Obama’s $2.4 trillion proposal is still on the table — and it remains his preference. Hill GOP cool to Obama overtures

The scope of a potential fiscal cliff deal narrowed dramatically Friday as President Barack Obama called on Congress to at least pass a scaled-down agreement that preserves the middle-class tax cuts and unemployment insurance.

The president’s pivot toward a smaller package is a recognition that the chances of reaching a grand bargain before the new year diminished greatly after House Republicans revolted on Thursday. But even a narrow proposal to avert the fiscal cliff won’t be easy to pass through Congress.


( PHOTOS: Fiscal cliff's key players)

House Speaker John Boehner (R-Ohio) failed to get enough support for a bill extending the Bush-era tax cuts on income below $1 million — so the vote count would be even more difficult if the income threshold dropped to $250,000, which Democrats prefer.

And top Senate Republicans are signaling that they could filibuster such a bill, though they are still discussing their strategy.

( Also on POLITICO: House Democrats enjoy rare victory lap)

Obama expressed impatience with the process in brief remarks from the White House briefing room shortly before he left for a family vacation in Hawaii. He had just met with Senate Majority Leader Harry Reid (D-Nev.) and called Boehner.

“Now is not the time for more self-inflicted wounds, certainly not those coming from Washington,” he said. He described the Christmas break as a cooling-off period but said that Congress needs to act later next week.

( Also on POLITICO: Right rages at Boehner cliff debacle)

Obama said he is “still ready and willing” to negotiate a comprehensive package, but the lack of bipartisan cooperation and the impending deadline means that Congress will need to focus on areas of consensus.

“This is something within our capacity to solve,” Obama said. “It doesn’t take that much work. We just have to do the right thing. So call me a hopeless optimist, but I actually still think we can get it done.”

After Boehner’s stunning setback on Thursday, the action will now move to the Senate. But the outlook there is grim.

( Also on POLITICO: Behind the scenes of a GOP meltdown)

“We haven’t had any discussions about the way forward yet,” Senate Minority Leader Mitch McConnell (R-Ky.) told POLITICO Friday evening when asked if he’d insist on a 60-vote filibuster-proof majority for any package. “And it would be pretty hard to speculate about where we go from here.”

McConnell allowed a tax bill to pass in July with a simple majority, but senators and aides expect that Reid would need 60 votes to pass a bill of this magnitude — meaning that Obama must reach agreement with Republicans in order to get a deal through the Senate, a goal that’s been elusive thus far.

“It’s gonna happen,” said Sen. Lindsey Graham (R-S.C.). “I think we’re going over the cliff here.”

Senate Minority Whip Jon Kyl, a close McConnell ally, said a possible scaled-down plan “was much worse” than the bill rejected by the House GOP Thursday night.

( PHOTOS: Fiscal cliff's key players)

When the Senate returns Dec. 27, if no deal is in reach, Democrats are prepared to push forward with their less ambitious proposal and dare the GOP to block — pushing the nation over the fiscal cliff.

The White House and Senate Democrats are looking at a smaller package that would extend the Bush-era tax rates on income below $250,000, pause the across-the-board spending cuts known as the sequester and renew unemployment insurance benefits.

“But the bottom line is that moving forward on any solution will require cooperation from Speaker Boehner and Senator McConnell,” an aide to Reid said. “We hope they will return from Christmas ready to cooperate.”

The fallback plan would hold off a significant portion of the fiscal cliff, minimizing any economic shock in the new year. But it means a host of tax provisions would likely expire, little would be done to address the debt and deficit, and no process would be set up for overhauling the Tax Code next year. There would be no agreement on entitlements and no resolution on raising the debt ceiling.

Faced with few good options and a shrinking timeline, Democrats are trying to put the squeeze on Boehner. The White House assumes that, if the Senate passes a bill, an isolated House Republican majority will feel pressured to act, similar to the way the 2011 payroll tax cut fight and debt limit showdown played out.

“Nobody gets 100 percent of what they want,” Obama said. “Everybody’s gotta give a little bit in a sensible way. We move forward together, or we do not move forward and all.”

On Friday, Boehner said the House Republican Conference’s rejection Thursday of his proposal to extend tax rates for income of less than $1 million was because of “a perception created that that vote last night was going to increase taxes.”

“Now I disagree with that characterization of the bill, but that impression was out there,” Boehner said. “And we had a number of our members who just really didn’t want to be perceived as having raised taxes. That was the real issue.”

If Boehner couldn’t get a bill at $1 million, then a $250,000 limit isn’t likely to stand much of a chance.

Twenty-six Republicans would need to back the bill for passage if every Democrat voted in favor. If the White House is aiming to include unemployment insurance and fixes for both the alternative minimum tax, which hits upper middle-income Americans, and the annual rate cuts to Medicare providers, Republicans would likely demand spending cuts in return.

In the Senate, Republicans increasingly predicted that the nation is headed over the fiscal cliff because any bill that doesn’t extend all of the Bush-era tax cuts would be tricky to pass before year’s end.

“If you look at last night’s lack of support, none of the bipartisan proposals have been as conservative as that proposal was,” said Sen. Saxby Chambliss (R-Ga.), who has unsuccessfully tried to fashion a bipartisan deficit compromise for the past two years. “I think passing something in the House is going to be very, very difficult.”

Making the White House’s push even tougher, the anti-tax bloc in the Senate GOP is just as strong as in the House — and it certainly has McConnell’s ear.

“I personally won’t vote for any plan that raises any taxes — no matter what — because the cuts in the out-years will never come,” Sen. Richard Shelby (R-Ala.) said.

“Compromise for the sake of compromises alone is not good enough,” said Sen. Marco Rubio (R-Fla.).

But some moderates were plainly irked by the House GOP rebellion Thursday night.

“I think those who blocked his proposal made a big mistake,” said Sen. Susan Collins (R-Maine).

Jake Sherman and Seung Min Kim contributed to this report.