House Speaker John Boehner said he's "not confident at all" that Congress can reach a budget deal to avert the so-called "fiscal cliff" at the end of this year.
On Tuesday morning Moody's, a credit rating agency, released a report threatening to lower the U.S. government's AAA credit rating if Congress didn't agree to a major deficit reduction package. Asked by CNN how confident he was that congressional negotiators could avoid that action Boehner replied, "I'm not confident at all."
The fiscal cliff is the combination of the automatic cuts to federal programs scheduled to go into effect in January and the tax increases that would result from expiration of all of the "Bush era" tax cuts at the end of this year.
The speaker maintained that House Republicans already passed legislation to replace those spending cuts and extend all the current tax rates.
"Listen the House has done its job on both the sequester and the looming tax hikes that will cost our economy some 700,000 jobs," Boehner said, and shifted the blame to Democrats, adding, "The Senate at some point has to act. And on both of these -- where is the President? Where's the leadership? Absent without leading."
Although Moody's report specified it would consider cutting the government's rating if an agreement didn't emerge in the next year, an aide to Boehner told CNN that the speaker's comments reflected his confidence level about reaching a deal by the end of 2012. Without any serious bipartisan negotiations taking place, both parties are expected to return to the issue in the lame duck session of Congress in mid-November.
House Democratic Whip Steny Hoyer, D-Maryland, said there were some discussions going on now, but conceded "there has not been a great deal of movement' on any potential budget deal.
But Hoyer was more upbeat about a deal emerging - after the election.
"I am optimistic that once this election is over that the patriotism of members -- Republicans and Democrats -- will come and summon them to coming to an agreement on the most important question confronting this nation and that is putting this nation on a more fiscally sustainable credible path."
Even after Congress reached a deal in the summer of 2011 to raise the debt limit and agreed to a series of spending cuts, Standard & Poor's, one of Moody's rival credit rating agencies, downgraded for the first time the U.S. credit rating.
As part of the automatic cuts, the military would especially be hit hard---a measure both parties say they want to prevent. A spokeswoman for President Barack Obama's re-election campaign said the president "agrees that we should avoid the automatic defense cuts."
"That's why he has called on Congressional Republicans to help prevent them with a balanced plan that asks millionaires and billionaires to pay their fair share," Lis Smith said in a statement.
The president's plan has some support in the Democratic-controlled Senate. Responding to Boehner's comments, Senate Majority Leader Harry Reid said he was "disappointed."
"I think we have to look at the glass being half-full, not half-empty all the time. I'm confident we will reach some kind of an arrangement," Reid told reporters on Capitol Hill. "We will continue with the middle class tax cut that the Senate passed. It's much, much too early to give up."
Asked what made him so optimistic about a deal, Reid pointed to what he sees as dwindling momentum for the tea party.
"I've been here for a while, and I believe once the elections are over, the tea party strength will be significantly weakened," he said.
On her part, House Democratic Leader Nancy Pelosi released a statement, calling on Boehner to keep the chamber in session until they solve the problem.
"Democrats are committed to staying in session as long as it takes to ensure certainty for the middle class and growth for the economy," she said. "The ball is in Speaker Boehner's court."