Obama: Pass stripped-down deal
Congress could be back after holiday to resume talks.
WASHINGTON — President Barack Obama, conceding that a “grand bargain” for deficit reduction with Speaker John Boehner is unlikely, called Friday for Congress to approve a stripped-down measure by year’s end to prevent a tax increase for all but the highest earners and to extend aid for 2 million unemployed Americans.
“That’s an achievable goal; that can get done in 10 days,” Obama said. “Call me a hopeless optimist, but I actually think we can get this done.”
The president read his statement to reporters after a brief phone conversation with Boehner and a separate meeting at the White House with Sen. Harry Reid, D-Nev., the Senate majority leader.
It was Boehner’s defeat Thursday night — when anti-tax House Republicans blocked a vote on his tax plan, after he had suspended negotiations with Obama — that forced the president to reach for a fallback strategy with Senate help.
By Friday, both the House and the Senate had closed for the Christmas break, and soon after his statement Obama left with his family for their annual holiday trip to Hawaii, his native state. His return date is dependent on events, aides said.
But as he and Democrats in Congress envision the coming days, the Senate would reconvene Thursday to pass a compromise bill with commitments of cooperation
B7 from both Boehner and Sen. Mitch McConnell of Kentucky, the Republican minority leader, to keep the process moving. Facing the Dec. 31 deadline for the expiration of all Bush-era tax cuts, McConnell would need to promise not to filibuster and Boehner would have to agree to a House vote on the Senate-passed bill.
Obama is proposing that the Bush tax rates be extended permanently for all incomes less than $250,000 a year. In negotiations with Boehner, he had tentatively agreed to raise that threshold to $400,000. Congressional Democrats on Friday said they would go as high as $500,000 if it would seal a deal.
But the Republicans’ rejection of Boehner’s bill Thursday indicated that such a concession by Democrats would not sway anti-tax lawmakers. Plan B would have extended the Bush tax cuts for incomes up to $1 million, meaning a tax hike for an estimated 0.3 percent of households.
While the strategy that Obama and Reid are now pursuing requires the acquiescence of both Republican leaders, McConnell has given no indication whether he would give it.
Boehner has not said whether he would call the House back in session, but a spokesman said late Friday that the speaker would return to Washington from his Ohio home after the holiday “ready to find a solution that can pass both houses of Congress.”
As Democrats on Cap- itol Hill described the possible fallback plan, it would be similar to legislation already passed by the Senate to extend the Bush-era tax rates for income less than $250,000, increase to 20 percent from 15 percent the tax rate for capital gains and dividends income, and extend some other tax breaks.
But the new bill, they said, would also delay the so-called sequester in January — across-the-board spending cuts in military and domestic programs that Obama and Congress scheduled in mid-2011 as an incentive for the two sides to approve an alternative, more deliberate deficit-reduction compromise. And it would extend federal unemployment benefits for the estimated 2 million Americans who have been out of a job for long enough to exhaust their initial state aid.