Congress resumes its lame-duck session work Monday with the two parties sharply divided over how to deal with the George W. Bush-era tax cuts due to expire at year's end.
President Barack Obama and most Democrats want to retain them for any couple earning $250,000 or less a year. Republicans are bent on making them permanent for everybody, including the richest.
The cuts apply to rates on wage income as well as to dividends and capital gains. A failure to act would mean big tax increases for people at every income level. Also at stake is the hope that Republicans and Democrats can work together, on this or any other issue, in the fading days of this congressional session or next year when Republicans gain control of the House.
Obama has scheduled a meeting at the White House with Republican leaders on Tuesday, and possible options for compromise will be on the table, including providing a temporary extension for the wealthy. Several Senate Democrats are uniting around a plan to extend the tax cuts to anyone making less than $1 million, an idea so far rejected by Republicans.
Senate Majority Leader Harry Reid, D-Nev., has suggested that the Senate hold two votes: one on the Democratic plan confining the tax cut extension to the middle class, the other on Republican leader Mitch McConnell's plan to extend the cuts to everyone. If both are defeated, as anticipated, then the real negotiations begin.
"There will be bipartisan support in the lame duck to extend all the tax cuts for two or three years, and I think that vote will be had before the end of the year," said Sen. Lindsey Graham, R-S.C., on Sunday. "And if the president doesn't support that, I think he's running a risk of making the economy weaker."
Congress also has a Dec. 3 deadline to pass a temporary spending bill to avoid a government shutdown. The Senate hasn't passed a single spending bill for the budget year that began Oct. 1. Democrats are working on a catchall $1.1 trillion to fund the government's day-to-day operations. Republicans, fresh off their election victory, are unlikely to go along.
"If this election showed us anything, it's that Americans don't want Congress passing massive trillion-dollar bills that have been thrown together behind closed doors," said McConnell, R-Ky.
One idea is to fund the government at current levels through February, when the next Congress and its influx of anti-spending conservatives, will deal with the matter.
As early as Monday night, the Senate could pass and send to the House a measure that gives the Food and Drug Administration greater authority to order food recalls and inspect imported food.
The House will also consider a Senate-passed child nutrition bill, which promotes healthier school lunches and has the support of first lady Michelle Obama.
Among the leftovers are:
— "Don't ask, don't tell": Senate Republicans have blocked a defense bill that would end the military's ban on gays serving opening. The Pentagon is to release a report Tuesday on how lifting "don't ask, don't tell" would affect military operations, and Democrats say they will try again to change the policy. Graham said he doesn't believe there are "anywhere near" the votes on the GOP side for a repeal right now.
—Obama says the new START treaty that would reduce nuclear weapons arsenals in the U.S. and Russia is a "national security imperative" and he wants the Senate to hold a ratification vote this year. But a key Republican, Sen. Jon Kyl of Arizona, says the vote should be put off until next year.
On the sidelines, hearings are expected on new airport screening methods judged by some travelers as being too intrusive. To darken everyone's holiday mood, the president's bipartisan deficit commission on Wednesday is expected to come out with its ideas on long-term cuts to Social Security, Medicare, defense and other federal spending needed to keep the government solvent.