WASHINGTON -- With congressional leaders set to trek over to the White House for perhaps the last high-stakes meeting before the fiscal cliff is hit, the contours of a last-ditch deal are faintly emerging.
The president will reportedly propose a scaled-down offer during that 3:00 p.m. meeting with House Speaker John Boehner (R-Ohio), Senate Minority Leader Mitch McConnell (R-Ky.), House Minority Leader Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.). Meanwhile, on the Hill, various congressional aides outlined a proposal that had the potential to resolve the stand-off.
House Republicans expect Obama may offer to extend the Bush-era tax rates for incomes under $400,000, as he had done previously before negotiations blew up. The president had originally argued that any scaled-back deal should set that threshold at $250,000. Republicans still may insist that it be set at $500,000.
In addition, Republicans would be granted an extension of the current estate tax, which is a 35 percent rate over a $5 million threshold. The president wants a 45 percent rate on a $3.5 million threshold but would likely be willing to bend, in part because congressional Democrats are skittish about his proposal.
The deal would include an extension of unemployment benefits and various tax breaks for businesses and lower-income workers. In a concession to Republicans, it would not include the infrastructure funding that the president has requested to help stimulate economic growth. It would also allow the current payroll tax cut to expire, meaning that individuals would see larger withholdings in their paychecks.
The deal would delay sequestration, which if left in place would result in roughly $1 trillion in spending cuts over the next decade. It would leave the debt ceiling issue unresolved. That would give Republicans hope of using future leverage to secure additional spending cuts and entitlement reforms. A top Obama administration official has insisted that they don't view an unresolved debt ceiling fight as too generous a concession because, as a matter of principle, the president will not negotiate with Republicans over raising it down the road.
The New York Times' John Harwood reported on Friday, citing a Republican source, that the deal would probably last just a couple of months, serving as a placeholder while lawmakers assemble a larger bill to take its place.
In the run-up to the meeting, neither side is holding out much hope for an agreement, even as outlined above. One top congressional aide said that any talk of a stopgap or scaled-down deal was, at this juncture, just conjecture, as there was "no paper" or formal discussions on which to base negotiations.
Administration officials reiterated on Friday that they want an assurance from McConnell that he won't filibuster any final arrangement. They continue to argue that they could pass a deal extending the tax rates for incomes under $250,000 absent a 60-vote threshold in the Senate.
Meanwhile, McConnell and Boehner want to see a legislative proposal before making any such agreements.
"The president says he is going to give us guidance about where he wants to go," said McConnell spokesman Don Stewart. "We are going to listen and then get going."
There remain a number of details and disagreements to hammer out. Take, for instance, a legislative fix to ensure that doctors don't end up getting paid less for treating Medicare patients. One Democratic official said that while both sides were on board with passing a "doc-fix," it wouldn't be simple or easy. Republicans want it to be paid for and are eyeing money for preventative medical services, as included in the president's health care reform law, as a means for doing so. Democrats are opposed to such a proposal.
"There are a number of issues that can trip this up," the Democratic official said.
UPDATE: 1:10 p.m. -- In a story posted Friday afternoon, The New York Times confirmed many of the above details as being part of a potential scaled-back deal to avert the fiscal cliff. The one difference: the Times reports that sequestration would remain in place, to be dealt with next year.