Senate negotiators search for deal to avoid the ‘fiscal cliff’

Still no deal.

There were signs of renewed effort in the talks to resolve the “fiscal cliff” crisis late Sunday afternoon. For one thing, direct talks had begun between Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Biden. Republicans exiting a mid-afternoon caucus meeting said that McConnell had excused himself to take a call from the vice president.

Those two Washington veterans have become the capital’s unofficial closers, hammering out the agreement that resolved a fight over tax cuts in late 2010, and the debt-ceiling crisis in August 2011.

But their task could could prove far more difficult this time around.

Less than 36 hours remain now before a package of painful tax hikes and spending cuts start to kick in. Even if a deal is struck, it will have to be passed by both the Democrat-controlled Senate and then the GOP-held House — running the gauntlet of a gridlocked Washington on new year’s eve.

Previously, it had been assumed that the more difficult task would be gathering Republican votes, given the House’s rebellious GOP caucus. But on Sunday, it appeared that Democrats, instead, were the ones standing in the way: Senate Majority Leader Harry M. Reid (D-Nev.) seemed to suggest that the stalemate was the fault of Democrats and the White House. They had been unable to produce a counter-offer to a proposal McConnell delivered to Reid’s office Saturday evening — nearly 19 hours earlier.

“I have had a number of conversations with the president, and at this stage we’re not able to make a counter-offer,” Reid said, adding of McConnell’s talks with Biden: “I wish them well.”

Senior Republican aides said McConnell decided to turn to Biden after it became apparent that aides to Reid were slow-walking the negotiations.

One sign of potential progress came late Sunday, when Republicans appeared to have dropped a key demand that had stalled the negotiations earlier in the day: that Democrats agree to a cost-saving, but politically sensitive, reduction in Social Security benefits. This demand, called “Chained CPI,” effectively reduces the cost-of-living increases in Social Security benefits over time.

Previously, the GOP had demanded this in exchange for President Obama’s request to extend emergency unemployment benefits and cancel deep cuts to the Pentagon and other agency budgets. A Democratic aide close to the talks described the request as a “poison pill.”

But, late Sunday, one GOP leader said it had been a demand that the GOP had expected to withdraw. A bargaining chip, which they had now given away.

“I don’t think anybody ever expected Social Security to be a part of this,” Sen. John Cornyn (R-Tex.) said after leaving the meeting with McConnell. He said McConnell’s aides included it in their offers as a standard negotiating tactic — “start big and get skinny,” he called it. Cornyn said it had always been something that Republicans expected Democrats to object to, and that it would be removed from GOP follow-up offers.

As afternoon edged into evening, there was still a good deal of pessimism on Capitol Hill.

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Senate negotiators search for deal to avoid the ‘fiscal cliff’