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

deadline.

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

last-minute push.'

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

entitlement programs.

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

promotes business.

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)

((John.Whitesides@thomsonreuters.com)(202-898-8300)(Reuters

Messaging: john.whitesides@thomsonreuters.com))

(For complete coverage of the 'fiscal cliff,' click on)

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