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Fiscal cliff talks intense; Obama and Boehner talk

By Andrew Taylor

Associated Press

Published: Wednesday, Dec. 12 2012 9:05 a.m. MST

WASHINGTON — Despite an intensifying pace, little progress is being reported in talks on averting automatic spending cuts and tax increases that economists fear could send the U.S. economy off a "fiscal cliff."

House Speaker John Boehner and President Barack Obama spoke on the phone twice Tuesday, a day after the president offered to reduce his initial demand for $1.6 trillion in higher tax revenue over a decade to $1.4 trillion. But Obama continued to insist that much of the revenue come from raising top tax rates on the wealthy.

Boehner countered later Tuesday with another offer that aides to the Ohio Republican said stuck close to a document delivered to the White House a week ago. A top White House aide, Rob Nabors, came to the Capitol to respond.

"There were some offers that were exchanged back and forth yesterday and the president and I had pretty frank conversations about just how far apart we are," Boehner said Wednesday after a closed-door meeting with fellow Republicans in which he advised them not to make plans for the week after Christmas.

Leading lawmakers expressed pessimism that a deal was close, despite increasing angst about a Dec. 31 deadline to stop the expiration of Bush-era tax cuts and separate across-the-board spending cuts that are the result of Washington's failure to complete a deficit-reduction deal last year.

"I think it's getting worse, not better," House GOP Whip Kevin McCarthy, R-Calif., said.

The Boehner camp again said it's up to the White House to proffer additional spending cuts to programs like Medicare. The White House countered that Republicans still need to cave on raising tax rates for the rich.

House Minority Leader Nancy Pelosi, meanwhile, warned Republicans against insisting on raising the Medicare eligibility age as part of any deal.

"One of the things that we object to is raising the Medicare age," Pelosi said on "CBS This Morning." ''Don't go there."

Pelosi said raising the retirement age wouldn't contribute much savings toward an agreement, 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.

The White House, for its part, detailed numerous 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.

Obama remains determined that tax rates rise on family income exceeding $250,000, a move Republicans say would strike many small businesses that are engines of new jobs and file as individuals when paying their taxes.

Two weeks before the year-end holidays, time to find agreement was short, but not prohibitively so.

"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, D-Nev., said.

Boehner's office took the step — unusual in secretive talks — of announcing that Republicans "sent the White House a counteroffer that would achieve tax and entitlement reform to solve our looming debt crisis and create more American jobs."

Democrats have watched with satisfaction in recent days as Republicans struggle with Obama's demands to raise taxes, but Reid privately has 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 many Democrats strongly oppose.

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