Fiscal cliff: Obama, Boehner speak frankly

Face to face with time running short, President Barack Obama and Republican House Speaker John Boehner negotiated at the White House on Thursday night in what aides called "frank" talks aimed at breaking a stubborn deadlock and steering the nation away from an economy-threatening "fiscal cliff."

There was no sign of movement, as evidence mounted that the White House was moving away from politically difficult cuts like increasing the Medicare eligibility age. But some Republicans, especially in the Senate, advocated yielding to Obama on tax rates on the wealthy but continuing the battle on other fronts.

An increasing number of Senate Republicans have been pressing to yield on the question of allowing top tax rates to increase on income over $250,000 for couples, while extending Bush-era tax cuts for everyone else. That reflects increasing resignation within the GOP that Obama is going to prevail on the rate issue since the alternative is to allow taxes on all workers to go way up when Bush-era tax cuts expire on Dec. 31.

"I think it's time to end the debate on rates," Sen. Richard Burr, R-N.C., said. "It's exactly what both parties are for. We're for extending the middle-class rates. We can debate the upper-end rates and what they are when we get into tax reform."

"He's got a full house and we're trying to draw an inside straight," Sen. Johnny Isakson, R-Ga., said. When it was observed that making a straight would still be a losing hand, Isakson said: "Yeah, I know."

No details were released about the Obama-Boehner meeting, though the use of the word "frank" by both sides to describe the talks suggested the president and the speaker stuck hard to their opposing positions.

The meeting came shortly after Obama suggested that the sluggish pace of deficit-cutting talks between the administration and congressional Republicans was a result of a "contentious caucus" of GOP lawmakers who were making it difficult for Boehner to negotiate.

Boehner saw it differently. He said earlier in the day: "Unfortunately, the White House is so unserious about cutting spending that it appears willing to slow-walk any agreement and walk our economy right up to the fiscal cliff."

Boehner remains caught between a tea party faction and more pragmatic Republicans advising a tactical retreat. He dodged two questions on whether he would consider a legislative minuet that would allow for Obama's proposal on higher tax rates for upper earners to proceed despite GOP opposition to the idea. Such an approach was employed by then-Speaker Nancy Pelosi, D-Calif., when funding military operations in Iraq and Afghanistan when Democrats controlled Congress but President George W. Bush occupied the White House.

Thursday night's meeting was the two men's second face-to-face encounter in five days as they seek to find an agreement that avoids major tax increases and across-the-board spending cuts scheduled to kick in in January. Also attending were Treasury Secretary Timothy Geithner and Obama's chief congressional lobbyist, Rob Nabors.

Before the meeting, Boehner accused Obama of dragging out negotiations. Obama is insisting on higher tax rates for household incomes above $250,000 to cut federal deficits; Boehner says he opposes higher rates, though he has said he would be willing to raise tax revenue instead by closing loopholes and deductions.

Obama, in an interview during the day with WCCO-TV in Minneapolis, said that the notion of not raising taxes "has become sort of a religion for a lot of members of the Republican Party. I think Speaker Boehner has a contentious caucus, as his caucus is tough on him sometimes so he doesn't want to look like he's giving in to me somehow because that might hurt him in his own caucus."

While the impasse over the president's demand for higher tax rates continues to be a main obstacle in negotiations, Boehner complains that the president refuses to offer spending cuts to popular benefit programs like Medicare whose costs are rapidly rising.

The White House has pointed out that it has offered about $600 billion in specific savings over the next decade, including about $350 billion in spending reductions in health care programs such as Medicare.

Meanwhile, one of Obama's top Senate allies said Thursday that an increase in the Medicare eligibility age is "no longer one of the items being considered by the White House" in negotiations.

Sen. Dick Durbin told reporters that he did not get the information directly from the president or the White House. But as the Senate's No. 2 Democrat, Durbin is regularly apprised of the status of negotiations by key players such as Majority Leader Harry Reid, D-Nev.

Senior White House aide Gene Sperling briefed Senate Democrats on the talks Thursday and declined to tell them whether the administration was taking the issue off the table, said a senator who was present. That senator spoke only on condition of anonymity since he was not authorized to describe a meeting that was confidential.

Increasing the eligibility age, currently 65, is a key demand by Republicans seeking cost curbs in popular benefit programs in exchange for higher tax revenues.

Durbin's comments on the Medicare eligibility age were surprising, since negotiators including Reid have been careful to not preclude the possibility of agreeing to such an increase — perhaps as a late-stage concession in a potential deal between Obama and Boehner.

Particularly noteworthy were comments by Sen. John Cornyn of Texas to Politico.com, in which Cornyn, soon to be the No. 2 Senate Republican, said, "I believe we're going to pass the $250,000 and below sooner or later, and we really don't have much leverage" because those rates are going to expire anyway on Dec. 31.

The willingness of Cornyn to voice such sentiments raised eyebrows since he's a top confidant of Senate Republican leader Mitch McConnell of Kentucky, who keeps a tight rein on the Senate GOP caucus. Neither McConnell nor Cornyn are prone to firing half-cocked.

Still, any GOP plan B to surrender on upper income tax rate would leave unaddressed a bunch of other issues, especially $109 billion in automatic across-the-board spending cuts to the Pentagon and domestic programs that would start to take effect in January. The alternative minimum tax needs to be addressed or else millions of middle- to upper-income taxpayers will face higher tax bills, while doctors face sharp cuts in their Medicare reimbursements.

A number of tax breaks for businesses are also set to expire, including write-offs for investments in equipment and research and development.