Sides failing to budge in talks over 'fiscal cliff'

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WASHINGTON -- Republicans aren't budging on tax rates, and Democrats are resisting steps such as raising the Medicare eligibility age. Negotiations on averting a year-end fiscal train wreck combining big automatic tax hikes and sweeping spending cuts again appear stalled.

There are less than three weeks before the government could careen off this "fiscal cliff," but the chief GOP negotiator, House Speaker John Boehner, R-Ohio, said Wednesday that "serious differences" remain between him and President Barack Obama after an exchange of offers and a pair of conversations this week.

Mr. Boehner spoke after a closed-door meeting with fellow GOP lawmakers in which he advised them not to make plans for the week after Christmas.

Neither side has given much ground, and his exchange of proposals with Mr. Obama seemed to generate hard feelings more than progress. The White House has slightly reduced its demands on taxes -- from $1.6 trillion over a decade to $1.4 trillion -- but isn't yielding on demands that rates rise for wealthier earners.

Mr. Boehner responded with an offer very much like one he gave the White House more than a week ago that offered $800 billion in new revenue, half of Mr. Obama's demand. Mr. Boehner is also pressing for an increase in the Medicare eligibility age and a stingier cost-of-living adjustment for Social Security recipients.

Boehner spokesman Michael Steel said the two men did not have any follow-up talks Wednesday.

"There were some offers that were exchanged back and forth yesterday, and the president and I had a pretty frank conversation about just how far apart we are," Mr. Boehner said after his meeting with fellow Republican lawmakers.

"He said it's looking like trench warfare," said Rep. John Duncan Jr., R-Tenn., referring to Mr. Boehner.

There is increasing concern about a Dec. 31 deadline to stop the expiration of Bush-era tax cuts and the start of across-the-board spending cuts resulting from Washington's failure to complete a deficit-reduction deal last year. Even if an accord can be reached, the halting pace of negotiations is jeopardizing chances that it could be written into proper legislative form and passed through both the House and Senate before the new Congress convenes Jan. 3.

Both sides accuse the other of slow-walking the talks. Democrats say the House speaker is unwilling to crack on the key issue of raising tax rates on family income over $250,000 because he's afraid of a revolt on his right flank and from younger, ambitious members of his leadership team.

"I do have an increasing concern that the speaker ... is trying to string this out until January 3rd, because that's when he would be re-elected as speaker," Maryland Rep. Chris Van Hollen, ranking Democrat on the House Budget Committee, said in an interview. "And I think he's nervous that if he can't get a majority of his House Republican members to support a reasonable agreement, that that could put his speakership election in jeopardy. And so that might cause him to try and string [out] these talks."

Many conservatives say they would oppose a deficit-cutting package negotiated by Mr. Boehner that included higher tax rates. "I'll say no, because the focus has got to be on economic growth," said Rep. Jim Jordan, R-Ohio. "The simple fact is raising taxes is not going to grow our economy."

Others wouldn't rule it out completely. "If there's real cuts in spending, if there's real reform of entitlement programs, I think all of us would have to reconsider our position," said Rep. Raul Labrador, R-Idaho. "But the problem is, I don't see real cuts -- real cuts. I'm not saying yes, and I'm not saying no."

Liberal Democrats are trying to pull the president in the opposite direction regarding Medicare and Social Security. Eighteen months ago, Mr. Obama had all but agreed to a retirement-age increase and a less generous inflation adjustment for calculating Social Security COLAs.

House Minority Leader Nancy Pelosi, D-Calif., warned Republicans against insisting on raising the Medicare eligibility age as part of any deal. "Don't go there," she said on "CBS This Morning." She said raising the retirement age wouldn't contribute much savings toward an agreement in the short term, adding, "Is it just a trophy that the Republicans want to take home?"

Raising the Medicare age from 65 to 67 could cut Medicare costs by $162 billion over a decade, according to a Congressional Budget Office estimate last year. But by 2035, it would cut Medicare's projected budget by 7 percent. That estimate, however, assumes that the eligibility age would increase rather abruptly and hit people just about to retire. Republicans in the past have said instead that their Medicare proposals would not affect those now 55 and above.

Democrats are also pushing back against a GOP plan to reduce Social Security cost-of-living adjustments, another step back from where Mr. Obama and Mr. Boehner were just 18 months ago. "Quite frankly, Social Security is off the table," said Rep. Joe Crowley, D-N.Y.

The backtracking has Republicans fuming that Mr. Obama campaigned on a "balanced" fiscal solution, but now is unwilling to pair tax increases with politically painful cuts to Medicare and other popular programs. "The president and his allies have taken so many things off the table, the only thing left is the varnish," said Senate Minority Leader Mitch McConnell, R-Ky.

But in an ABC interview Tuesday, Mr. Obama did not reject a Republican call to raise the Medicare eligibility age from 65 to 67. The proposal is "something that's been floated," he said, not mentioning that he had tacitly agreed to it in the deficit-reduction talks with Mr. 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," the president 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."

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