Fiscal Cliff Disputes Remain as Deadline Nears

Senate Minority Leader Mitch McConnell, R-Ky., followed by Sen. Pat Roberts, R-Kan., second from right, leaves the Senate chamber to meet with fellow Republicans in a closed-door session as the "fiscal cliff" negotiations continue at the Capitol in Washington, Sunday, Dec. 30, 2012.
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Republicans were insisting that budget cuts be found to pay for some of the spending proposals Democrats were pushing.

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These included proposals to erase scheduled defense and domestic cuts exceeding $200 billion over the next two years and to extend unemployment benefits. Republicans complained that in effect, Democrats would pay for that spending with the tax boosts on the wealthy.

"We can't use tax increases on anyone to pay for more spending," said Sen. Kay Bailey Hutchison, R-Texas.

Both parties also want to block an immediate 27 percent cut in reimbursements to doctors who treat Medicare patients. Republicans wanted to find savings from Obama's health care bill as well as from Medicare providers, while Democrats want to protect the health care law from cuts.

Both sides agree that a temporary 2-percentage-point cut in the Social Security payroll tax was likely to expire. That reduction — to 4.2 percent — was initiated by Obama two years ago to help spur the economy and has meant $1,000 annual savings to families earning $50,000.

A senior defense official said if the spending cuts were triggered, the Pentagon would soon begin notifying its 800,000 civilian employees to expect furloughs — mandatory unpaid leave, not layoffs. It would take time for the furloughs to be implemented, said the official, who requested anonymity because the official was not authorized to discuss the preparations

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Associated Press writers David Espo, Julie Pace and Robert Burns contributed to this report.

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