Lawmakers ramp up the rhetoric, with no plan in sight to avert fiscal crisis

Dec. 18, 2012: Senate Majority Leader Harry Reid speaks to reporters following a Democratic policy luncheon on Capitol Hill.

Dec. 18, 2012: Senate Majority Leader Harry Reid speaks to reporters following a Democratic policy luncheon on Capitol Hill.  (AP)

The rhetoric heated up Thursday as time on the clock wound down for a fiscal crisis deal, with lawmakers trickling back into Washington and no plan of action in place for averting the tax hikes and spending cuts scheduled to hit next week.

President Obama returned Thursday afternoon from vacation in Hawaii, as the Senate gaveled into session for unrelated business. House leaders announced that members will return late Sunday – but that leaves just one full day to act on any legislation before the deadline passes.

Rumors were flying Thursday afternoon about last-ditch efforts to craft some sort of a scaled-back package that can shield most Americans from the more than $500 billion in tax hikes scheduled to take effect Jan. 1. Congressional leaders are expected to meet with Obama on Friday.

But with hope fading, Senate Democratic Leader Harry Reid said on the floor that “it looks like” the nation is going to miss the deadline.

Reid also put all the blame on House Speaker John Boehner, likening him to a dictator and claiming he was putting his speakership before the good of the country.   

"John Boehner seems to care more about keeping his speakership than about keeping the nation on firm financial footing," Reid said. "He's waiting until Jan. 3 to get re-elected as speaker before he gets serious with negotiations because he has so many people ... that won't follow what he wants."

Boehner's office quickly shot back: "Senator Reid should talk less and legislate more. The House has already passed legislation to avoid the entire fiscal cliff. Senate Democrats have not," Boehner spokesman Brendan Buck said.

Senate Republican Leader Mitch McConnell said on the floor that his party has "bent over backwards."

"We stepped way, way out of our comfort zone," he said. We wanted an agreement, but we had no takers. The phone never rang. So here we are five days from the new year and we might finally start talking."

But he also warned, "Republicans aren't about to write a blank check for anything the Senate Democrats put forward just because we find ourselves on the edge of the cliff."

Separately, Vice President Biden said he was neither optimistic nor pessimistic about a deal. “You tell me what will attract Republican votes and I will tell you” what sort of plan might work, he said.

Each side continues to call on the other to act.

Reid, on the floor, urged the House to pass a Senate bill that would extend current tax rates for most families but let them rise on top earners. Reid, who wants Boehner to let the bill pass with mostly Democratic votes, claimed the chamber was "being operated with a dictatorship of the speaker."

Boehner earlier put the onus on the Senate, referring to two Republican-passed bills in his chamber -- one extending current tax rates for everyone; the other rearranging the $110 billion in spending cuts set to hit next year.

“The Senate first must act,” he and other GOP leaders said late Wednesday.

McConnell’s aides, meanwhile, claimed they expected some sort of plan to emerge from the Democratic side.

After Obama spoke separately with all four congressional leaders Wednesday before leaving Hawaii, McConnell spokesman Don Stewart said: “The leader is happy to review what the president has in mind, but to date, the Senate Democrat majority has not put forward a plan. When they do, members on both sides of the aisle will review the legislation and make decisions on how best to proceed.”

With each side refusing to make the first move, it may be incumbent upon Obama to give a negotiated bill one last try, presuming he can get all the stakeholders in the same room. Also unclear is what role McConnell, who has stayed largely quiet throughout this debate, may play in pushing for an 11th-hour deal.

A new Gallup poll, though, showed Americans are growing increasingly pessimistic about the chances for an agreement over the next few days. Considering the time it takes to write and pass a bill of this magnitude, the best route for averting tax hikes may be to pass a short-term extension of current rates with the goal of approving a larger package early next year.

Lawmakers have not even agreed to that, though. Without a deal, more than $500 billion in tax hikes are scheduled to go into effect. This includes increases in income tax rates, investment tax rates, the estate tax, the payroll tax and other provisions. Budget cuts to the Pentagon and other federal agencies threaten to hit government contractors. All together, a prolonged failure to avert these policies could cause another recession, economists warn.