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WASHINGTON – Republicans and Democrats bickered and blustered Thursday toward eventual compromise legislation extending expiring Social Security payroll tax cuts and long-term jobless benefits through 2012, each seeking political advantage for elections almost a year distant.
The White House weighed in with a written statement opposing the GOP approach, which presidential press secretary Jay Carney said includes "window dressing" hung by Republicans seeking to cut costs by freezing federal workers' pay through 2015 and reducing the government bureaucracy.
By contrast, President Barack Obama and most Democrats in Congress want to extend and expand the payroll tax cut and pay for it by slapping a 3.25 percent surtax on incomes of $1 million or more.
Senate Majority Leader Harry Reid said Republican opponents "insist on helping the very wealthy while turning their back on the middle class," while another member of the leadership, Sen. Richard Durbin of Illinois, said they "put up a transparent fig leaf" that would kill jobs rather than create them.
In remarks on the Senate floor, the Senate Republican leader, Mitch McConnell of Kentucky, said the issue reflected poorly on both Obama and his allies in Congress.
"There's no reason folks should suffer even more than they already are from the president's failure to turn this jobs crisis around," he said. "But there's also no reason we should pay for that relief by raising taxes on the very employers we're counting on to help jolt this economy back to life."
That left both parties seeking the political high ground — Democrats accusing Republicans of siding with the rich, and Republicans countering that Democrats were taxing small business owners who create jobs — in advance of a pair of Senate test votes expected late Thursday or Friday morning.
Neither of two rival measures was expected to gain the 60 votes necessary for passage, a double-barreled rejection likely to clear the way for talks on a compromise.
Across the Capitol, House Republicans readied legislation of their own that aides said likely would include the tax cut extension as well as renewed benefits for long-term victims of the worst recession in decades and a painfully slow recovery.
House Speaker John Boehner, R-Ohio, made clear that all costs must be paid for, and said higher taxes were a non-starter.
"Republicans are ready to work with the president and the Democrats to extend the payroll tax cut and unemployment insurance temporarily, but they must be offset with spending cuts elsewhere," he said.
There were other issues under negotiation as lawmakers looked toward the end of a highly partisan year, the first in a new era of divided government.
Boehner said lawmakers were discussing a bill to avoid a scheduled 27 percent cut on Jan. 1 in reimbursement rates for doctors treating Medicare patients.
The two parties also looked for agreement on a measure to fund the government through the Sept. 30 end of the budget year.
Boehner added that he likely would try to include some of the 20 House-passed bills that are part of a GOP jobs package in one of the year-end wrap-up bills. Most of the measures would block federal regulations on various industries, and are stalled in the Senate.
With unemployment hovering around 9 percent nationally, Obama urged Congress in September to renew and expand the Social Security payroll tax cut for workers that he signed a year ago, and called as well for an extension of benefits that can cover up to 99 weeks for the long-term jobless.
State unemployment insurance programs guarantees coverage for six months, but as in previous downturns, Congress approved additional benefits in 2008. Expiration of those payments would mean an average loss of $296 in weekly income for 1.8 million households in January, and a total of 6 million throughout 2012.
On the tax cut extension, Republicans prefer a simple one-year continuation of the existing law, jettisoning Obama's call to deepen the cut while expanding it to cover an employer's portion of payroll taxes.
To pay for the measure, Senate Republicans proposed freezing federal workers' pay through 2015 — extending a two-year-freeze recommended by Obama — and reducing the bureaucracy by 200,000 jobs through attrition.
The bill also would raise Medicare premiums for the wealthy, and take steps to deny unemployment benefits and food stamps to anyone with a seven-figure income.
Republicans circulated statistics from the Internal Revenue Service reporting that tax filers with $1 million or more in income received a total of $20.8 million in unemployment benefits in 2009, the latest year for which figures are available. Their bill would impose a 100 percent tax on those payments — an irony for a party that historically has opposed any tax increases.
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Associated Press writer Donna Cassata contributed to this report.
COMMENTARY | What is Congress doing? That was my first question when I read that the disaster aid bill passed by the House was blocked by the Senate. I know the House is led by Republicans and the Senate is led by Democrats. The Senate voted primarily along party lines. This means Republican's passed the bill in the House and Democrats refused to pass the bill in the Senate. That's got to be a huge blow to everyone suffering from the recent natural disasters.
