Both sides trade proposals in ‘fiscal cliff ’ talks

President’s demand on tax revenue lowered

WASHINGTON — President Barack Obama and House Speaker John Boehner sought an elusive compromise Tuesday to prevent economy-damaging tax increases on the middle class at year’s end, conferring by phone after a secretive exchange of proposals.

Details were sparse and evidence of significant progress scarcer still, although officials said the president had offered to reduce his initial demand for $1.6 trillion in higher tax revenue over a decade to $1.4 trillion. There was no indication he was relenting on his insistence — opposed by most Republicans — that tax rates rise at upper incomes.

Boehner sounded unimpressed in remarks on the House floor at midday.

“The longer the White House slowwalks this process, the closer our economy gets to the fiscal cliff,” he said, declaring that Obama had yet to identify cuts to government benefit programs that as part of an agreement that also would raise federal tax revenue.

The Ohio Republican made his comments well before he and the president talked by phone about attempts to avert a “fiscal cliff,” across-the-board tax increases and cuts in defense and domestic programs that economists say could send the economy into recession.

In rebuttal, the White House swiftly detailed several 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.

Two weeks before the year-end holidays, time to find agreement was short.

“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 said.

Boehner’s office said Republicans have “sent the White House a counteroffer that would achieve tax and entitlement reform to solve our looming debt crisis and create more American jobs.”

Both sides say they want a deal to prevent damage to the economy, but that commitment has been accompanied by a battle to gain the political high ground in negotiations.

Republicans acknowledge that Obama has an advantage in one respect, citing his re-election last month after a race in which he made higher taxes on the wealthy a centerpiece of his campaign.

But Republicans hold powerful leverage of their own, the potential threat not to raise the government’s borrowing authority.

It was just such a threat that previously allowed them to extract $1 trillion in spending cuts from the White House and Democratic lawmakers, a situation that Obama has vowed he won’t let happen again.

Democrats have watched with satis- faction in recent days as Republicans struggle with Obama’s demands to raise taxes, but Reid has privately 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 that many Democrats 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,” he 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.”