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TheStreet Open House

Senate Leaders Seek Fiscal Deal

By Jim Kuhnhenn and David Espo

WASHINGTON -- Senate leaders rushed to assemble a last-ditch agreement to avoid middle-class tax increases and possibly delay steep spending cuts in an urgent attempt to find common ground after weeks of postelection gridlock.

An impatient President Barack Obama pressed top lawmakers to cut a deal, even one that falls short of the ambitions he and congressional leaders may once have harbored for a bigger deficit reduction package. Without a resolution, he warned, "every American's paycheck will get a lot smaller."

"Congress can prevent it from happening, if they act now," he said in his weekly Saturday radio and internet address.

Following a White House meeting Friday among Obama and congressional leaders, aides to Senate Republican leader Mitch McConnell of Kentucky and Senate Majority Leader Harry Reid (D., Nev.) began racing against the clock for a bipartisan bargain. The leaders could present legislation to senators as early as Sunday, with a vote possible on Sunday or Monday.

The guest list for the White House meeting included Reid, McConnell, House Speaker John Boehner (R., Ohio) and House Democratic leader Nancy Pelosi (D., Calif.). But the key players were clearly Reid and McConnell, both of whom stayed behind briefly at the White House and huddled with their staffs and Obama's top legislative aide, Rob Nabors, in the West Wing Cabinet Room just outside the Oval Office.

Neither side expected compromise to be easy. However, McConnell and Reid voiced unexpected optimism that they could work toward a deal that could win support in both their camps.

Warned Reid: "Whatever we come up with is going to be imperfect."

Looking to add pressure on negotiators, Obama said that absent a compromise he expects Reid to put legislation on the floor to prevent tax increases on the middle class and extend unemployment benefits -- an implicit challenge to Republicans to dare to vote against what polls show is popular.

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