President Barack Obama has asked congressional leaders to convene today at the White House for last-minute talks on a “fiscal cliff” deal that avoids automatic tax increases and broad spending cuts that threaten the economy’s nascent recovery.
The development capped a day of growing urgency in which Mr Obama returned early from a Hawaiian holiday and planned to meet with top members of Congress just four days before the government goes over the so-called fiscal cliff if no deal is reached.
The bitter partisan fight is over reining in deficit spending by raising taxes for some wealthy earners – the Democrats’ priority – and cutting some popular benefit programmes, as demanded by Republicans.
As the Senate reconvened yesterday, Senate Majority Leader Harry Reid warned that the US appeared to be headed over the year-end “fiscal cliff” with no deal in sight.
He also slammed House of Representatives Speaker John Boehner for not immediately reconvening the House. Boehner called the House back into session for a highly unusual Sunday evening session.
Majority Leader Eric Cantor said the House could be in session until January 2, the day before the new congress is sworn in.
Today’s meeting would be the first time Mr Obama has huddled with all the leaders of Congress since November 16 and would represent that last hope for a deal before the year-end deadline. Mr Obama spoke to each leader individually on Wednesday.
Administration officials confirmed the meeting at the White House in a bare-bones announcement that said the president would “host a meeting”.
An aide to Senate Republican Leader Mitch McConnell said he “is eager to hear from the president”.
A spokesman for Mr Boehner issued a statement that said the speaker would attend and “continue to stress that the House has already passed legislation to avert the entire fiscal cliff and now the Senate must act”.
While there was no guarantee of a compromise, Republicans and Democrats said privately that elements of any agreement would likely include an extension of middle class tax cuts with increased rates at upper incomes as well as cancellation of the scheduled spending cuts.
An extension of expiring unemployment benefits, a reprieve for doctors who face a cut in payments from the federal Medicare programme and possibly a short-term measure to prevent dairy prices from soaring could also become part of a year-end bill, they said.
That would postpone politically contentious disputes over spending cuts for 2013.
The issue has been Mr Obama’s first test of muscle after his re-election in November. At stake are Bush-era tax cuts that expire on December 31 and revert to the higher rates in place during the administration of President Bill Clinton in the 1990s.
Nearly all Americans and branches of the federal government, including the military, would be affected.
The parties are also arguing about cutting entitlement programmes like Social Security pensions. The changes are part of a long-delayed need for the government to address its chronic deficit spending.