Fiscal cliff: Obama, Boehner trade proposals

WASHINGTON (AP) — In a test of divided

government, President Barack Obama and House Speaker John Boehner sought

an elusive

compromise Tuesday to prevent economy-damaging year-end tax

increases for the middle class, speaking by phone after a secretive

exchange of proposals.

Details were sparse and evidence of significant progress scarcer still, although officials said the president had offered

to reduce his initial demand for $1.6 trillion in higher tax revenue over a decade to $1.4 trillion.

There was no indication he was relenting on his insistence — strongly opposed by most Republicans — that tax rates rise at

upper incomes.

Boehner sounded unimpressed in remarks on the House floor at midday, well before he and the president talked by phone about

attempts to avert a "fiscal cliff," across-the-board tax increases and cuts in defense and domestic programs that threaten

to send the economy into recession.

"The longer the White House slow-walks this process, the closer our economy gets to the fiscal cliff," he said, declaring

that Obama had yet to identify specific cuts to government benefit programs that the president would support as part of an

agreement that also would raise federal tax revenue.

In rebuttal, the White House swiftly detailed numerous proposals Obama has made to cut spending, including recommendations

to cull $340 million from Medicare over a decade and an additional $250 billion from other government benefit programs.

The House Democratic leader, Rep. Nancy Pelosi of California, challenged Boehner to allow a vote on the president's proposal

to extend most expiring tax cuts while letting them lapse at higher incomes.

She predicted it would gain "overwhelming approval," even in the GOP-controlled House.

Boehner's office took the step - unusual in

secretive talks - of announcing that Republicans "sent the White House a


that would achieve tax and entitlement reform to solve our looming

debt crisis and create more American jobs."

Both sides say they want a deal to prevent damage to the economy, but that stated commitment has been accompanied by a fierce

battle to gain the political high ground in negotiations — and the occasional comment that one side or the other would be

willing to let the deadline pass without a deal unless it got acceptable terms.

Republicans acknowledge that Obama has an advantage in one respect, citing his re-election last month after a race in which

he made higher taxes on the wealthy a centerpiece of his campaign.

At the same time, Republicans hold powerful

leverage of their own, the certainty that by spring the president will

be forced

to ask Congress to raise the government's borrowing authority. It

was just such a threat that previously allowed them to extract

$1 trillion in spending cuts from the White House and Democratic

lawmakers, a situation that Obama has vowed he won't let

happen again.

In his noontime remarks on the House floor, Boehner said, "Let's be honest. We're broke. The plan we offered is consistent

with the president's call for a balanced approach."

"We're still waiting for the White House" to do the same," added the Ohio Republican.

GOP senators across the Capitol soon echoed his remarks.

"You have to ask the question, Is the president obsessed with raising taxes?" said Sen. John Thune of South Dakota, a member

of the GOP leadership.

Referring to the president's occasional outside-the-Beltway trips to build public support for his position, Thune said Obama

was "doing a victory lap" after the campaign.

Senate Republican leader Mitch McConnell

said GOP lawmakers are determined to overhaul benefit programs so they

can "meet

the demographics of the country." He recently said Republicans

want to curtail annual cost-of-living benefits for Social Security

and other government benefits, as well as raise the age of

eligibility for Medicare from 65 to 67 beginning at some point

in the future.

"The president seems to think that if all he

talks about are taxes, and that's all reporters write about, somehow

the rest

of us will magically forget that government spending is completely

out of control and that he himself has been insisting on

balance," McConnell said on the Senate floor.

He highlighted several government programs as examples of what he said was wasteful spending.

"A few weeks ago, Senator (Tom) Coburn

issued a study that showed taxpayers are funding Moroccan pottery

classes, promoting

shampoo and other beauty products for cats and dogs and a video

game that allows them to relive prom night," McConnell said.

"Get this: Taxpayers also just spent $325,000 on a robotic

squirrel named RoboSquirrel."

The two sides had presented rival initial offers in the cliff negotiations.

Obama's plan would raise $1.6 trillion in revenue over 10 years, in part by raising tax rates on incomes over $200,000 for

individuals and $250,000 for couples. He has recommended $400 billion in spending cuts over a decade.

He also is seeking extension of the Social

Security payroll tax cut due to expire on Jan. 1, a continuation in

long-term unemployment

benefits and steps to help hard-pressed homeowners and doctors who

treat Medicare patients.

The White House summary noted that Obama last year signed legislation to cut more than $1 trillion from government programs

over a decade, and was proposing $600 billion in additional savings from benefit programs.

It also noted that the health care law that Obama signed into law showed savings of $100 billion. Much or all of that funding

came from Medicare, even though Obama's aides insisted during his successful campaign for re-election that he had not made

any cuts in that program.

Boehner's plan, in addition to calling for

$800 billion in new revenue, envisions $600 billion in savings over a

decade from

Medicare, Medicaid and other government health programs as well as

$300 billion from other benefit programs and another $300

billion from other domestic programs.

It would trim annual increases in Social Security payments to beneficiaries, and it calls for gradually raising the eligibility

age for Medicare from 65 to 67, beginning in a decade.