By David Jackson and Susan Davis, USA TODAY
President Obama said Friday the Senate will try to put together a plan this weekend to avoid the tax hikes and budget cuts that kick in next week with the so-called "fiscal cliff."
"The hour for immediate action is here," Obama said after meeting with Senate and House leaders at the White House. "It is now."
Senate Majority Leader Harry Reid, D-Nev., and GOP counterpart Mitch McConnell, R-Ky., said they hope to have a plan ready when the Senate and House reconvene Sunday -- two days before New Year's Day and the fiscal cliff deadline.
"We'll be working hard to try to see if we can get there in the next 24 hours," McConnell said on the Senate floor, adding that he and other leaders had a good meeting with the president.
Obama and lawmakers expressed optimism, though the president also voiced frustration that yet another Washington budget battle is going down to the last minute. He said "people outside of Washington" don't understand why this keeps happening, and that the uncertainty has inhibited consumer and business spending, creating a "self-inflicted wound" on the economy.
If the Senate can't agree on a plan this weekend, Obama said he will ask Reid to simply put a bare bones plan on the floor that would stop tax hikes for the middle class. Obama's plan would extend unemployment benefits due to expire, as well as the George W. Bush tax cuts for Americans who make less than $250,000 a year.
Such a move would presumably pressure Republicans into signing off, or be blamed if the nation goes over the cliff.
"We should let everybody vote," Obama said. "That is the way this is supposed to work."
Administration officials noted that Obama has offered to work on a short-term deal to beat the deadline for the fiscal cliff, a series of automatic tax hikes and budget cuts that take effect in the new year without some kind of new budget and debt reduction agreement.
Even if the Senate strikes a deal, it must be ratified by House Republicans and House Democrats.
House Speaker John Boehner, R-Ohio, said the Republican-run chamber would consider anything the chamber sends over, according to a statement from his office.
"The Speaker told the President that if the Senate amends the House-passed legislation and sends back a plan, the House will consider it -- either by accepting or amending," said the statement from Boehner's office. "The group agreed that the next step should be the Senate taking bipartisan action."
Boehner had been negotiating an agreement with Obama in previous weeks, but now appears to be on the sidelines.
Before leaving for vacation in Hawaii a week ago, Obama said he asked Republican and Democratic leaders to "work toward a package that prevents a tax hike on middle-class Americans, protects unemployment insurance for 2 million Americans and lays the groundwork for further work on both growth and deficit reduction. That's an achievable goal."
Obama returned to the White House on Thursday. On Friday afternoon, he met with Reid, McConnell, Boehner, and House Minority Leader Nancy Pelosi, D-Calif. Treasury Secretary Timothy Geithner also attended.
Pelosi told reporters that Reid and McConnell will try to come up with something that can pass both chambers. She called their meeting "constructive" and "candid." She said Boehner said he won't move something until the Senate moves first on a proposal.
Meanwhile, McConnell huddled with Republican colleagues on the Senate floor following the meeting with Obama. McConnell's message was one of progress, according to Sen. Kay Bailey Hutchison, R-Texas, who said he asked his members not to disclose the substance of his comments to the media.
"I've got a positive feeling," she said, adding that senators in both parties were in constant communication on the floor. "It's been very productive," she said.
Reid said the Senate will return Sunday; the House also returns Sunday.
Even if the Senate agrees on a plan this weekend, it would still have to be approved by the Republican-run House to become law.
Boehner has stressed that the House has passed a debt reduction plan and is awaiting Senate action. After the White House session, the statement from his office said the leaders "spent the majority of the meeting discussing potential options and components for a plan that could pass both chambers of Congress."
In recent weeks, the White House and Congress had hoped for a major deal to reduce the federal debt that now exceeds $16 trillion. They have discussed spending cuts, steps toward a tax overhaul and changes to entitlement programs and ways to address the debt ceiling.
With time growing short, however, the parties are now discussing a scaled-back agreement ahead of next week's deadline.
One of their likely topics: the fate of the George W. Bush tax cuts, which are due to expire at the end of the year, leading to a rise in income tax rates for all Americans.
Obama has proposed extending the Bush tax rates for most Americans, but ending them for those who make more than $250,000; he has also discussed increasing that threshold to $400,000 a year as part of a larger deal to reduce the debt.
Many Republicans oppose any rise in income tax rates, though Boehner has offered to end the Bush tax cuts for those who make more than $1 million a year.
The president also wants an extension of unemployment benefits that are set to run over the next few days.
Hutchison, the Republican senator from Texas, said she could personally support a deal that raises rates on high earners in the $500,000-per-year-and-above threshold, but cautioned there was no consensus yet.
In the meantime, some officials are already talking about what happens after the country goes over the cliff on Tuesday, New Year's Day.
"It looks like that is where we're headed," Reid said on Thursday, if only because so little time is left before the end of the year.
Lawmakers are now starting to say that the next Congress -- the one that will be sworn in Jan. 3 -- will have to work on a debt reduction deal, including legislation to deal retroactively with the tax increases that take effect on Jan. 1.
One advantage of this approach: Senate and House members in the next Congress would be able to argue next year that they are voting to cut taxes; the tax hikes would already be in effect.
Reid blamed Boehner and the Republican-run House, saying they have refused to even vote on plans to reduce the debt with higher taxes on the wealthy as well as budget cuts.
Boehner said it's up to Reid and the Senate Democrats to act on measures passed by the House that emphasize reduced spending.
After the Friday meeting at the White House, some senior administration officials -- including Geithner and top adviser Valerie Jarrett -- will conduct a conference call with business leaders to discuss fiscal cliff issues; Obama himself will not be on the call.
Despite the partisan impasse, there is overwhelming agreement on Capitol Hill that Washington will at least extend the current tax rates for the majority of Americans. "It'll get resolved, and most Americans, almost all Americans, won't pay higher taxes next year," said Sen. Lamar Alexander, R-Tenn.
What remains uncertain is whether Congress will send legislation to the president before the Dec. 31 "fiscal cliff" deadline, or in the days or weeks after when the tax rates have expired. "That'll either be settled this weekend by our votes or it'll be settled after the first of the year," Alexander said.
Efforts to achieve a broad deficit reduction deal are all but gone, said Alexander and Sen. Bob Corker, R-Tenn., who outlined their proposal Friday to deal with the next budgetary crisis facing Washington a vote to raise the $16.4 trillion debt ceiling, the nation's borrowing authority.
"Unfortunately for America, the next line in the sand is going to be the debt ceiling," said Corker, who outlined a GOP proposal to raise the debt ceiling by $1 trillion in exchange for entitlement changes to Medicare, Social Security and Medicaid.
Corker said he believes the White House meeting is for "optics" and will not produce any significant bipartisan agreement. He said senators, during a series of votes Friday, were discussing on the floor how to bring up a bill to address the immediate fiscal issues of expiring tax rates and spending cuts.
Corker levied a harsh critique of the president and his congressional colleagues. "It's pretty apparent that we're not going to do what we've been called to do," he said, "I think that every American should be disgusted with all of Washington....And it's a shame that we are where we are, and candidly, that our economy is not going to be what it could have been the first quarter of this year if we had just done the work that we were supposed to do by this year end."