Obama, Boehner meet on ‘fiscal cliff,’ but no deal is reached

The late-afternoon invitation from the president surprised senior Republicans. But it did nothing to dispel the sense that hope is all but lost for a far-reaching agreement to raise taxes, cut spending and avert the year-end cliff.

Obama's top economic adviser, Gene Sperling, confirmed the gloomy outlook in a closed-door lunch meeting Thursday with Senate Democrats, according to those present.

Senior Senate Republicans, meanwhile, were at work on a fallback plan that would not significantly restrain the national debt but would at least avert widespread economic damage by canceling tax increases scheduled to take effect next year for the vast majority of Americans. That strategy calls for Republicans to capitulate to Obama's demand to let tax rates rise on wage and salary income for the wealthiest 2 percent of taxpayers.

But the approach would also seek to thwart the Democrats by trying to block other steps that would increase taxes paid by wealthy taxpayers, including higher rates on investment income and limits on the value of itemized deductions. This strategy would produce only about $440 billion in new taxes and give the Democrats even less revenue than Republicans had previously put on the table. In his initial offer earlier this month, Boehner had said he could support $800 billion in new tax revenue.

With a relatively low price in new taxes, the strategy, if successful, would represent a tactical victory for Republicans and shift the political burden onto Democrats to make greater concessions on federal spending.

Senate Minority Leader Mitch McConnell (R-Ky.) has floated the strategy among Republicans in both chambers, according to lawmakers and senior GOP aides. It has been rejected by Boehner and other House leaders, aides said.

Don Stewart, a spokesman for McConnell, denied that he was floating the idea. "The leader has held numerous discussions to hear input from his members, and many ideas have been raised," he said.

But top GOP policy aides continued to refine the plan Thursday as a growing number of Senate Republicans clamored for action to prevent the fiscal crisis — for which, polls show, Republicans would be blamed.

"It's bizarre. It's truly bizarre. There's no sense of urgency," said retiring Sen. Olympia J. Snowe (R-Maine). "We're lurching from deadline to deadline now. We do not want to create this as the new norm."

The divide between Republicans in the House and Senate has become increasingly apparent in recent days. While House leaders have roundly rejected any strategy that would let tax rates rise, the ranks of Senate Republicans who are willing to accept a small tax hike and continue the fight over spending early next year continue to grow.

Source: http://www.news.theusalinks.com/2012/12/14/obama-boehner-meet-on-fiscal-cliff-but-no-deal-is-reached/