If cut, fiscal deal will pale against expectations

Sunday - 12/30/2012, 11:23am EST

By JIM KUHNHENN
Associated Press

WASHINGTON (AP) - Whether negotiated in a rush before the new year or left for early January, the fiscal deal President Barack Obama and Congress cobble together will be far smaller than what they initially envisioned as an alternative to purposefully distasteful tax increases and spending cuts.

Instead, their deal, if a deal they indeed cut, will put off some big decisions about tax and entitlement changes and leave other deadlines in place that will likely lead to similar moments of brinkmanship, some in just a matter of weeks.

Republican and Democratic negotiators in the Senate were hoping for a deal as early as Sunday on what threshold to set for increased tax rates, whether to keep current inheritance tax rates and exemptions and how to pay for jobless benefits and avoid cuts in Medicare payments to doctors. Senate leaders were hoping to be able to present their members with a plan when the parties meet separately on Capitol Hill Sunday afternoon.

An agreement would halt automatic across-the-board tax increases for virtually every American and perhaps temporarily put off some steep spending cuts in defense and domestic programs.

Obama pressed lawmakers to start where both sides say they agree _ sparing middle-class families from looming tax hikes.

"If we can get that done, that takes a big bite out of the fiscal cliff. It avoids the worst outcomes. And we're then going to have some tough negotiations in terms of how we continue to reduce the deficit, grow the economy, create jobs," Obama said in an interview on NBC's "Meet the Press" that aired Sunday.

Gone, however, is the talk of a grand deal that would tackle broad spending and revenue demands and set the nation on a course to lower deficits. Obama and Republican House Speaker John Boehner were once a couple hundred billion dollars apart of a deal that would have reduced the deficit by more than $2 trillion over ten years.

Republicans have complained that Obama has demanded too much in tax revenue and hasn't proposed sufficient cuts or savings in the nation's massive health care programs.

Obama upped the pressure on Republicans to negotiate a fiscal deal, arguing that GOP leaders have rejected his past attempts to strike a bigger and more comprehensive bargain.

"The offers that I've made to them have been so fair that a lot of Democrats get mad at me," Obama said.

The interview was taped Saturday while aides to the Senate Republican leader, Mitch McConnell of Kentucky, and to Senate Majority Leader Harry Reid, D-Nev., were engaged in negotiations in the Capitol in hopes of having something to present senators as early as Sunday.

"I was modestly optimistic yesterday, but we don't yet see an agreement," Obama said, referring to his mood Friday. "And now the pressure's on Congress to produce."

The trimmed ambitions of today are a far cry from the upbeat bipartisan rhetoric of just six weeks ago, when the leadership of Congress went to the White House to set the stage for negotiations to come.

"I outlined a framework that deals with reforming our tax code and reforming our spending," Boehner said as the leaders gathered on the White House driveway on Nov. 16.

"We understand that it has to be about cuts, it has to be about revenue, it has to be about growth, it has to be about the future," House Democratic leader Nancy Pelosi said at the time. "I feel confident that a solution may be in sight."

And Senate Majority Leader Harry Reid, D-Nev., offered a bold prediction: "There is no more let's do it some other time. We are going to do it now."

That big talk is over for now.

Senate negotiators were haggling over what threshold of income to set as the demarcation between current tax rates and higher tax rates. They were negotiating over estate limits and tax levels, how to extend unemployment benefits, how to prevent cuts in Medicare payments to doctors and how to keep a minimum income tax payment designed for the rich from hitting about 28 million middle class taxpayers.

South Carolina Republican Sen. Lindsey Graham is predicting that without at least 28 of the 47 GOP senators on board with any given proposal, House Speaker John Boehner wouldn't be able to get the votes to pass it.

If Senate Minority Leader Mitch McConnell, R-Ky., "can't get 60 percent of us to vote for this deal, it will be hard for Boehner to get it through the House. And I want to vote for it even though I won't like it because the country's got a lot at stake here," Graham said on "Fox News Sunday".