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 CollinsThe Hill's 12:30 Report Overnight Energy: Lawmakers work toward deal on miners’ benefits Schumer: Senate Russia probe moving too slowly MORE (R-Maine).
Senate Majority Leader Harry ReidHarry ReidDraft House bill ignites new Yucca Mountain fight Week ahead: House to revive Yucca Mountain fight Warren builds her brand with 2020 down the road MORE (D-Nev.) and Minority Leader Mitch McConnellMitch McConnellStudy: Trump tops recent GOP presidents in signing bills in first 100 days Senate passes stopgap funding bill to avert shutdown Let’s never talk about a government shutdown — ever again 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 CornynSenate's No. 2 Republican: Border tax 'probably dead' McConnell: Senate will pass short-term funding bill to avoid shutdown The Hill's 12:30 Report 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 GrahamTop admiral: North Korea crisis is 'worst I've seen' Comey to testify before Senate Judiciary Committee Overnight Defense: US moving missile defense system to South Korea | Dems want justification for Syria strike | Army pick pushes back against critics of LGBT record 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 ThuneWant to grow the economy? Make student loan repayment assistance tax-free. Net neutrality fight descends into trench warfare Hopes fade for using tax reform on infrastructure 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 BoehnerLobbyists bounce back under Trump Business groups silent on Trump's Ex-Im nominee Chaffetz won't run for reelection 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.