By Richard Cowan and David Lawder
WASHINGTON, Dec 11 (Reuters) - U.S. House of Representatives
Speaker John Boehner offered no concrete signs of progress on
Tuesday on the 'fiscal cliff' talks but said he remained hopeful
that both sides would reach an agreement by the end-of-year
Amid signs the White House and Boehner's office are making
headway in the talks, Boehner repeated his now-familiar call for
President Barack Obama to offer a new proposal to avert the
automatic steep tax hikes and spending cuts set for the end of
the year unless Congress intervenes.
'I'm an optimist. I'm hopeful we can reach an agreement,'
Boehner said on the House floor.
While Boehner demanded more specific spending cuts from
Obama, White House spokesman Jay Carney said the administration
had submitted extensive proposals to reduce spending but
Republicans had not offered specifics on increasing revenues.
'There is a deal out there that's possible,' Carney told
reporters. It could include reduced spending, more revenues and
tax reform as long as Republicans accepted higher tax rates on
the wealthiest Americans, he said.
'We do believe the parameters of a compromise are pretty
clear,' Carney said.
The pace of staff-level talks has quickened since Boehner
met on Sunday with Obama at the White House in a meeting that
the Republican described as 'nice' and 'cordial.'
But Senate Democratic leader Harry Reid said it would be
difficult to reach an agreement before Christmas.
'Until we hear something from Republicans, there's nothing
to draft,' Reid told reporters, referring to writing legislation
based on a deal. 'It's going to be extremely difficult to get it
done before Christmas.'
The two major elements of the fiscal cliff are broad
spending reductions starting Jan. 1 and tax cuts that expire at
the end of the year. Economists have warned the fragile economy
could slip back into recession without a deal.
Obama and Boehner have exchanged opening proposals aimed at
cutting deficits by more than $4 trillion over the next 10
years, but they differ on how to get there.
Obama and Democrats demand that tax rates rise for the
wealthiest 2 percent of Americans. Republicans want existing
lower rates continued for all brackets and prefer to raise more
revenue by eliminating tax loopholes and reducing deductions.
Republicans also want deeper spending cuts than those sought
by Obama and fellow Democrats, particularly on social
entitlement programs like the government-funded Medicare and
Medicaid healthcare plans.
Stocks rose on Tuesday, with the S&P 500 reaching its
highest close since Election Day. Markets endured a sharp
selloff after the Nov. 6 re-election of Obama, as investors
focused on the fiscal cliff concerns.
'I guess in our own dysfunctional way, there is progress,'
said Frank Davis, director of sales and trading at LEK
Securities in New York. 'Since conversations are occurring, it
clarifies at least they are taking some action. My personal gut
is they'll jostle this into the holiday week and try to do a
FRAMEWORK FOR A DEAL
While senior figures from both parties caution they are far
from a deal, a softening of partisan rhetoric in recent days and
the increased frequency of talks has created speculation that
negotiations are going well.
If there is a fiscal cliff deal, congressional leaders will
have to decide the most efficient way to move the controversial
legislation forward. Aides said those decisions had not yet been
made as negotiators were still focused on the elements of a
possible deal and would then figure out the legislative vehicle
to carry out any fiscal cliff measure.
The most frequently discussed scenario on Capitol Hill
involves Democrats getting the higher rates on the top earners
in exchange for significant concessions on reducing costs in
The two parties could then work together next year on
comprehensive tax reform aimed at creating more revenues, in
part by eliminating some tax breaks.
A group of corporate leaders urged a fiscal cliff compromise
that would include both higher taxes and spending cuts, but it
did not take sides on whether the revenues should be from
raising taxes on the wealthiest, as Obama wants, or from
limiting deductions and closing loopholes, as Republicans want.
'For far too long, political paralysis has fueled global
uncertainty that discourages businesses from investing and
hiring new workers,' the CEOs said in a letter sent under the
umbrella of the Business Roundtable, a non-partisan group that
Complicating the talks is the looming need for an increase
in U.S. borrowing authority that Obama wants before Congress
wraps up for the year. Without the authority, the government
will hit its $16.4 trillion borrowing limit by year's end and
run out of steps to stave off default by mid-February.
Obama has asked for the power to raise U.S. borrowing
authority without legislation from Congress in hopes of avoiding
another confrontation with Republicans like the 2011 showdown
that led to an embarrassing downgrade of the U.S. credit rating.
Also in the mix is a payroll tax 'holiday' set to expire,
which, if not extended, will quickly reduce the take-home pay of
a large segment of the U.S. workforce.
The holiday, now in its second year, has been providing
workers with an average of about $1,000 a year in extra cash.
Significant divisions remain on the payroll tax question in part
because it funds the Social Security retirement program.
The payroll tax is paid by employers and employees each at a
rate of 6.2 percent of wages, up to a maximum of $110,110. The
holiday, enacted in 2010, reduced the rate by 2 percentage
points on the portion paid by the worker.
Democratic Representative Chris Van Hollen said Republicans
were coming around on the tax-rate hikes on the wealthiest
Americans and there was a good chance of resolving that soon.
But the other things might have to wait, he said, mentioning the
budget cuts and the payroll tax.
If not complete by Jan. 1, he said, 'my belief is you would
get it done very soon' after the New Year, noting that the
government has some flexibility on withholding taxes that could
limit the immediate hit to taxpayers while negotiations
continued into 2013.
(Additional reporting by Rachelle Younglai, Kim Dixon, Steve
Holland and Matt Spetalnick; Writing by John Whitesides; Editing
by Alistair Bell and Eric Beech)
(For complete coverage of the 'fiscal cliff,' click on)
Copyright Thomson Reuters 2012. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.