President Barack Obama will meet Friday with the top leaders in the House and Senate, several hours past the deadline for averting automatic budget cuts, to discuss how to proceed on divisive tax-and-spend issues.
Because the meeting is set to take place well after Friday's deadline for the so-called sequester to kick in, it appears both sides are operating under an assumption that a deal to avert the cuts ahead of the deadline is now out of the question.
Senate Republican leader Mitch McConnell said the session will focus on ways to reduce government spending, but he also said he will not back down on his opposition to any new revenues. McConnell, along with House Speaker John Boehner, Senate Democratic leader Harry Reid and House Democratic leader Nancy Pelosi, will attend meeting at the White House.
"We can either secure those reductions more intelligently, or we can do it the president's way with across-the board cuts. But one thing Americans simply will not accept is another tax increase to replace spending reductions we already agreed to," said McConnell, R-Ky.
The meeting reflects a move to jumpstart negotiations after weeks of inaction on cuts that both parties have said could inflict major damage to government programs, the military and the economy at large. No serious talks to avert the cuts have been under way, and Friday's meeting will be the first face-to-face discussion between Obama and Republican leaders this year.
The White House has warned that the $85 billion in cuts could affect everything from commercial flights to classrooms and meat inspections. The cuts would slash domestic and defense spending, leading to forced unpaid days off for hundreds of thousands of government workers. (Read More: Toddlers to Teachers Face Pain From Budget Cuts)
The impact won't be immediate. Federal workers would be notified next week that they will have to take up to a day every week off without pay, but the furloughs won't start for a month due to notification requirements. That will give negotiators some breathing room to keep working on a deal. (Read More: From Schoolhouse to Factory Floor, Girding for Cuts)
On Thursday, the Senate is expected to stage votes on competing Democratic and GOP plans to deal with the automatic cuts, known as a sequester in Washington-speak. But Democrats were poised to vote down a GOP plan to give Obama flexibility to redirect money from lower priority accounts to top priorities such as air traffic control, federal law enforcement and military readiness.
Republicans, in turn were set to kill by filibuster a Democratic measure that would forestall the automatic cuts through the end of the year, replacing them with longer-term cuts to the Pentagon and cash payments to farmers and installing a minimum 30 percent tax rate on income exceeding $1 million.
The GOP alternative measure has yet to be released but Republicans were circulating a measure that would give Obama authority to propose a rewrite to the 2013 budget to redistribute the cuts. Obama would be unable to cut defense by more than the $43 billion reduction that the Pentagon currently faces, and would also be unable to raise taxes to undo the cuts. The GOP plan would allow the Obama proposal to go into effect unless Congress passed a resolution to overturn them.
The idea is that money could be transferred from lower-priority accounts to accounts funding air traffic control or meat inspection. But the White House says that such moves would only offer slight relief. At the same time, however, it could take pressure off of Congress to address the sequester. (Read More: Job Cuts From Sequester Could Be Expensive)
Senate Democrats have prepared a measure that would forestall the automatic cuts through the end of the year, replacing them with longer-term cuts to the Pentagon and cash payments to farmers, and by installing a minimum 30 percent tax rate on income exceeding $1 million. That plan is virtually certain to be toppled by a GOP-led filibuster vote later this week.
In the House, where Republicans in the last Congress passed legislation to replace the cuts, Boehner has said it's now up to Obama and the Senate to figure a way out. The Senate never took up the House-passed bill.