Grand bargain shrinks as Congress nears U.S. budget deadline

The deal that seems possible to fix the U.S. budget is getting smaller and smaller.

Five days before a deadline that would trigger more than $600 billion in tax increases and spending cuts that could cause a U.S. recession, Congress will return Dec. 27 amid calls for action in the Senate.

The politics of progress there are easier than in the Republican-controlled House of Representatives, which balked last week at Speaker John Boehner’s plan for tax increases on income above $1 million. Still, the House would have to sign off next. Boehner and President Barack Obama have been unable to agree on the tax-rate increase on top earners Obama wants or the cuts to entitlement programs that Boehner sought, complicating the chances of getting a package done.

“At this point, all they’re looking for is a fig leaf,” said Stan Collender, a former staff member of the House Ways and Means Committee and the House and Senate Budget committees who is now at Qorvis Communications in Washington. “There’s no grand bargain. There never was.”

The Senate is run by Democrats, and some Republican members, including Kay Bailey Hutchison of Texas, have said that they would favor a small deal on parts of what the president has sought to avoid raising taxes on the middle class.

The trouble is that Senate Majority Leader Harry Reid, a Nevada Democrat, and Minority Leader Mitch McConnell, a Kentucky Republican, need to come up with something that also can get through the House, which has balked at any tax increases. Senate Republicans don’t want to be on the record supporting higher taxes unless they know the House also would pass it.

Still a Chance

“There’s still a chance for them to get a deal,” said Ron Bonjean, a Republican strategist who formerly served as a spokesman for House Speaker Dennis Hastert and Senate Majority Leader Trent Lott. “It grows more unlikely by the day, and there’s not a lot of days left.”

Obama plans to leave for Washington today from his Christmas vacation in Hawaii, while his family will stay behind, the White House said yesterday. Lawmakers plan to return tomorrow, the same day Obama will arrive in Washington.

Bonjean put the probability of no deal at 75 percent. Still, he said there’s a chance for one because the president and Republican leaders want to avoid the “fiscal cliff” -- a term coined by Federal Reserve Chairman Ben S. Bernanke in testimony before the House Financial Services Committee in February. Tax cuts signed into law by President George W. Bush and extended by Obama are scheduled to expire Jan. 1, and automatic spending cuts are scheduled to start next month, creating the so-called cliff.

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