Obama, GOP make public pitch as budget talks start in private

William DouglasMcClatchy Washington Bureau,Anita Kumar

WASHINGTON -- As Senate leaders worked feverishly behind closed doors to avert a looming fiscal cliff, President Barack Obama Saturday implored lawmakers to strike a deal that would prevent taxes from rising on the middle class and lay a foundation for the economy to grow and reduce the deficit.

"It's a balanced plan -- one that would protect the middle class, cut spending in a responsible way, and ask the wealthiest Americans to pay a little more," Obama said in his weekly radio address. "And I'll keep working with anybody who's serious about getting a comprehensive plan like this done -- because it's the right thing to do for our economic growth."

Republicans, in their radio address rebuttal, said they agree with Obama about sparing millions of Americans from economic hardship. They just disagree with some of the ways to do it.

"The president's proposal to raise taxes on the top 2 percent of Americans won't even pay one-third of the annual interest that's now owed on this massive $16 trillion debt," Sen. Roy Blunt, R-Mo., vice chair of the Senate Republican Conference, said in his party's radio message. "We still can avoid going over the fiscal cliff if the president and the Democrat-controlled Senate step forward this week and work with Republicans to solve this problem and solve it now."

As the parties repeated their positions in public, Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., were spending the weekend working to find a possible solution to looming tax increases and spending cuts in time for votes Sunday night by both the Senate and the House of Representatives.

Failure to reach agreement by the end of the year Monday evening would mean that all Bush-era tax cuts would expire for all taxpayers, an Obama cut in the payroll tax for Social Security would expire, jobless benefits would dry up for 2 million unemployed, the alternative minimum tax would hit more taxpayers, Medicare payments to doctors would be cut, and $109 billion in federal government spending cuts would start, the first installment toward $1.2 trillion in cuts over two years.

At the center of the private talks Saturday was the question of which Bush-era tax cuts to extend, with Democrats pushing to extend only those on individual income below $200,000 and family income below $250,000, which would mean a tax increase for all income above that. Republicans were pushing to extend all of the tax cuts.

Some of the painful measures were increasingly likely to take effect, at least temporarily.

No one was known to be pushing to extend the cut in the payroll tax, enacted as a temporary measure to put more cash in people's pickets in hopes of stimulating the economy. If the cut expires Monday night, every taxpayer would see their paychecks shrink as that tax goes back to 6.2 percent from 4.2 percent.

Also, House Republicans signaled that they would not agree to stop the automatic spending cuts unless or until they could forge a deal for long-term spending cuts.

If Reid and McConnell fail to reach any agreement, Obama will ask Congress to vote on his original proposal to raise taxes on individual income above $200,000 and family income above $250,000, and also to extend jobless benefits for 2 million unemployed workers.

"I believe such a proposal could pass both houses with bipartisan majorities -- as long as these leaders allow it to come to a vote," he said. "If they still want to vote no, and let this tax hike hit the middle class, that's their prerogative -- but they should let everyone vote. That's the way this is supposed to work."

Blunt in the radio address suggested that Senate negotiators already have a blueprint to work with to avoid the fiscal cliff in legislation passed earlier this year by the Republican-controlled House, including an August vote to extend President George W. Bush-era tax cuts for all incomes for one year. The House measures went nowhere in the Democratic-controlled Senate.

"The House has already passed bills to protect all Americans from burdensome tax increases," Blunt said. "But instead of working across the aisle and considering the House-passed plan to protect taxpayers, Senate Democrats have spent months drawing partisan lines in the sand."

"We're now at the point where, in just a couple days, the law says that every American's tax rates are going up," Obama said. "Every American's paycheck will get a lot smaller. And that would be the wrong thing to do for our economy. It would hurt middle-class families, and it would hurt the businesses that depend on your spending."

For all the talk of fiscal urgency, Capitol Hill appeared quiet on a snowy Saturday morning, except for the usual throng of weekend tourist shuffling through the halls. At the White House, officials said Obama had no public events scheduled for the final weekend before the fiscal cliff deadline.

To keep pressure on Congress, Obama will sit for an interview with NBC's "Meet the Press." It is his 11th appearance on the show but only his second as president. His last appearance was in September 2009 during the battle over revamping the nation's health-care system.

By William Douglas and Anita Kumar
McClatchy Newspapers