As budget deadline nears, House plans Sunday session

Senate Majority Leader Harry Reid returned from the Christmas recess to the Capitol as the “fiscal cliff” deadline loomed.
Senate Majority Leader Harry Reid returned from the Christmas recess to the Capitol as the “fiscal cliff” deadline loomed.

WASHINGTON — The House will hold its first Sunday session in more than two years as lawmakers seek to resolve a budget impasse before at least $600 billion in spending cuts and tax increases begin Jan. 1.

In a conference call Thursday with the Republican leadership, House members agreed to return Sunday amid a budget stalemate that has each side blaming the other. Markets pared losses following the announcement of the House return, after the Standard & Poor’s 500 Index fell as much as 1.3 percent on mounting concern that no deal would be reached.

‘‘We are coming up against a hard deadline here,’’ Senate Minority Leader Mitch McConnell, R-Ky., said on the Senate floor. ‘‘This is a conversation we should have had months ago.’’


If Congress does nothing, taxes will go up in 2013 by an average of $3,446 for U.S. households, according to the nonpartisan Tax Policy Center in Washington. Tax filing for up to two-thirds of U.S. taxpayers could be delayed into at least late March. Defense spending would be cut, and the economy would probably enter a recession in the first half of 2013, according to the Congressional Budget Office.

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Majority Leader Eric Cantor, R-Va., who announced plans for Sunday’s session on Twitter, didn’t say what action the House plans to take. He said the House may meet through Wednesday, the day before the next session of Congress will convene. The House held a brief pro-forma session Thursday although most members weren’t in Washington.

During the conference call, House Speaker John Boehner, R-Ohio, told fellow Republicans that the Senate should act on House-passed measures that would carry out Republicans’ plan to avert the so- called fiscal cliff, said an aide who sought anonymity to discuss the private conference call.

One lawmaker on the call said several House Republicans agreed with plans for the weekend session, even if only to wait for the Senate to act. The members were concerned that Democrats were winning the public relations battle on the budget talks, said the lawmaker, who requested anonymity to discuss the private session.

The House last convened on a Sunday on March 21, 2010, to vote on President Obama’s health-care legislation. The House has met on 16 Sundays since World War II, according to records of the House clerk and historian’s offices.


Senate Majority Leader Harry Reid, D-Nev., said the House should back Democrats’ plan to extend expiring tax cuts on income of married couples up to $250,000. Republicans oppose raising tax rates on any income level.

‘‘We know that the Republicans have buried themselves in procedural roadblocks to everything we try to do around here,’’ Reid said. ‘‘Any time the speaker and the Republican leader come to the president and say we've got a deal for you, the president’s door is always open.’’

The S&P 500 dropped 0.1 percent to 1,418.03 at 4 p.m. in New York, after earlier falling as much as 1.3 percent. Trading in S&P 500 companies was 8.4 percent below the 30-day average at this time of day. The benchmark Treasury 10-year note yield declined three basis points, or 0.03 percentage point, to 1.72 percent at 3:12 p.m. in New York, according to Bloomberg Bond Trader prices.

‘‘I'm neither optimistic nor pessimistic,’’ Vice President Joe Biden told reporters while leaving the Capitol after swearing in Brian Schatz as Hawaii senator, succeeding the late Daniel Inouye, D.

When asked what Obama’s administration is seeking in a potential plan, Biden said, ‘‘You tell me what will attract Republican votes, and I will tell you.’’


Earlier Thursday, Reid said the budget dispute probably wouldn’t be resolved before Tuesday because Republicans wouldn’t cooperate.

‘‘I don’t know time-wise how it can happen now,’’ Reid said, blaming Boehner and McConnell.

Obama called Reid, Boehner, McConnell and House Minority Leader Nancy Pelosi, D-Calif., late Wednesday for an update on negotiations, said Amy Brundage, a White House spokeswoman. Obama returned Thursday to Washington from his vacation in Hawaii.

‘‘There’s always hope. There are a few days,’’ Senate Finance Committee Chairman Max Baucus, D-Mont., said in an interview. ‘‘It’s so important to resolve this that the president, the speaker, Senator Reid, McConnell, they’re all talking trying to find a way out of this.’’

Retiring Ohio Rep. Steve LaTourette, R, said the speaker and majority leader didn’t say during the conference call what legislation the House may take up Sunday and following days if the Senate doesn’t act on budget legislation.

Obama’s administration is considering options on the budget and other expiring legislation such as extended unemployment benefits, Maryland Rep. Steny Hoyer, the second- ranking House Democrat, said at a news conference.

The House passed a bill in August that would extend the expiring tax cuts for all income levels, and another bill Dec. 20 to replace the automatic spending cuts with other reductions. The House hasn’t addressed some expiring provisions, including a scheduled pay cut to doctors under Medicare and expanded unemployment insurance.

The Senate voted in July to extend George W. Bush-era income tax cuts for one year for individual income up to $200,000 and income of married couples up to $250,000. Reid said House Democrats and some Republicans would join to pass such a plan.

