(CNBC) -- With only four days to go before the government falls over the
"fiscal cliff" of tax hikes and budget cuts, GOP aides told NBC News
that House members would reconvene Sunday -- two days before the
deadline -- to resume talks.
Earlier Thursday, the Senate
returned from Christmas break, with Majority Leader Harry Reid
expressing doubt that a deal can be reached to avoid the automatic
confluence of higher taxes and deep spending cuts.
like that's where we're headed," Reid said of the "fiscal cliff." He
accused Speaker John Boehner of running a "dictatorship" by "not
allowing the vast majority of the House of Representatives to get what
Stock prices dropped after Reid spoke. The Dow slid
into negative territory for December and fell below 13,000 for the
first time since Dec. 5.
President Barack Obama arrived back in Washington on Thursday,
cutting short his Hawaii vacation to face the showdown in the nation's
capital with even a stopgap solution now in doubt. Before leaving, he
made phone calls to Reid, Boehner, Senate Republican leader Mitch
McConnell and House Democratic leader Nancy Pelosi, the White House
On the Senate floor, Reid challenged Boehner to call the House back into session.
done nothing," Reid said of the GOP-controlled House. "The speaker has
just a few days left to change his mind," Reid said, but added: "I don't
know time wise how it will happen."
Reid also took to Twitter,
tweeting: "The way to avoid the 'fiscal cliff' has been in the face of
GOP leaders for months - taking up the Senate-passed mid.-class tax cut
Boehner spokesman Brendan Buck retorted: "Harry Reid should talk less
and legislate more if he wants to avert the fiscal cliff. The House has
already passed legislation to do so."
The House has passed a
Republican plan to avert the fiscal cliff, and the Senate has passed a
Democratic version. Their deficit-reduction projections differ by
hundreds of billions of dollars over 10 years.
It is unclear what
legislation the House might consider Sunday, since Boehner has insisted
that the Senate must make the next move.
Republican Sen. Scott
Brown created a brief stir Thursday by saying on Facebook that Obama
had presented a new proposal to the Senate GOP leadership, but the White
House told NBC News that no new plan had been offered.
the mix of developments pushing toward a "fiscal cliff," Treasury
Secretary Timothy Geithner informed Congress on Wednesday that the
government was on track to hit its borrowing limit on Monday and that he
would take "extraordinary measures as authorized by law" to postpone a
he added, uncertainty over the outcome of negotiations over taxes and
spending made it difficult to determine how much time those measures
At stake are current tax rates that expire on Dec. 31
and revert to the higher rates in place during the administration of
President Bill Clinton. All in all, that means $536 billion in tax
increases that would touching nearly all Americans. Moreover, the military and other federal departments would have to cut $110 billion in spending.
But while economists have warned about the economic impact of tax
hikes and spending cuts of that magnitude, both sides appear to be
proceeding as if they have more than just four days left. Indeed,
Congress could still act in January in time to retroactively counter the
effect on most taxpayers and government agencies, but chances for a
large deficit reduction package would likely be put off.
Republican leaders on Wednesday said they remain ready to negotiate,
but urged the Senate to consider or amend a House-passed bill that
extends all existing tax rates. In a statement, the leaders said the
House would consider whatever the Senate passed. "But the Senate first
must act," they said.
Aides said any decision to bring House members back to Washington would be driven by what the Senate does.
office responded shortly after, insisting that the House act on Senate
legislation passed in July that would raise tax rates only on incomes
above $200,000 for individuals and $250,000 for couples.
Obama has been pushing for a variant of that Senate bill that would
include an extension of jobless aid and some surgical spending
reductions to prevent the steeper and broader spending cuts from kicking
For the Senate to act, it would require a
commitment from McConnell not to demand a 60-vote margin to consider the
legislation on the Senate floor. McConnell's office says it's too early
to make such an assessment because Obama's plan is unclear on whether
extended benefits for the unemployed would be paid for with cuts in
other programs or on how it would deal with an expiring estate tax,
among other issues.
What's more, Boehner would have to let the
bill get to the House floor for a vote. Given the calendar, chances of
accomplishing that by Dec. 31 were becoming a long shot.
standoff, Geithner advised Congress on Wednesday that the administration
will begin taking action to prevent the government from hitting its
borrowing limit. In a letter to congressional leaders, Geithner said
accounting measures could save approximately $200 billion.
could keep the government from reaching the debt limit for about two
months. But if Congress and the White House don't agree on how to avoid
the "fiscal cliff," he said, the amount of time before the government
hits its borrowing limit is more uncertain.
"If left unresolved,
the expiring tax provisions and automatic spending cuts, as well as the
attendant delays in filing of tax returns, would have the effect of
adding some additional time to the duration of the extraordinary
measures," he wrote.
Whenever the debt ceiling hits, however, it is likely to set up yet
another deadline for one more budget fight between the White House and
Initially, clearing the way for a
higher debt ceiling was supposed to be part of a large deal aimed at
reducing deficits by more than $2 trillion over 10 years with a mix of
tax increases and spending cuts, including reductions in health programs
like Medicare. But chances for that bargain fizzled last week when
conservatives sank Boehner's legislation to only let tax increases
affect taxpayers with earnings of $1 million or more.
Obama and his aides have said they would refuse to let Republicans
leverage spending cuts in return for raising the debt ceiling. But
Republicans say the threat of voting against an increase in the limit is
one of the best ways to win deficit reduction measures.
potential showdown is pending. A renewed clash over spending could come
in late March; spending authority for much of the government expires on