Of course, it's not so much the refusal to pass the disaster aid bill. It's more Congress' refusal to pass anything. Everything passed this year has been passed just as the clock was set to expire. That's not the making of an efficient government. In fact, I think this is the most inefficient government I've ever seen.
It narrowly averted a shutdown and debt limit breach in August only to have to revisit the high deficit and a potential shutdown in September. If it does pass a measure to keep the government open it will only last until Nov. 18.
Doesn't Congress have anything better to do than keep revisiting the same issues? I don't want to see this budget issue come up again in November, then in December and January. In fact, it could keep doing this until the end of this presidential term. In which case, I'm pretty sure Obama wouldn't see a second term. I'm not sure he'll see a second term anyway. His idea of "hope and change" certainly wasn't my idea of hope and change.
I do know that I'm sick and tired of reading about the same issues. The federal deficit, the budget, and the disaster aid relief should have been decided and settled months ago. You'd think with a split party Congress they'd come up with some awesome compromises that would benefit the American people by reducing the deficit, helping those who have been harmed by natural disasters, create jobs, and reduce unemployment. Instead, I guess they're just focused on the 2012 elections, their own salaries, and pork.
Congress is just simply not getting anything done. Along with the disaster aid bill, Congress needs to pass 12 other financial bills before Oct. 1. It has one week to do it. I think it will get it done, but I think it will get it done on Sept. 30 at 11:59 p.m., and I, along with the rest of the American people, will be livid.
WASHINGTON (Reuters) – The Congress set the stage for another last-minute budget showdown as lawmakers delayed action on a broad spending bill until Monday, shortly before disaster relief funds will run out completely.
This time, the brinkmanship threatens to disrupt assistance to victims of floods, wildfires and other natural disasters in one of the most extreme years for weather in U.S. history.
That money could run out as soon as Tuesday, but Republicans and Democrats appeared no closer to a solution after a week of legislative maneuvering.
A billion-dollar dispute over an electric-vehicle program favored by Democrats is preventing Congress from passing a trillion-dollar bill that would replenish disaster funds and ensure the government keeps running past October 1, the start of the new fiscal year.
"Everyone, once in a while, needs a little cooling off," Senate Democratic Leader Harry Reid said. "We'll come here Monday and more reasonable heads will prevail."
Reid spoke after the Democratic-controlled Senate, by a vote of 59 to 36, rejected a version that had passed the Republican-led House of Representatives.
Lawmakers have tried to lower the temperature on Capitol Hill after a series of acrimonious budget battles rattled markets, spooked consumers and disgusted voters.
Still, the stark partisan divide over spending that has dominated Washington this year once again threatened Congress' ability to pass even the most basic legislation.
The bill in question would give the Federal Emergency Management Agency more disaster relief money and ensure that the government can continue operating while Congress debates a full 2012 budget.
Failure to act by then would force the government to suspend everything from space exploration to river dredging. It also would disrupt a flood-insurance program, delivering a further hammer blow to the troubled housing market.
ADDING TO UNCERTAINTY
Analysts and lawmakers said a government shutdown remains unlikely at this point as Congress now routinely resolves budget disputes at the last possible minute. But the wrangling adds further uncertainty to markets that are already on edge.
"Something like this is just a reminder of a lack of policy response by government, not only here in the U.S. but across the globe, in coming up with solutions to the financial and economic problems that we face," said Gary Pollack, managing director at Deutsche Bank Private Wealth Management.
Democrats and Republicans remained at odds over a $1.5 billion cut to an electric vehicle program championed by President Barack Obama.
Republicans proposed the cut to partially offset the added disaster costs to avoid adding to the nation's fiscal woes.
Democrats point out that Congress usually exempts disaster money from normal budget rules. They say the cut would threaten thousands of manufacturing jobs at a time when the country is struggling with 9.1 percent unemployment.
The Senate is scheduled to vote on Monday on a version of the bill that would restore the car loan program. The chamber's top Republican, Mitch McConnell, predicted it would fail.
The dispute throws into question lawmakers' ability to find common ground on the more painful choices they will have to confront in the coming months as a special bipartisan committee searches for trillions of dollars in budget savings.
