U.S. fiscal talks taking on new urgency

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WASHINGTON -- Private talks between President Barack Obama and top congressional leaders in search of a deal to avoid the year-end "fiscal cliff" are accelerating, officials said Monday, even as the president began ramping up pressure on Republicans to extend tax cuts for the middle class.

Mr. Obama phoned House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev., over the weekend, in a sign that high-level negotiations are advancing with only weeks to go before an automatic series of spending cuts and tax hikes starts to hit nearly every American.

Mr. Boehner, meanwhile, was laying plans Monday for top Republicans to meet with Erskine Bowles, a chief of staff in the Bill Clinton administration who also has close ties to Mr. Obama's White House.

Ahead of the meeting Wednesday, GOP aides noted that Mr. Bowles offered a debt-reduction plan last fall in line with Republican principles. That plan called for $800 billion in fresh revenue through an overhaul of the tax code and significant spending cuts, including major changes to Medicare and other federal health programs.

"People in both parties agree we need a 'balanced approach to deal' with our deficit and debt and help our economy create jobs," Mr. Boehner said. "We look forward to talking to Mr. Bowles and [others advocating a debt deal] about their ideas to avert the fiscal cliff without tax hikes that target small businesses and cost jobs."

In recent days, other Republicans -- such as Sens. Lindsey Graham of South Carolina, Bob Corker of Tennessee and Saxby Chambliss of Georgia as well as Rep. Peter King of New York -- have voiced support for a deal that includes additional tax revenue and dismissed an anti-tax pledge circulated by GOP activist Grover Norquist. Mr. Norquist has long been a potent force in Republican politics, admonishing party members who express any openness to increasing tax collections and organizing opposition to them.

Still, a wide gap remains between Mr. Obama and the Republicans on taxes and changes to federal retirement programs. Resolving those differences is key to avoiding the year-end tax hikes and spending cuts that threaten to suck $500 billion out of the economy next year and snuff out the recovery.

Talks began 10 days ago with a meeting between Mr. Obama and congressional leaders at the White House. That session ended with the four congressional leaders -- Mr. Boehner, Mr. Reid, House Minority Leader Nancy Pelosi, D-Calif., and Senate Minority Leader Mitch McConnell, R-Ky. -- standing side by side and expressing optimism about a potential deal. But continuing work by staff up to the Thanksgiving weekend and on Monday has not yet made enough progress for a second meeting between Mr. Obama and the congressional leaders to be scheduled.

A key dispute is how to raise taxes on the wealthy. Mr. Boehner has previously opened the door to about $800 billion in new tax revenue -- achieved through a tax code overhaul that eliminates deductions that disproportionately benefit the rich. The speaker and other Republicans have opposed any proposal that increases tax rates.

Mr. Obama, however, favors $1.6 trillion in new tax revenue and insists that it be achieved by allowing tax rates on the wealthy to increase at the end of the year, as well as by eliminating deductions.

On Monday, White House press secretary Jay Carney made clear that the president was maintaining that position. "Math tells us that you can't get the kind of balanced approach that you need without having rates be part of the equation," he said. "We haven't seen a proposal that achieves that, a realistic proposal that achieves that."

Mr. Carney, however, also embraced the view that any plan to tame the national debt would require adjustments to the nation's health programs for the elderly and the poor, Medicare and Medicaid. Mr. Obama "believes and understands that in order to achieve a deal -- a compromise -- that everybody has to make some tough choices, and he remains committed to that principle," his spokesman said.

On the other hand, he said the White House is less interested in tackling Social Security's rising cost during the current talks, echoing Senate Democrats who have said the program should be reviewed separately next year. "Social Security is not currently a driver of the deficit. That's an economic fact," Mr. Carney said.

In addition to pursuing private talks, the White House began making a public push Monday. Mr. Obama is strongly considering holding events in Washington or elsewhere later this week to argue for extending current tax rates for 98 percent of Americans and letting rates rise for the wealthy, according to administration officials.

White House officials met Monday with the leaders of two major business groups -- the Business Roundtable and the U.S. Chamber of Commerce -- part of Mr. Obama's campaign to persuade business executives to get behind a deal that raises $1 trillion or more in tax revenue. The president plans another meeting with executives Wednesday.

As part of its campaign over tax rates, the White House published a report Monday warning that the average family will pay $2,200 more in taxes next year if Congress does not freeze rates for the middle class.



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