The Senate won’t consider a small- scale bill to avoid an expansion of the alternative minimum tax or a cut in Medicare reimbursements to physicians if no broader budget deal is reached, Senate Majority Leader Harry Reid said.
Reid, a Nevada Democrat, said today the Senate won’t address any tax or spending provisions that expire at year’s end unless Republicans agree to let tax rates rise for the top 2 percent of earners, as Democrats are demanding.
“As long as they do something on rates, I am happy to talk to them about anything,” Reid said in an interview. Pressed on whether he would refuse to move a smaller scale bill if Republicans won’t budge on rates, Reid said, “That’s right.”
President Barack Obama and House Speaker John Boehner are at an impasse in talks over how to avert more than $600 billion in spending cuts and tax increases, the so-called fiscal cliff, scheduled to start taking effect in January. Obama and congressional Democrats have said they won’t discuss spending cuts unless Republicans agree to higher tax rates for top earners.
Obama, walking across Pennsylvania Avenue to Blair House today for a holiday party, waved and said the budget talks were “still a work in progress” when asked whether he thought there would be a deal by Christmas.
Also today, Boehner repeated his insistence that Obama’s budget proposal is “anything but” balanced, and accused the president of being “not serious” about cutting spending.
Still, the speaker today didn’t rule out allowing a House vote on extending tax cuts for income up to $250,000 a year for married couples, as Obama has demanded, if a broader tax-and- spending deal isn’t reached soon.
“The law of the land today is that everyone’s income taxes are going to go up on Jan. 1,” Boehner said when asked by reporters if he would rule out such a vote. “I have made it clear I think that is unacceptable. Until we get this issue resolved, that risk remains.”
Reid said earlier today he is “really mystified that we haven’t had significant movement from the Republicans” in the talks. He said Obama has indicated he would agree to “take some looks” at spending cuts once Republicans agree on higher tax rates for top earners.
House Minority Leader Nancy Pelosi, a California Democrat, said that talk of deeper spending cuts demanded by Republicans should await discussions on a tax overhaul next year.
“Don’t even think about using” an increase in the Medicare eligibility age to reduce spending, Pelosi said. Democrats won’t throw “America’s seniors over the cliff to give a tax cut to the wealthiest in America,” she said.
The Standard & Poor’s 500 Index snapped a six-day gain, falling 0.6 percent to 1,420.38 at 12:40 p.m. New York time. The Dow Jones Industrial Average dropped 59.48 points, or 0.5 percent, to 13,185.97. Yields on the benchmark 10-year Treasury note rose two basis points to 1.72 percent.
Obama this week reduced his demand for new tax revenue to $1.4 trillion from $1.6 trillion. Boehner said the plan wouldn’t pass the Republican-controlled House.
The alternative minimum tax, a parallel tax system created to ensure that wealthy individuals couldn’t avoid all taxes, is scheduled to affect about 28 additional million households for tax year 2012, up from about 4 million otherwise.
Without legislation to prevent that, the Internal Revenue Service has said it would delay tax filing scheduled to start in January until at least late March for more than 60 million filers. Action isn’t required, though inaction would cost taxpayers $92 billion in early 2013, according to the nonpartisan Joint Committee on Taxation.
“AMT is obviously something that needs to be taken care of, because it’s going to affect millions of Americans,” said Representative Tom Reed, a New York Republican on the House Ways and Means Committee. “There’s significant policy that needs to be attended to, and I hope, sooner than later, that we get to those issues.”
If Congress doesn’t act by Jan. 1, Medicare payments to physicians will drop by 26.5 percent. Lawmakers regularly act to prevent the cut or restore it retroactively in what has become known as the “doc fix.”
Senator Richard Durbin of Illinois, the chamber’s second- ranking Democrat, told reporters that Democratic leaders met today with doctors who were concerned about the cut in reimbursement rates.
Representative Dave Camp, chairman of the House Ways and Means Committee, said today in an interview that he was continuing to explore alternatives, noting that Congress is running out of time to address the AMT and physician reimbursement rates.
“Many of us were looking at the possibility of a larger package, and it doesn’t look like that’s coming together,” said Camp, a Michigan Republican who is part of Boehner’s negotiating team. “I think those others, it’s uncertain how they’re going to be addressed.”
House Majority Leader Eric Cantor, a Virginia Republican, said the House next week will consider several “expiring provisions” without offering details.
Cantor was referring to the possibility the House could extend current farm programs and take up legislation to prevent a drop in physician reimbursements from Medicare, said three Republican leadership aides who weren’t authorized to speak publicly.
By Kathleen Hunter
Courtesy of Bloomberg News