president or Senate Democrats to make the first move in the political standoff over how to prevent or soften automatic tax hikes and spending cuts of the fiscal cliff set to take effect in the new year -- just five days away.
Economists warn the full impact of the fiscal cliff could spark another recession. In signs of the potential effect, stocks were lower Thursday on increasing doubts about an agreement, and the Consumer Confidence Index sank.
Hopes for a so-called grand bargain that would address the nation's chronic federal deficits and debt appeared dashed for now, leaving it to the White House and legislators to work out a less ambitious agreement.
The principal dispute continues to be over taxes, specifically the demand by Obama and Democrats to extend most of the tax cuts passed under President George W. Bush while allowing higher rates of the 1990s to return on top income brackets.
Obama campaigned for reelection on keeping the current lower tax rates on family income up to $250,000, which he argues would protect 98% of Americans and 97% of small businesses from rates that increase on income above that level.
Republicans oppose any kind of increase in tax rates, and House Speaker John Boehner suffered the political indignity last week of offering a compromise -- a $1 million threshold for the higher rates to kick in -- that his colleagues refused to support because it raised taxes and had no chance of passing the Senate.
Last Friday, Obama proposed a scaled-back agreement that included his call for extending tax cuts on households with incomes under $250,000, as well as an extension of unemployment insurance.
However, there were no immediate details available on the exact components of the measure that the sources said was headed to Congress on Thursday.
After a Christmas holiday, Obama returned to Washington from Hawaii and the U.S. Senate reconvened Thursday as the fiscal cliff deadline approached. The House remained on Christmas break, with members warned they could be called back on 48 hours' notice if needed.
With House Republicans unable to resolve the impasse, the focus shifted to the Democratic majority in the Senate to come up with a way forward that could pass the House and get signed into law by Obama.
In the Senate, Majority Leader Harry Reid of Nevada expressed doubtThursday that enough time remained to reach an agreement, especially with the House at least 48 hours from coming back.
"I don't know, time wise, how it can happen now," he said as he opened the Senate's first session back from the holiday.
The White House said Obama spoke with all four congressional leaders before leaving Hawaii on Wednesday. Spokesmen for Republican leaders of the House and Senate made clear, though, that the president or Senate Democrats needed to offer a proposal to start further negotiations.
Possible scenarios include a short-term deal now, setting up continued negotiations next year when Obama and a new Congress that convenes in January confront a need to raise the federal debt ceiling and approve further spending to keep the government funded.
Another possibility would be a short-term deal reached after January 1 that would change the political calculus by having legislators vote for cutting the higher tax rates from the fiscal cliff -- a much more palatable exercise than the current debate over allowing top rates to increase.
Retiring Republican Rep. Steve LaTourette of Ohio told CNN on Thursday that such an outcome would be entirely due to politics.
"Nobody is willing to pull the trigger" on an agreement because "everybody wants to play the blame game," he said. "This blame game is about to put us over the edge."
Reid lambasted Boehner in his remarks Thursday, saying the speaker wanted to wait until after the new House chooses him as speaker on January 3 before proceeding with a compromise that would pass the chamber today.
Boehner was "more concerned about his speakership than putting the country on firm financial footing," Reid charged.
In response, Boehner's spokesman said Reid should stop talking and instead take up legislation passed by the House that would avert the fiscal cliff.
"The House has already passed legislation to avoid the entire fiscal cliff. Senate Democrats have not," said the spokesman, Michael Steel.
Reid and Democrats reject the GOP proposals, which would extend all the Bush tax cuts and revamp the spending cuts of the fiscal cliff, as insufficient steps that would shift too much of the burden of deficit reduction on the middle class.
Instead, Reid called on Boehner to allow a vote on a Senate-passed measure that would implement Obama's plan to extend tax cuts to the $250,000 threshold.
Rep. Nan Hayworth, R-New York, acknowledged Wednesday that a deal will have to include some form of higher rates on top income brackets, but she said her party would fight to make it as minimal as possible.
Hayworth also made clear to CNN that a limited agreement was the most to expect for now, saying: "I don't think we're going to get the big plan in the next six days."
A statement Wednesday by Boehner's leadership team said the Senate must act first on proposals already passed by the House but rejected by Senate leaders and Obama.
"If the Senate will not approve and send them to the president to be signed into law in their current form, they must be amended and returned to the House," the leadership statement said. "Once this has occurred, the House will then consider whether to accept the bills as amended, or to send them back to the Senate with additional amendments. The House will take this action on whatever the Senate can pass, but the Senate first must act."