"Any delay that occurs because of inaction in the Senate will only imperil needed disaster relief for these thousands of families all across our country," House Speaker John Boehner, the top Republican in Congress, said at a news conference.
Boehner has so far declined to give ground to Democrats as he seeks to control a rebellion from his party's conservative Tea Party faction, which is pressing for deeper spending cuts.
Democrats have shown an increased reluctance to compromise after a year of bruising budget battles has left their liberal supporters feeling like they have already given away too much.
Budget fights in Congress earlier this year pushed the government to the brink of a shutdown in April and the edge of default in August, leading to a cut in the country's top-notch AAA credit rating.
(Additional reporting by Donna Smith, Susan Cornwell and Thomas Ferraro in Washington and Karen Brettell, Rodrigo Campos and Richard Leong in New York; editing by Ross Colvin and Eric Walsh)
Obama brushed off question about whether the debt limit is constitutional at Wednesday press conference (Carolyn …As both major parties debate their conditions for raising the nation's debt ceiling, some Senate Democrats and constitutional scholars are questioning whether the limit is constitutional in the first place. Delaware Sen. Chris Coons told The Huffington Post this week that he's part of a group of lawmakers now examining whether, in the case that debt negotiations fail, the Treasury could ignore Congress and continue paying its bills on time.
"This is an issue that's been raised in some private debate between senators as to whether in fact we can default, or whether that provision of the Constitution can be held up as preventing default," Coons told Huffington Post reporters Ryan Grim and Samuel Haass. "[I]t's going to get a pretty strong second look as a way of saying, 'Is there some way to save us from ourselves?' "
Critics of the debt limit cite the Fourteenth Amendment to the Constitution, which states: "the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." (Emphasis ours)
Of course, the Fourteenth Amendment is open to wide, and varying, interpretation and debate. The most basic question here is, does a limit on debt "question" the "validity" of the debt?
Legal scholar Garrett Epps, writing in The Atlantic in April, said that a case could easily made for simply ignoring the congressionally mandated debt limit.
"This provision makes clear that both the monies our nation owes to bondholders, and the sums promised in legislation to those receiving pensions set by law from the federal government, must be paid regardless of the political whims of the current congressional majority," Epps wrote.
In essence, Epps argues that Obama should stand before Congress and say, Tough luck--the Constitution says we can't default. Epps argued that in the event that Congress does not act, Obama should (and could) instruct the Treasury Department to issue "binding debt instruments on the world market sufficient to cover all the current obligations of the United States government, even in default of Congressional action to meet those obligations."
President Obama's own views on the subject, however, are unclear. During his press conference Wednesday, Obama dodged a question about the debt limit's constitutionality, telling NBC's Chuck Todd: "I'm not a Supreme Court justice, so I'm not going to put my constitutional law professor hat on."
Obama understandably didn't want to show his cards by hashing out a plan for how he would act in the event Congress fails to raise the debt ceiling. But some observers have already outlined how he could--and still get away with it.
Writing in the Financial Times in April, Former Reagan adviser and Treasury official Bruce Bartlett said the Obama administration could justify ignoring Congress to ensure the nation pays its debts.
"The president would be justified in taking extreme actions to protect against a debt default. In the event that congressional irresponsibility makes default impossible to avoid, he should order the secretary of the Treasury to simply disregard the debt limit and sell whatever securities are necessary to raise cash to pay the nation's debts. They are protected by the full faith and credit of the United States and preventing default is no less justified than using American military power to protect against an armed invasion without a congressional declaration of war," Bartlett wrote. "Under those circumstances, when default is the only possible alternative, I believe that the president and the Treasury secretary would be justified in taking extraordinary action to prevent it, even if it means violating the debt limit."
However, if Obama were to follow that route, it's still unclear how the courts would rule.
Grim and Saass point to the 1935 Perry v. U.S Supreme Court ruling, which determined that the language in the Fourteenth Amendment does apply to the national debt. What's more, they observe, according to the majority opinion on the case, no act of Congress can undermine promises of debt payment from the federal government.
"To say that the Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise; a pledge having no other sanction than the pleasure and convenience of the pledgor," wrote Chief Justice Charles Evans Hughes, who presided over the case.
Even with that precedent, however, the specific debt limit as we know it today has not yet seen its day in court. Should the White House's negotiations with Congress on the debt ceiling fail, it will be up to Obama to decide whether he wants to start that fight, which would no doubt require years-long court battles to settle.
