Susan Davis and David Jackson, USA TODAY
House Republican leaders told lawmakers to return to Washington on Sunday, setting the stage for a dramatic final act in this Congress to avert the year-end "fiscal cliff."
Senate Majority Leader Harry Reid, D-Nev., offered a pessimistic outlook for the chances of sending President Obama legislation before Dec. 31 to avert the budgetary collision of tax hikes and spending cuts that threaten the U.S. economic recovery.
"Nothing is happening," Reid warned on Thursday in a Senate floor speech in which he put the blame on Republicans if Washington fails to act. "If we go over the cliff, we'll be left with the knowledge that it could've been prevented with a single vote in the Republican-controlled House of Representatives," he said.
With broader talks between the White House and Congress seemingly at a standstill, Reid wants the House to take up a Senate-passed bill to extend the the current George W. Bush era tax rates for everyone making $250,000 or less, about 98% of earners, which President Obama made a central issue of his re-election campaign.
House Republicans have countered that the Senate could take up House-passed legislation to extend all of the current tax rates, as well as a separate piece of legislation that alters the scheduled spending cuts to protect defense programs in order to avert the "fiscal clff."
House Speaker John Boehner, R-Ohio, failed to muster enough support within his own party last week for his alternative "Plan B" that would have allowed tax rates to increase for those earning $1 million or more. Since then, Boehner has put the burden on the president and Senate Democrats to come up with a proposal that can pass a divided Congress.
House Majority Leader Eric Cantor, R-Va., told lawmakers that the House will return Sunday and could stay in session until Jan. 2. The 113th Congress will convene at noon on Jan. 3, scrambling the political dynamic if Washington fails to reach an agreement before 84 new House members and 12 new senators are sworn in next Thursday. Democrats will have a stronger hand in the next Congress, gaining eight seats in the House and two seats in the Senate.
President Obama phoned the top four congressional leaders before he returned to the White House on Thursday after cutting short his Hawaii Christmas vacation. It was the first sign that communication between party leaders--which have been at a standstill since last week--is restarting in the home stretch. Reid said there has been no communication with Boehner or Senate Minority Leader Mitch McConnell, R-Ky., since Congress adjourned for the Christmas holiday.
The Senate returned on Thursday. The expiration of tax rates and impending spending cuts are not the only lingering issues Congress is trying to address.
The current 2% payroll tax holiday is scheduled to expire, as are unemployment benefits affecting 2.1 million Americans. The alternative minimum tax (AMT) patch will also expire, which would make millions of taxpayers vulnerable to higher tax rates. A popular package of "tax extenders" affecting businesses, individuals and charitable giving tax laws are also scheduled to expire, as well as the "Medicare doc fix" a short-term patch to avoid a scheduled 26.5% drop in payments to physicians who treat Medicare patients.
The White House also continues to seek an agreement as part of a "fiscal cliff" deal to lift the debt ceiling, the nation's borrowing authority, in order to avoid another showdown with congressional Republicans. In a Wednesday letter to Congress, Treasury Secretary Timothy Geithner said the $16.4 trillion debt limit will be met on New Year's Eve, and that "certain extraordinary measures" will be taken to postpone congressional approval for an increase.
Some rank-and-file lawmakers expressed optimism that a deal could be reached on any number of issues before the end of the year.
"I actually think there's still a chance to get something done," Rep. Tom Cole, R-Okla., told MSNBC. "You know, these deals usually come together at the last moment. That's what happened in the budget deal, the debt ceiling deal. I think that's what's going to happen again."
Asked why he was optimistic, Cole said, "Well, to paraphrase Ronald Reagan, there's so much manure around here there's got to be a pony someplace."
Rep. John Yarmuth, D-Ky., told MSNBC that action in the next Congress remains a possibility if gridlock continues. "We have a lot of new members -- 80-something new members -- coming to the House. Some of them are bringing the same kind of mandate that many of the more conservative Republicans did, but a lot of them don't. And I think there's going to be a different kind of mentality here."
He added: "I think a lot of the new members who come here want to govern rather than just campaign, and so I think things can happen pretty quickly in January."