Obama says the meeting was 'constructive.' Obama to Congress: It's time for a deal

President Barack Obama called on Senate leaders to hammer out a last-minute deal to prevent taxes from rising on Americans across every income group, warning that he otherwise would push Congress to allow an up-or-down vote on an emergency fiscal package just before the new year’s deadline.

Speaking after an hour-long meeting with congressional leaders, Obama called on Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell to cut a deal before the end of the weekend to prevent $500 billion in tax hikes and spending cuts from taking effect in the new year. Obama said he was “modestly optimistic” a deal could be reached, calling the 11th hour haggling before the fiscal cliff deadline “mind-boggling.”


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“America wonders why it is in this town why you can’t get stuff done in an organized timetable. Why everything has to always wait until the last minute. We’re now at the last minute,” Obama told reporters at the White House briefing room. “The American people are not going to have any patience for a politically self-inflicted wound to our economy. Not right now.”

Obama said if no deal can be reached, the House and Senate should put a bill on the floor immediately aimed at preventing taxes from rising on middle-class families and jobless benefits from expiring on two million people. Reid later said he would set a last-ditch vote for Monday — New Year’s Eve — on the fall-back plan.

“Let’s not miss this deadline,” Obama said. “That’s the bare minimum we should be able to get done.”

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The furious, last-minute negotiating and involvement show how both sides fear the political fallout of failure. Obama will need to worry about the ramifications on the economy and having to manage a potential recession in his second term if economists’ predictions ring true. McConnell fears that Republicans will have a much weaker hand next Congress and could suffer a disproportionate amount of blame if no deal is reached.

At the White House meeting, Obama argued that his plan to let taxes rise for families who earn more than $250,000 would win a majority vote in both chambers. But that means House Speaker John Boehner would need to allow the bill to pass with a majority of Democrats, something the Ohio Republican has strongly rejected.

The big-ticket item hanging over the Reid-McConnell talks will be the income level at which taxes can rise. Boehner failed to win sufficient GOP support for a plan to increase taxes for income over $1 million, and Obama has previously upped his offer from $250,000 to $400,000. McConnell and Reid are also trying to agree on the level to set taxes on estates that are transferred after the death of an owner.

At the meeting, Boehner made clear any efforts to eliminate pending cuts to defense and domestic programs — about $109 billion next year — must be replaced by spending cuts to other programs. Republicans later said it appeared that the so-called sequester would not be addressed in a final agreement. A final deal appears unlikely to include an increase of the $16.4 trillion national debt limit, which will be reached on Monday, meaning that Congress will almost certainly renew the battle over taxes and spending immediately in the new year.

Returning to the Senate after the hour-long White House meeting, Reid and McConnell said the two would attempt to cut a deal over the weekend and pitch it to their parties on Sunday — just two days before the country faces the prospect of spending cuts and tax hikes that could eventually send the country back to recession.

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Reid said the Senate would not be in session Saturday, giving the two leaders room to negotiate a potential deal. He called the Friday meeting “very positive” and said “there was not a lot of hilarity” given the serious nature of the talks. And for the first time in weeks, Reid’s tone turned more positive, telling members that whatever deal they reach would be “imperfect.”

“I do think we need that time to have everybody step back a little bit,” Reid said. “If we come up with something, it’s not easy, we’re dealing with big numbers, and some of that stuff we do is somewhat complicated.”

Reid added: “Some people aren’t going to like it. Some people will like it less. But that’s where we are. And I feel confident that we have an obligation to do the best we can. That was made very clear in the White House.”

McConnell said it was a “good meeting.”

“So we’ll be working hard to try to see if we can get there in the next 24 hours,” McConnell said on the floor Friday evening. “So I’m hopeful and optimistic.”

If no deal can be reached, Obama wants the Senate to vote on a plan that includes an extension of current tax rates for those who make less than $250,000, a patch to the Alternative Minimum Tax so it does not hit middle-income families and an extension of jobless benefits for about two million unemployed workers. There’s also a push to prevent doctors servicing Medicare patients from seeing their reimbursement rates slashed in the new year.

At the meeting, Obama reiterated the outlines of an offer he made last week and asked for Republican support, sources said. He also pressed Republican leaders to lay out an alternative proposal that can pass Congress. He also asked Republican leaders to allow an up-or-down vote on the Democratic plan in both chambers, according to a source familiar with the meeting.

Such an offer won a chilly reception among to Republicans on Capitol Hill, since the GOP would have to essentially concede the tax fight in both chambers, winning few — if any — concessions from Democrats.

Boehner indicated that a bill must emerge from the Senate before his chamber takes action, deferring discussion over policy details to the opposite side of the Capitol, participants said.

“The speaker told the president that if the Senate amends the House-passed legislation and sends back a plan, the House will consider it - either by accepting or amending,” a Boehner aide said. “The group agreed that the next step should be the Senate taking bipartisan action.”

Emerging from the meeting, Pelosi called the session “candid and constructive.”

“We’re waiting to see what Leader Reid and Leader McConnell can find as far as a legislative path to go forward,” Pelosi told reporters in the Capitol. “I would say the president led in that direction of saying the Speaker says we need to hear from the Senate so let’s have the Senate put something together and see where that takes us.”

Asked if Boehner indicated a willingness to take up a Senate-passed bill, Pelosi said: “Well he’s not going to bring up anything unless something comes over from there. He made that very clear.”

Senior Republicans said Friday there was virtually no possibility that McConnell would back a deal that couldn’t pass the House, meaning it would need significant Republican support, something that has been elusive in any Democratic proposal put forward thus far.

Asked if the Senate GOP would cut a deal without Boehner’s blessing, Kyl said: “I think that’s pretty unlikely. If you know the House isn’t going to do something, then why go through the charade? Then it becomes political gamesmanship.”

North Carolina Sen. Richard Burr, the chief GOP deputy whip, said it would “take a monumental move” for a deal to be reached. He added that if Obama pitches a plan to set the tax threshold at $250,000, “I think we can just sorta laugh at it.”

Last Friday, Obama proposed what the White House considered a scaled-back plan from its earlier offers in order to get past the immediate crush of spending cuts and tax hikes poised to hit the economy.

But Republicans — most of whom are dead set against any tax increases — say a plan to set the threshold at $250,000 cannot pass the House, especially if Obama does not offer to cut deeper into Medicare and other entitlement programs than he has so far. Democrats said Friday that if the GOP ups its demands on spending cuts, a deal would be unlikely before the first of the year.

Carrie Budoff Brown, John Bresnahan, Steven Sloan and Jake Sherman contributed to this report.