Note: text highlighted in gray and within brackets is my own opinion:
[Finally, a political story that tells it straight. Does anyone else ever get tired of stories about political posturing? I want to know what our policymakers are talking about and doing, not reporters' speculations on their motives. The latter is usually just depressing/frustrating for everybody, anyway.]
PROGRESS SEEN IN LAST-MINUTE 'FISCAL CLIFF' TALKS
By ALAN FRAM and JULIE PACE (Associated Press) — Dec. 31 11:45 AM EST
WASHINGTON (AP) — Working against a midnight deadline, negotiators for the White House and congressional Republicans narrowed their differences Monday on legislation to avert across-the-board tax increases.
Congressional officials familiar with talks between Vice President Joe Biden and Senate Republican leader Mitch McConnell said one major remaining sticking point was whether to postpone spending cuts that are scheduled to begin on Jan 1.
Republicans want to replace across-the-board reductions with targeted cuts elsewhere in the budget, while the White House and Democrats want to offset at least some of the so-called sequester with the revenue from tax increases. Senate Democrats were pushing hard against a GOP proposal for just a three-month delay in the across-the-board cuts.
[As far as I can see, so far Republicans and Democrats agree they need to spend less, but D want to cut spending a little bit across the board while R want to concentrate cuts on targeted areas. To cushion the blow to all government agencies/projects' budgets, D also want to raise taxes. D also want to start with the spending cuts right away, while R want to delay the cuts. For what, I don't know.]
At the same time, Democrats said the two sides were closing in on an agreement over taxes. They said the White House had proposed blocking an increase for most Americans, while letting rates rise for individuals with incomes of $400,000 a year and $450,000 for couples, a concession from President Barack Obama's campaign call to set the levels at $200,000 and $250,000.
[Thank heaven for some evidence, at least, of a willingness to make some concessions. Concessions are essential in finding compromise. The politics of this country were purposefully set up under the idea that people with different views would be able to balance one another and find good, reasonable compromises. We sorely need people with a variety of opinions, but at the same time those people have to be willing to listen to other ideas and, at times, compromise a few of their own. Just because you give ground on some issues doesn't necessarily mean your ideas are flawed. It might just mean the country isn't ready for them yet.]
Any overall deal was also likely to include a provision to prevent a spike in milk prices with the new year, extend unemployment benefits due to expire and protect doctors who treat Medicare patients from a 27 percent cut in fees.
Despite the movement, Senate Majority Leader Harry Reid warned that differences remained without spelling out what they were and said cooperation would be needed by both sides.
[It's frustrating not to fully understand what's going on in these talks because we don't have all the pieces. I want to know what differences remain and what overtures of cooperation policymakers from both sides are making.]
"Negotiations are continuing as I speak," said Reid, D-Nev., as the Senate began an unusual New Year's Eve session. "But we really are running out of time. Americans are still threatened with a tax hike in just a few hours."
Liberal Sen. Tom Harkin, D-Iowa, took to the Senate floor after Reid to warn Democratic bargainers against lowering levies on large inherited estates and raising the income threshold at which higher tax rates would kick in.
"No deal is better than a bad deal. And this look like a very bad deal the way this is shaping up," said Harkin.
He suggested instead letting tax rates revert to the higher levels that existed when the economy was strong under President Bill Clinton, adding, "I ask, what's so bad about that?"
[It kind of sounds like Harkin is telling D not to make any more concessions on taxes. He also supports the raise taxes idea. See above.]
Both the House and Senate were on meeting on the final day of the year, although there was no expectation that a compromise could be approved by both houses by midnight, even if one were agreed to.
[Wow, we have become a cynical people indeed.]
Instead, the hope of the White House and lawmakers was to seal an agreement, enact it and send it to Obama for his signature before taxpayers felt the impact of higher income taxes or federal agencies began issuing furloughs or taking other steps required by spending cuts.
Regardless of the fate of the negotiations, it appeared all workers would experience a cut in their take-home pay with the expiration of a two-year cut in payroll taxes.
Officials who described the negotiations did so on condition of anonymity, citing the confidential nature of the discussions.
[Why are they confidential? This is something that affects all of us.]
A spokesman for McConnell, Don Stewart, said the Kentucky lawmaker and Biden "continued their discussion late into the evening and will continue to work toward a solution." Underscoring the flurry of activity, another GOP aide said the two men had conversations at 12:45 a.m. and 6:30 a.m. Monday.
Unless an agreement is reached and approved by Congress by the start of New Year's Day, more than $500 billion in 2013 tax increases will begin to take effect and $109 billion will be carved from defense and domestic programs.
Though the tax hikes and budget cuts would be felt gradually, economists warn that if allowed to fully take hold, their combined impact — the so-called fiscal cliff — would rekindle a recession.
[Economists? What economists? Citing vague sources isn't helpful.]
"This whole thing is a national embarrassment," Sen. Bob Corker, R-Tenn., said Monday on MSNBC, adding that any solution Congress would swallow at this late stage would be inconsequential. "We still haven't moved any closer to solving our nation's problems."
In a move that was sure to irritate Republicans, Reid was planning — absent a deal — to force a Senate vote Monday on Obama's campaign-season proposal to continue expiring tax cuts for all but those with income exceeding $200,000 for individuals and $250,000 for couples.
In one sign of movement on Sunday, Republicans dropped a demand to slow the growth of Social Security and other benefits by changing how those payments are increased each year to allow for inflation.
[Again, some evidence of concessions being made. But it's not yet enough.]
Obama had offered to include that change, despite opposition by many Democrats, as part of an earlier, failed bargaining with House Speaker John Boehner, R-Ohio, over a larger deficit reduction agreement. But Democrats said they would never include the new inflation formula in the smaller deal now being sought to forestall wide-ranging tax boosts and budget cuts, and Republicans relented.
"It's just acknowledging the reality," Sen. Susan Collins, R-Maine, said of the GOP decision to drop the idea.
There was still no final agreement on the income level above which decade-old income tax cuts would be allowed to expire. While Obama has long insisted on letting the top 35 percent tax rate rise to 39.6 percent on earnings over $250,000, he'd agreed to boost that level to $400,000 in his talks with Boehner. GOP senators said they wanted the figure hoisted to at least that level.
[Thank you for that much, Mr. President.]
Senators said disagreements remained over taxing large inherited estates. Republicans want the tax left at its current 35 percent, with the first $5.1 million excluded, while Democrats want the rate increased to 45 percent with a smaller exclusion.
[Ten percent seems like a big hike, D, but I like the line of thought. Could there be room for compromise here?]
The two sides were also apart on how to keep the alternative minimum tax from raising the tax bills of nearly 30 million middle-income families and how to extend tax breaks for research by business and other activities.
Republicans were insisting that budget cuts be found to pay for some of the spending proposals Democrats were pushing.
These included proposals to erase scheduled defense and domestic cuts exceeding $200 billion over the next two years and to extend unemployment benefits. Republicans complained that in effect, Democrats would pay for that spending with the tax boosts on the wealthy.
"We can't use tax increases on anyone to pay for more spending," said Sen. Kay Bailey Hutchison, R-Texas.
Both parties also want to block an immediate 27 percent cut in reimbursements to doctors who treat Medicare patients. Republicans wanted to find savings from Obama's health care bill as well as from Medicare providers, while Democrats want to protect the health care law from cuts.