The United States will reach the $16.4 trillion debt limit on Monday, Treasury Secretary Timothy Geithner said Wednesday. Treasury can take so-called extraordinary measures to finance about $200 billion in deficits in 2013.

Typically, that would be enough for two months. Geithner set no specific deadline because of the lack of certainty about tax rates and spending.

_ With assistance from Hans Nichols, Richard Rubin and Heidi Przybyla in Washington.

Adding to the woes confronting the middle class was a pending spike of $2-per-gallon or more in milk prices if lawmakers failed to pass farm legislation by year’s end.

White House aides disputed reports that Obama was sending lawmakers a scaled-down plan to avoid the ‘‘fiscal cliff’’ of tax increases and spending cuts. They gave no indication he would invite congressional leaders to a White House meeting either late Thursday or possibly on Friday.

Top Senate leaders said they remain ready to seek a last-minute agreement. But a little more than four days from the deadline, there was no legislation pending in either the House or the Senate to prevent the tax hikes and spending cuts that economists say could send the economy into a recession.

Far from conciliatory, the rhetoric was confrontational and at times unusually personal.

Senate Majority Leader Harry Reid, D-Nev., accused House Speaker John Boehner of running a dictatorship, citing his refusal to call a vote on legislation to keep taxes steady for most while letting them rise at upper incomes. The bill ‘‘would pass overwhelmingly,’’ Reid predicted, and said the Ohio Republican won’t change his mind because he fears it might cost him re-election as speaker when the new Congress convenes next week.

Boehner seems ‘‘to care more about keeping his speakership than keeping the nation on a firm financial footing,’’ he said in remarks on the Senate floor.

A few hours later, Senate Republican leader Mitch McConnell expressed frustration and blamed the standoff on Obama and the Democrats. ‘‘Republicans have bent over backwards. We stepped way, way out of our comfort zone,’’ he said, referring to GOP offers to accept higher tax rates on some taxpayers.

‘‘We wanted an agreement, but we had no takers. The phone never rang and so here we are five days from the new year and we might finally start talking,’’ McConnell said.

Still, he warned: ‘‘Republicans aren’t about to write a blank check for anything the Democrats put forward just because we find ourselves at the edge of the cliff.’’

Brendan Buck, a spokesman for Boehner, responded in a similar vein to Reid’s comments. ‘‘Harry Reid should talk less and legislate more if he wants to avert the fiscal cliff. The House has already passed legislation to do so,’’ he said, referring to a measure that extends existing cuts at all income levels.

Addressing the GOP rank and file by conference call, Boehner said the next move is up to the Senate, which has yet to act on House-passed bills to retain expiring tax cuts at all income levels and replace across-the-board spending cuts with targeted savings aimed largely at social programs.

‘‘The House will take this action on whatever the Senate can pass - but the Senate must act,’’ he said, according to a participant in the call.

At the same time, Boehner told Republican lawmakers the House would convene on Sunday evening.

The risk of higher milk prices stems from the possibility that existing farm programs will expire at year’s end, and neither chamber of Congress has scheduled a vote on even a temporary extension to prevent a spike. There have been unverified estimates that the cost to consumers of a gallon of milk could double without action by Congress.

The president flew home from Hawaii overnight after speaking with top congressional leaders.

Before leaving the White House last Friday, the president had called on lawmakers to pass scaled-down legislation that prevents tax increases for the middle class, raises rates at upper incomes and renews expiring unemployment benefits for the long-term jobless. He said he still supports a more sweeping measure to include spending cuts to reduce deficits, but said they could wait until the new year.

That capped an unpredictable week in which Boehner pivoted away from comprehensive deficit reduction talks with Obama to an aborted attempt to push legislation through the House that retained existing tax levels except above $1 million. Anti-tax Republicans rebelled at raising rates on million-dollar earners, and Boehner backpedaled and canceled the planned vote.

Without congressional action, current tax rates will expire on Dec. 31, resulting in a $536 billion tax increase over a decade that would touch nearly all Americans. In addition, the military and other federal departments would have to begin absorbing about $110 billion in spending cuts.

Failure to avoid the ‘‘fiscal cliff’’ doesn’t necessarily mean tax increases and spending cuts would become permanent, since the new Congress could pass legislation cancelling them retroactively after it begins its work next year.

But gridlock through the end of the year would mark a sour beginning to a two-year extension of divided government that resulted from last month’s elections in which Obama won a new term and Republicans retained their majority in the House.

The tax issue in particular has been Obama’s first test of muscle after his re-election in November. He ran for a new term calling for higher taxes on the wealthy, and postelection public opinion polls show continued support for his position.

Boehner’s decision to support higher rates on million-dollar earners marked a significant break with long-standing GOP orthodoxy, but the resistance among his rank and file so far has trumped him as well as any mandate the president claims.


Associated Press writers Alan Fram and Jim Kuhnhenn contributed to this report.