House Speaker John Boehner said on Wednesday "serious differences" remain with President Barack Obama in talks to avert the "fiscal cliff" of steep tax hikes and budget cuts set for the end of the year.
Boehner, who spoke with Obama on Tuesday night, said the president's proposal for $1.4 trillion in new tax revenues did not fulfill his promise for a balanced approach to taming the federal deficit and could not pass Congress.
"I remain the most optimistic person in this town, but we've got some serious differences," Boehner told reporters after a meeting with House Republicans where he warned members the negotiations could run through the holidays and up to the end-of-year deadline.
Obama and Boehner each have proposed cutting deficits by more than $4 trillion in the next 10 years as part of a deal to avert the cliff, but they differ on how to get there. Economists have warned that failure to strike a deal could send the economy back into recession.
On Tuesday, Boehner rejected a proposal the White House viewed as a concession that would shrink the amount of deficit reduction that comes from revenue to $1.4 trillion from $1.6 trillion over 10 years. Boehner has called for $800 billion in revenue through tax reform.
Boehner has repeatedly offered gloomy assessments of the state of the talks in public, even as signs of progress have sprouted on Capitol Hill. The pace of talks has quickened in recent days, and the two sides exchanged counter-offers on Tuesday that neither side said was sufficiently detailed.
Boehner said he and Obama had an open and honest exchange about their positions in a Tuesday night phone call, but said the president's plan did not do enough to reduce the federal deficit.
"The president and I had a pretty frank conversation about just how far apart we are," Boehner said.
The stubborn differences have dampened hopes of a potential deal before the Christmas holiday. "Keep your Christmas decorations up and make no plans" to leave Washington, was Boehner's advice in the closed-door meeting with Republicans, Representative John Shimkus of Illinois told reporters.
The two sides have clashed over Obama's demand that any deal include an increase in tax rates for the wealthiest 2 percent of all Americans. Republicans want existing lower rates continued for all brackets and prefer to raise more revenue by eliminating tax loopholes and reducing deductions.
In exchange for more tax revenues, Republicans have demanded deep spending cuts in politically popular social entitlement programs like the government-funded Medicare and Medicaid healthcare plans.
'A BAD THING'
House Democratic Leader Nancy Pelosi said on Wednesday that House Democrats objected to Republican efforts to raise the age when seniors become eligible for Medicare, which now stands at 65, as a way to cut government spending.
"Raising the retirement age does not get you that much money, so you're doing a bad thing when it comes to seniors, and you're not achieving your goal," she told CBS.
Senate Democratic leader Harry Reid said on Wednesday that Boehner and Republicans needed to make concessions on taxes. "To this point there hasn't been a lot of progress, and I'm very, very disappointed," he said on the Senate floor.
Obama planned to discuss the economy, deficit, taxes and the fiscal cliff with a bipartisan group of mayors and community leaders at noon EST. That event is private.
Financial markets have watched the negotiations with interest. JPMorgan Chase & Co CEO Jamie Dimon said the United States could have a "booming economy" in a couple of months if lawmakers in Washington reach agreement.
A budget deal could mean 4 percent economic growth and a drop in unemployment, Dimon said at a New York Times conference in New York. A deal would need to link any tax increases with spending cuts, he said.
"The table is set very well right now," Dimon said.
White House press secretary Jay Carney pushed back on Tuesday on suggestions of vagueness in Obama's dealings with Boehner, holding up copies of prior administration budget proposals that include, among other things, corporate tax reductions, and comparing them to the two-page offer that Boehner has sent to the White House.
The White House has repeated the proposal it made in February to consider reductions in corporate tax rates, a source familiar with the talks said.
A senior Republican fiscal hawk, Senator Tom Coburn of Oklahoma, faulted both sides for playing politics.
"There's no leadership in Washington either at the presidential level or the leadership level in Congress," Coburn said on CNN Tuesday night. "People are playing to the media rather than playing to the future of the country."
Republican Senator Rand Paul of Kentucky suggested in a Fox News interview on Tuesday that to get things moving the House should vote on the stickiest issue - whether to extend expiring tax cuts to all taxpayers except high-earners, as Democrats want, or to everyone, as Boehner wants.
Republicans would simply vote "present" on the Democratic plan, he said, allowing it to pass.