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Wednesday, Dec 12, 2012 8:30 AM UTC

Fiscal cliff talks appear to be stalled

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Fiscal cliff talks appear to be stalledSenate Majority Leader Harry Reid, D-Nev., speaks with reporters following a Democratic strategy session at the Capitol in Washington, Tuesday, Dec. 11, 2012. (AP Photo/J. Scott Applewhite) (Credit: AP)

WASHINGTON (AP) — Despite an intensifying pace, little progress is being reported in talks on averting automatic spending cuts and tax increases that economists fear could send the U.S. economy off a “fiscal cliff.”

House Speaker John Boehner and President Barack Obama spoke on the phone Tuesday, a day after the president offered to reduce his initial demand for $1.6 trillion in higher tax revenue over a decade to $1.4 trillion. But Obama continued to insist that much of the revenue come from raising top tax rates on the wealthy.

Boehner countered later Tuesday with another offer that aides to the Ohio Republican said stuck close to a document delivered to the White House a week ago. A top White House aide, Rob Nabors, came to the Capitol to respond.

Leading lawmakers expressed pessimism that a deal was close, despite increasing angst about a Dec. 31 deadline to stop the expiration of Bush-era tax cuts and separate across-the-board spending cuts that are the result of Washington’s failure to complete a deficit-reduction deal last year.

“I think it’s getting worse, not better,” House GOP Whip Kevin McCarthy, R-Calif., said.

The Boehner camp again said it’s up to the White House to proffer additional spending cuts to programs like Medicare. The White House countered that Republicans still need to cave on raising tax rates for the rich.

“Where are the president’s spending cuts?” Boehner said on the House floor. “The longer the White House slow-walks this process, the closer our economy gets to the fiscal cliff.”

In rebuttal, the White House swiftly detailed numerous proposals Obama has made to cut spending, including recommendations to cull $340 billion from Medicare over a decade and an additional $250 billion from other government benefit programs.

Obama remains determined that tax rates rise on family income exceeding $250,000, a move Republicans say would strike many small businesses that are engines of new jobs and file as individuals when paying their taxes.

Two weeks before the year-end holidays, time to find agreement was short, but not prohibitively so.

“I think it’s going to be extremely difficult to get it done before Christmas, but it could be done,” Senate Majority Leader Harry Reid, D-Nev., said.

Boehner’s office took the step — unusual in secretive talks — of announcing that Republicans “sent the White House a counteroffer that would achieve tax and entitlement reform to solve our looming debt crisis and create more American jobs.”

Democrats have watched with satisfaction in recent days as Republicans struggle with Obama’s demands to raise taxes, but Reid privately has told his rank and file they could soon be feeling the same distress if discussions grow serious on cuts to benefit programs.

In an ABC interview, Obama did not reject a Republican call to raise the age of Medicare eligibility from 65 to 67, a proposal many Democrats strongly oppose.

The proposal is “something that’s been floated,” Obama said, not mentioning that he had tacitly agreed to it in deficit-reduction talks with Boehner more than a year ago that ended in failure.

“When you look at the evidence, it’s not clear that it actually saves a lot of money,” Obama said. “But what I’ve said is, let’s look at every avenue, because what is true is we need to strengthen Social Security, we need to strengthen Medicare for future generations, the current path is not sustainable because we’ve got an aging population and health care costs are shooting up so quickly.”

Obama’s plan would raise $1.6 trillion in revenue in part by raising tax rates on incomes over $200,000 for individuals and $250,000 for couples. He has recommended $400 billion in spending cuts over a decade.

He also is seeking extension of the Social Security payroll tax cut due to expire Jan. 1, a continuation in long-term unemployment benefits and steps to help hard-pressed homeowners and doctors who treat Medicare patients.

The White House summary noted that Obama last year signed legislation to cut more than $1 trillion from government programs over a decade, and was proposing $600 billion in additional savings from benefit programs.

Boehner’s plan, in addition to calling for $800 billion in new revenue, envisions $600 billion in savings over a decade from Medicare, Medicaid and other government health programs, as well as $300 billion from other benefit programs and another $300 billion from other domestic programs.

It would trim annual increases in Social Security payments to beneficiaries and gradually raise the eligibility age for Medicare.

More By Andrew Taylor.

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