Obama and Democrats have leverage, based on the president's reelection last month and Democratic gains in the House and Senate in the new Congress. In addition, polls consistently show majority support for Obama's position on taxes.
The Gallup daily tracking poll released Wednesday showed 54% of respondents support Obama's handling of the fiscal cliff negotiations, compared with 26% who approve of Boehner's performance.
A senior Senate Democratic source told CNN on Wednesday that Reid has made clear in private conversations that he will need assurance that any plan can pass both the Senate and the House before he will bring it up.
"It is to nobody's advantage to have a failed Senate vote at this point," the source said on condition of not being identified. "This will be the last train we will have, and there is no sense in it leaving the station before we have assurance it will get through."
Remaining questions include whether enough Republicans will support a compromise acceptable to Democrats, and whether McConnell and Senate Republicans will allow a simple majority vote to take up and pass any proposal, or stick to the filibuster level of 60%.
"We believe very strongly a reasonable package can get majorities in both houses," a senior White House official said. "The only thing that would prevent it is if Senator McConnell and Speaker Boehner don't cooperate."
Some Senate Democrats have discussed holding off on bringing up a proposal until the final days of 2012 to increase pressure on Republicans to support avoiding higher taxes on everyone due to the fiscal cliff
While the focus now is on a possible agreement in coming days or weeks, anti-tax crusader Grover Norquist told CNN this week that the nation should gird for long-range battle.
"It's four years of a fight. It's not one week of a fight," said Norquist, who has threatened to mount primary challenges against Republicans who violate a pledge they signed at his behest against ever voting for a tax increase.
He predicted "a regular fight" when Congress needs to authorize more government spending and raise the federal debt ceiling in coming months.
"There the Republicans have a lot of clout because they can say we'll let you run the government for the next month, but you've got to make these reforms," he said.
On Wednesday, Treasury Secretary Timothy Geithner informed Congress that the government would reach its borrowing limit at the end of the year -- in five days' time -- but could take steps to create what he called "headroom" for two months or so.
However, Geithner said uncertainty about the fiscal cliff negotiations and possible changes to the deficit situation made it difficult to predict precisely how long the government's steps to ease the situation would last.
The GOP opposition to any kind of tax rate increase has stalled deficit negotiations for two years and led to unusual political drama, such as McConnell recently filibustering a proposal he introduced and last week's rebuff by House Republicans of the alternative tax plan pushed by Boehner, their leader.
Reid and other Senate Democrats say House Republicans must accept that an agreement will require support from legislators in both parties, rather than a GOP majority in the House pushing through a measure on its own.
He insisted that a Senate-passed plan with Obama's $250,000 threshold would pass the House if Boehner would allow a vote. However, the Senate proposal is held up on constitutional grounds, because legislation that increases revenue must originate in the House.
Some House Republicans have said they would join Democrats in supporting the president's proposal in hopes of moving past the volatile issue to focus on the spending cuts and entitlement reforms they seek.
The possibility of a fiscal cliff was set in motion over the past two years as a way to force action on mounting government debt.
Now, legislators risk looking politically cynical by seeking to weaken the measures enacted to try to force them to confront tough questions regarding deficit reduction, such as reforms to popular entitlement programs such as Social Security, Medicare and Medicaid.
The two sides seemingly had made progress early last week on forging a $2 trillion deficit reduction deal that included new revenue sought by Obama and spending cuts and entitlement changes desired by Boehner.
Obama's latest offer set $400,000 as the income threshold for a tax rate increase, up from his original plan of $250,000. It also included a new formula for the consumer price index applied to some entitlement benefits, much to the chagrin of liberals.
Called chained CPI, the new formula includes assumptions on consumer habits in response to rising prices, such as seeking cheaper alternatives, and would result in smaller benefit increases in future years.
Statistics supplied by opponents say the change would mean Social Security recipients would get $6,000 less in benefits over the first 15 years of chained CPI.
Liberal groups sought to mount a pressure campaign against including the chained CPI after news emerged this week that Obama was willing to include it, calling the plan a betrayal of senior citizens who had contributed throughout their lives for their benefits.
For his part, Boehner conceded on increased tax revenue, including higher rates on top income brackets and eliminating some deductions and loopholes.
CNNMoney's Jose Pagliery and CNN's Brianna Keilar, Jessica Yellin, Deirdre Walsh, Ted Barrett and Kevin Liptak contributed to this report.
