By Alexander Bolton – 12/31/12 08:51 PM ET

Democratic opposition to a fiscal cliff deal negotiated between Vice President Biden and Senate Republican Leader Mitch McConnell (R-Ky.) is holding up a deal to extend tax rates and postpone spending cuts.

Biden will meet with the Senate Democratic caucus at 9:15, Senate Majority Leader Harry Reid’s office announced. The meetings comes after labor leaders, progressive groups and some Democrats have criticized the tax deal Biden negotiated.

Senate Democrats say they will not sign off on the deal because of details related to the extension of the estate tax. Biden and McConnell agreed to set the estate tax at 40 percent and exempt inheritances below $5 million.

But Senate Democrats do not want to index the estate-tax exemption to inflation, even though Republicans say Biden already agreed to the indexing.

“That’s never going to happen,” a senior Senate Democratic aide said of the Republican demand to raise the inheritance tax exemption to keep pace with inflation. The aide denied that Biden had ever agreed to indexing the level.

But Democrats are divided on the issue. Senate Finance Committee Chairman Max Baucus (D-Mont.) said he supports pegging the estate tax exemption to inflation.

Republican aides familiar with the talks say Biden signed off on the deal early Monday morning in order to prevent tax hikes from hitting the middle class. With no action, most households would see their taxes rise and the estate tax would jump to 55 percent for inheritances over $1 million.

“Biden signed off on all of it last night,” said a GOP official.

A senior Democratic aide, however, countered, “that’s not true.”

President Obama in comments Monday afternoon also appeared to suggest the deal between McConnell and Biden would hold, saying the sides were close to an agreement though it was “not done yet.”

Republicans say Senate Majority Leader Harry Reid (D-Nev.) has raised various last-minute objections to the deal. They say the first one came at 6 a.m. Monday when Reid balked at language relating to the automatic spending cuts known as the sequester.

The Senate went into recess subject to the call of the chair after 8 p.m. on Monday, leaving it unclear whether there would be a deal or votes in the upper chamber before midnight, when tax rates are set to expire.

A Senate Democratic aide insisted Reid has not yet signed off on what Biden negotiated.

It even appeared that Reid was not fully aware Biden and McConnell had begun substantive negotiations on Sunday as one Senate Democratic aide expressed doubt at the time that the talks were actually taking place.

 

Read Full Article Here