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Geithner set for talks on cliff; senator sees "standoff"

Treasury Secretary Timothy Geithner speaks at the Institute of International Finance (IIF)'s annual meeting in Tokyo October 11, 2012. REUTE
Treasury Secretary Timothy Geithner speaks at the Institute of International Finance (IIF)'s annual meeting in Tokyo October 11, 2012. REUTE

By Fred Barbash

WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner, President Barack Obama's chief negotiator in talks to avert the "fiscal cliff," will meet with Congressional leaders on Thursday amid signs that the market-rattling uncertainty about the outcome could go down to the wire.

"It is not going to happen soon," Republican Senator John Barrasso of Wyoming, the Senate's fourth-ranking Republican, said in a Fox Business News interview Wednesday evening of an agreement to avoid the tax hikes and spending cuts that will be triggered on January 1 without an act of Congress.

"I think right now" it's "a little bit of a standoff," Sen. John Thune, the third-ranking Republican in the Democratic- controlled Senate, told CNN late Wednesday.

The announced schedule of Geithner's meetings Thursday suggested relatively contained chats with Republicans rather than intensive negotiations.

The Treasury Secretary, accompanied by Obama's top legislative aide, Ron Nabors, is set to meet first with Senate Democratic Leader Harry Reid at about 10 a.m. EST followed 45 minutes later by a session with Republican leaders of the House of Representatives, including Speaker John A. Boehner, Majority Leader Eric Cantor, House Budget Committee Chairman Paul Ryan, fresh off his Republican vice-presidential campaign, and the chairman of the House's tax writing Ways and Means Committee, Dave Camp.

The president's emissaries will lunch with Republican Senate Minority Leader Mitch McConnell followed by a meeting with House Minority Leader Nancy Pelosi.

At immediate issue is whether the tax cuts that originated in the administration of President George W. Bush should be extended beyond December 31 for all taxpayers including the affluent, as Republicans want, or just for less wealthy taxpayers, with income under $250,000, as Democratic President Obama wants.

Despite a few cracks in Republican ranks, most notably from Republican Representative Tom Cole of Oklahoma, neither side has budged significantly from its position, leaving the markets and political analysts alike to grasp at wording nuances.

It's become clear during the post-election lame-duck session of Congress that until the two sides get over the immediate tax issue, they will not move forward to serious discussions on longer-term deficit reduction and tax reform, though both have expressed interest in doing so.

Keeping the nation in suspense down to a white-knuckled deadline has become the rule rather than the exception for Congress in recent years.

Whether the risk has been a government shutdown or, as in the events that led to the fiscal cliff, default for failure to raise the U.S. government's borrowing power, Republicans and Democrats have needed the pressure of time and possible disaster to bring them together.

The last standoff, over the debt ceiling in 2011, was settled by scheduling across-the-board automatic-budget cuts of about $500 billion - the sequestration part of the fiscal cliff - to take effect just as the tax cuts expire.

While little visible progress has been made on either element of the cliff, Congress could make quick work of it once a deal is reached, as no elaborate legislation is necessarily required just to get passed the twin deadlines.

Once "off that fiscal cliff," said Thune, "and we're on to the New Year and the markets will be happy. And the people will smile."

(Editing by Eric Walsh)

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