COMMENTARY | If the House Democrats thought they were finally out of the woods with the resignation of Anthony Weiner, it appears they have thought wrong. The latest congressman to be involved in a sex scandal is Rep. Alcee Hastings, D-Fla.
According to the Wall Street Journal, Hastings is being investigated by the Office of Congressional Ethics for allegedly sexually harassing a member of his staff. The staffer in question, Winsome Parker, worked for the Commission on Security and Cooperation in Europe, a Cold War era entity that Hastings heads. Parker alleges instances of sexual harassment, usually involving inappropriate remarks, lasting just more than two years. She further alleges the congressman retaliated against her when she tried to report the matter. A lawyer for Rep. Hastings denies the allegations.
It is unknown whether the investigation will be referred to the House Ethics Committee. If that happens, one can only think that House Minority Leader Nancy Pelosi is not going to be happy. Her forlorn hope of ever becoming Speaker of the House again will just get all that more forlorn. Getting her caucus snake bit with another sordid scandal is something she does not need right at the moment. The is especially true as she needs to begin accusing Republicans of wanting to kill old people again and not have to explain why her members have impulse control issues.
Hastings actually came to Congress with an ethical cloud hanging over him, having been removed from the bench for conspiring to take a bribe. The jury, however, failed to convict him on that charge.
To be sure, what Hastings is accused of seems positively decorous compared to what Weiner did. But ever since Clarence Thomas, lewd behavior toward a subordinate has become quite unacceptable. This is true in the corporate world as well as in politics.
The Hastings matter has not yet risen to the level in which it has caused calls for resignation, daily coverage in the media, and become the subject of jokes by late night comedians. It could be that the matter will be dealt with quietly, either with Hastings being absolved, or with him being found guilty and having some kind of sanction imposed on him that would be less than having to resign from the Congress. Nancy Pelosi should hope that will be the case. Otherwise she has another distraction on her hands.
The tension between Congressional Republicans and the White House is manifesting itself on multiple fronts on Friday. House Republicans will vote on a resolution to limit what the American military can do in the Libyan intervention--and many Democrats are likely to join them, despite a last-minute appeal from Secretary of State Hillary Clinton Thursday, Politico's Jonathan Allen reports. "The president has not developed strong relationships with members of Congress that would allow members to even look at the politics of this," Rep. Maxine Waters told Allen.
Related: GOP Intensifies Demands for Votes to Raise the Debt Ceiling
Meanwhile, negotiations over raising the debt ceiling--which many experts say absolutely has to be done--are falling apart, as Minority Leader Eric Cantor quit talks led by Vice President Joe Biden Thursday. Sen. Jim DeMint said raising the debt limit would be "the most toxic vote" for Republicans, one that would "set [the party] back many years."
Starting at 12:30 p.m., the House will begin voting on two resolutions--one, modeled on a Senate proposal put forward by John Kerry and John McCain, would prohibit ground troops in Libya but otherwise authorize the war. That one will likely fail, Allen reports. The second would bar American bomb strikes, whether by drones or piloted aircraft. Senate Majority Leader Harry Reid "has no intention of letting the bill become law," Allen writes, but "the White House is worried about the political fallout of losing a vote on the House floor." An anonymous Democratic aide explained, "They don't want to be embarrassed." But that's exactly what Republicans are predicting.
As for the stalled debt limit talks, The Hill's Molly K. Hooper reports that Republicans had planned for Cantor to bail for weeks. The Republican Study Committee, a conservative group of lawmakers, "wants Obama to publicly float a solution to the current debt-ceiling quandary," Hooper writes. "That way Republicans will know Democrats cannot back out at the last minute by saying the final deal was not acceptable to Obama," according to the RSC's budget chair, Rep. Scott Garrett.
Related: Debt and Taxes: Eric Cantor's Hot Potato Game With Boehner
But DeMint doesn't want to see a deal at all. "I can tell you if you look at the polls, Democrats, Republicans, Independents, they do not think we should increase the debt limit," he said. As ABC News' Jonathan Karl and Sunlen Miller report, "DeMint is not just talking political analysis here. He has a significant fundraising base and has shown a willingness to use his campaign money to support or oppose fellow Republicans."