Leading U.S. lawmakers expressed confidence on Sunday that
they could reach a deal to avert the "fiscal cliff" even as
they laid down markers on taxes and spending that may make
any agreement more difficult.
Republicans and Democratic leaders have agreed on a framework
to reform the tax code and government benefit programs next
year, but first need to prevent across-the-board tax
increases and spending cuts due to begin in January that
could push the economy back into recession.
That toxic $600 billion combination, known as the fiscal
cliff, is the legacy of earlier failed budget deals. Both
sides say they see greater willingness to compromise this
"What I hear is a perceptible change in rhetoric from the
other side," Dick Durbin, the No. 2 Senate Democrat, said on
CNN's "State of the Union" program. "And what it is is an
invitation for our side to basically sit down and say, 'What
can we do for this country?'"
Taxes are the biggest hurdle.
President Barack Obama campaigned on a promise to raise tax
rates on the wealthiest 2 percent of households, who have
benefited more than the rest of the population over the past
several decades as globalization and technology have
transformed the U.S. economy. He wants to extend low tax
rates for the bottom 98 percent of the population, but said
he will not sign a budget deal that keeps low rates for the
wealthiest in place.
Nancy Pelosi, the top Democrat in the House of
Representatives, echoed this view. Though Republicans control
the House, they will probably need Democratic votes to get
any deal passed.
"If it's going to bring in revenue, the president has been
very clear that the higher-income people have to pay their
fair share," she said on ABC's "This Week."
A top Republican, Representative Tom Price, said his
colleagues recognize the need to generate more tax revenue
even as he said any tax-rate increase on the wealthy would
lead to job losses.
Most Republican lawmakers have signed a pledge promising they
will not tax rates. Instead, they want to generate more
revenue through a rewrite of the code that would eliminate
exemptions, lower rates and presumably spur the economy.
They also say tax changes must be paired with spending cuts.
"The two sides have identified the tax revenue that we're
willing to discuss, and now it's time to talk about spending
reductions," Price, a member of the leadership team who has
close ties to rank-and-file conservatives, said on CNN.
Many of Price's fellow Republicans voted against an August
2011 budget deal that included $1 trillion in spending cuts
on the grounds that it did not go far enough. That deal
narrowly averted a U.S. default, but it rattled consumers and
investors and led to a first-ever downgrade of the country's
Opinion polls show that Republicans would shoulder more of
the blame if the country goes over the fiscal cliff in
January. Price said his side is eager to avert disaster this
"Every member of our caucus appreciates that this fiscal
crisis, this challenge that we have, is ever closer," he
Durbin said he sees an increased willingness on the part of
Republicans to reach a deal compared with prior budget
standoffs. "You have to be careful. If you talk about taxes
they run for the hills, but if you talk about revenue and tax
reform they'll sit still for that conversation," Durbin said.