By Alexander Bolton - 12/22/12 05:00 PM EST
Senate Majority Leader Harry Reid (D-Nev.) is resisting pressure from Republicans pushing for the Senate to take a more active role to avoid the “fiscal cliff” after House legislation stalled Thursday.
On Friday, Reid dismissed McConnell’s proposal that he bring to the floor legislation extending tax rates that could be molded with a variety of amendments.
Reid argues the Senate has already done its work on the expiring tax rates by passing a bill in July shielding family income below $250,000 from tax hikes. He has insisted for weeks that the House take up and pass that bill.
Republicans, however, say the legislation is inadequate because it would allow taxes on inheritances and dividend income to soar.
Until now, Reid has had a limited role in the talks. President Obama kept him informed of negotiations with Boehner, but he was not an active participant.
That may now change. Reid met with Obama at the White House Friday in what could be preparation for a bigger role.
With the talks between Obama and Boehner at an impasse, some Senate Republicans think getting a deal in the upper chamber first is the most likely path forward. Boehner’s failure Thursday to advance his “Plan B” proposal to extend income tax rates for family income below $1 million intensified concerns that he does not have enough support within his own conference to reach agreement with the president.
“We’re now in a bad spot,” said Sen. Lindsey Graham (R-S.C.). “I hope we don’t go over the cliff but I think we are.”
Another senior Senate Republican said the Obama-Boehner talks are “in a ditch”.
But Democratic leaders have firmly resisted moving new legislation to avoid the fiscal cliff. They say Boehner should resume talks with Obama and pass Senate legislation to extend income tax rates for family income below $250,000 as a fallback.
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Sen. Charles Schumer (D-N.Y.), Reid’s lieutenant, said the Senate would not move a new bill.
“The two key people are the president and the Speaker and until they come to an agreement, not much else is going to happen,” he said.
Schumer dismissed the notion of the Senate leaders hammering out a short-term agreement to avoid the immediate consequences of the fiscal cliff.
“The last time I read the Constitution, a short-term deal has to pass the House as well as a long-term deal,” Schumer said.
He said Reid would want Obama involved and McConnell would want Boehner’s active input. Even if the Senate leaders could strike a deal, they still would have little guarantee of it getting a vote in the House, he said.
A senior Democratic aide said Reid would not attempt to move first on fiscal-cliff legislation unless he received an assurance from Boehner he would schedule it for a vote in the House.
Boehner called for Senate action after he cancelled a vote on Plan B Thursday evening.
“The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” Boehner said. “Now it is up to the president to work with Sen. Reid on legislation to avert the fiscal cliff.
A senior Democratic aide said Friday McConnell has not made any recent attempt to reach out to Reid to negotiate a solution. The aide noted McConnell is up for re-election in 2014 and would be hesitant to craft any deal that would effectively raise tax rates on the wealthy. This could open him to a Tea Party-backed challenge in the Kentucky Republican primary.
For this reason, some Senate Republicans think it makes sense for McConnell to tap retiring Sen. Jon Kyl (R-Ariz.) to negotiate with Reid. Kyl is an expert on tax and entitlement reform, having participated in the deficit-reduction talks led by Vice President Biden in the summer of 2011 and served as a member of the deficit-reduction supercommittee later that year.
One Republican lawmaker, however, argued that McConnell would be willing to hash out a compromise raising taxes if it included significant entitlement reform.
The senator noted McConnell told The Wall Street Journal last month Republicans would agree to more tax revenue in a budget deal in exchange for reforms to Medicare and Social Security.
McConnell called for a deal that would raise the Medicare eligibility age and Medicare premiums for the wealthy and curb Social Security cost-of-living increases.
But McConnell said additional tax revenues should not come from raising income tax rates, something Democrats say is must-have for any deal. And Democrats say Obama has taken the question of raising the Medicare eligibility age off the table.