The call to include a measure of inflation known as the chained consumer price index, or “chained CPI,” threatened to derail talks as negotiators raced to find a compromise by their year-end deadline.
But after a conference meeting, GOP lawmakers made clear they were not insisting on the measure.
"It's safe to say that chained CPI will not be a part of … [the GOP's] proposal. … We'll leave that for a later day, which I'm pleased about because I'm not a fan of affecting those currently on Social Security, especially the more elderly," said Snowe.
"There is a realization that that proposal deserves more study," added Sen. Susan CollinsSusan CollinsPruitt sworn in as EPA chief Comey meets Intel senators amid uproar over Trump-Russia ties EPA breaks Twitter silence to congratulate new head MORE (R-Maine).
Senate Majority Leader Harry ReidHarry ReidIf Gorsuch pick leads to 'crisis,' Dems should look in mirror first Senate confirms Mulvaney to be Trump’s budget chief Democrats declare victory after Puzder bows out MORE (D-Nev.) and Minority Leader Mitch McConnellMitch McConnellRepublicans play clean up on Trump's foreign policy Americans brimming with optimism on the economy McCain hopes Americans can be confident GOP-controlled Congress can investigate president MORE (R-Ky.) have been negotiating since late Friday on a package to avoid the combination of automatic tax increases and spending cuts set to begin in January.
On Sunday, the GOP introduced their new demand for including the chained CPI measure. The accounting adjustment would create reductions in some Social Security and other entitlement benefit payments while raising some tax revenue. But Democrats said it was a non-starter this late in negotiations.
Reid took to the Senate floor and said that talks had reached an impasse and that "at this stage we are not able to make a counteroffer."
“We’re not going to have any Social Security cuts," Reid added. “It’s just doesn’t seem appropriate at this time,” said Reid.
Multiple GOP senators said a chief sticking point is that Democrats want to use new revenue to replace or delay the sequester, while Republicans want other offsetting spending cuts. But GOP senators said they were abandoning the demand on Social Security to push toward a deal.
Incoming Senate Minority Whip John CornynJohn CornynRepublicans play clean up on Trump's foreign policy Comey meets Intel senators amid uproar over Trump-Russia ties Corker: Senate GOP discussing best path for Russia probe MORE (R-Texas) said that McConnell expects to convene the conference again later Sunday as talks continue.
Heading into the Sunday Republican conference meeting, Sen. Lindsey GrahamLindsey GrahamTrump’s feud with the press in the spotlight Senators eye new sanctions against Iran Republicans play clean up on Trump's foreign policy MORE (R-S.C.), a party leader on Social Security reform, said chained CPI did not need to be in the deal.
"It is absolutely not crucial at all," he said, adding that it can be done as part of a debt-ceiling deal next year.
Sen. John ThuneJohn ThuneWhere Trump’s travel ban stands Verizon angling to lower price of Yahoo purchase: report Congress should take hands off the wheel of self-driving cars MORE (R-S.D.) said that Democrats needed to take the next step in talks. "If that is unacceptable to them they need to come up with an alternative," he said.
Chained CPI is greatly opposed by progressives in the Senate Democratic caucus and could have led members of Reid's own party to filibuster a deal on the floor as the deadline for the fiscal cliff approaches.
The new measure was included in an offer by Obama to BoehnerJohn BoehnerFormer House leader Bob Michel, a person and politician for the ages Former House GOP leader Bob Michel dies at 93 Keystone pipeline builder signs lobbyist MORE as part of their talks to reach a more sweeping deal. Those talks involved much greater levels of guaranteed revenue from tax reform than appear to be on the table in the Reid-McConnell talks. As such, Democrats were loath to lose the concession at this time.
Obama in an interview with NBC’s “Meet the Press” on Sunday, however, cited chained CPI as one area where he would be willing to buck liberals in his party to push entitlement reform.
House Minority Leader Nancy Pelosi (D-Calif.) has also in the past said that she would be open to support chained CPI as part of a broad deal.
"If there are some savings that do not harm people who are in need, then that's something to look at,” said Pelosi earlier this month. “But we're really actually looking at the bigger picture. It doesn't mean you subscribe to everything within it. And certainly my colleagues are not happy with the chained CPI. But if we were very happy with the proposal that the president put forth, I'm not sure it would have much of a chance on the Republican side."
Russell Berman and Mike Lillis contributed.
-- Updated at 4:45 p.m.